Cambodia and Vietnam signed an agreement on Saturday that will link the two countries' railways, an important step in the creation of a Southeast Asian rail network that will connect major cities and tourist destinations between Kunming and Singapore.

China will help Cambodia with completion of the rail link with Vietnam, according to an AFP report quoting Cambodian Foreign Minister Hor Namhong. The Cambodian segment of the 5,382 kilometer (3,344 mile) rail network is expected to cost more than US$500 million - Cambodia's domestic rail network is still in disrepair after a civil war that ended in the 1990s.

Improvement of Cambodia's rail connectivity with its Southeast Asian neighbors is expected to boost the country's small but fast-growing economy. Hor Namhong said that Cambodia-Vietnam cross-border trade in the first eight months of this year totaled US$1.7 billion.

The opening of rail traffic between Cambodia and Vietnam will add to existing Southeast Asian cross-border rail connections between Singapore and Malaysia and Malaysia and Thailand. Cambodia has a rail connection to its western neighbor Thailand – with which it has recently been engaged in a violent border dispute – but it has fallen into disuse.

Tags: Cambodia, Hor Namhong, logistics, Malaysia, Singapore, Southeast Asia, Thailand, trains, transportation, Vietnam

Malaysia has called for a clear timetable for the completion of the rail network that will link Kunming with Singapore, a project that has been ongoing since 1994.

Yesterday Malaysian Transport Minister Ong Tee Keat told the rail network's 10th Special Working Group Meeting in Putrajaya, according to Malaysian media reports.

The 5,382 kilometer (3,344 mile) rail network will connect Singapore, Malaysia, Thailand, Myanmar, Laos, Cambodia and Vietnam with Kunming and other cities in Yunnan. The main obstacle to getting the network up and running is the existence of around 550 kilometers of gaps between rail lines around the region. According to Ong:


Ong said that despite concerns about rising costs of construction materials, Malaysia was not going to pressure poorer countries in the region – ie Cambodia, Laos and Myanmar – to meet the generally hoped-for completion target of 2015, although Malaysia's last gaps will be filled before then.


Once completed, the rail network is expected to greatly boost regional trade and tourism as well as contributing to poverty reduction in poorer areas throughout the region. It will also bolster Kunming's position as the primary Chinese logistics hub for trade with Southeast Asian countries.

Tags: Cambodia, Laos, logistics, Malaysia, Myanmar, Ong Tee Keat, Putrajaya, Singapore, Southeast Asia, Thailand, tourism, trade, trains, transportation, Vietnam

Two major transportation infrastructure projects which will dramatically increase Yunnan's regional and international importance are both seeking investment, according to Chinese news reports.

Southeast Asian rail network looking for funds
Economic ministers from China and the Association of Southeast Asian Nations (ASEAN) announced at a meeting in Singapore last Friday that they will hold a conference and exhibition to attract investment in a 5,000-kilometer railway network that will link Kunming with Singapore.

According to a joint statement released during the meeting, there are still 550 kilometers of gaps in the network that need to be filled. The remaining work is projected to cost US$2 billion at year 2006 prices.

Once complete, the network will connect Kunming, Dali, Baoshan, Hekou and other cities in Yunnan province with Singapore plus major cities in Vietnam, Laos, Myanmar, Malaysia, Thailand and Cambodia.

Yunnan Airport Group seeks cash for expansion
Yunnan Airport Group Co (YAG) is seeking strategic investors to assist in financing its upcoming expansion in Yunnan province, which includes a new 18.4 billion yuan (US$2.69 billion) airport in Kunming that will be China's fourth-largest in terms of both passenger and cargo traffic.

YAG is looking for cash-only investors to raise its registered capital in exchange for a maximum 40 percent share in the group. In addition to the Kunming airport, other airport projects will be started around Yunnan.

The new Kunming international airport is a key project of China's 11th Five-Year Plan and is positioned to be an international aviation hub with direct flights throughout Asia as well as to Europe, North America and Australia. The airport is expected to begin operations by 2010 and is projected to handle 38 million passengers and 1.3 million tons of cargo in its first year.

Hong Kong Airport Authority, Australia-based Macquarie Group, and the operators of Singapore's Changi Airport and Frankfurt Airport have reportedly expressed interest in investing in YAG.

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Tags: ASEAN, aviation, business, logistics, rail transport, transportation, Yunnan Airport Group

Last Friday China's National Development and Reform Commission (国家发改委) announced an upward adjustment in the price of gasoline and other petroleum products including diesel fuel and jet fuel, effective immediately.

Gasoline and diesel prices will rise between 17 and 18 percent nationwide and jet fuel prices will jump by nearly 25 percent.

These substantial fuel price hikes are expected to have far-reaching impacts on consumers in Kunming and throughout China, where logistics costs account for around 20 percent of an item's price, compared to seven or eight percent in more developed countries. Last Thursday, the World Bank raised its projection for inflation in China this year from 4.6 to 7.0 percent.

Food prices are expected to feel upward pressure from rising fuel costs. Kunming daily Dushi Shibao spoke with industry players to find out the impact of the price hike on the cost of certain food items in Kunming. Here's what they found:

Food oils: A manager surnamed Chen at the Kunming subsidiary of Luhua Peanut Oil said the transport cost for a five-liter bottle of peanut oil has suddenly jumped from 5.0 to 7.5 yuan. Despite the increased transport costs, Chen said food oil retail costs should maintain current levels for the time being.

Pork: A general manager at a local meat products company said that transport costs only account for a small percentage in the total cost of pork production. Rising feed costs, he said could possibly lead to further increases in the price of pork.

Rice: Rice prices should be unaffected by the increase in fuel costs, as most of Kunming's rice is transported by rail or sea, with only short-distance distribution done by trucks.

Frozen dumplings and ice cream: A spokesperson for Chengdu Guofu Longfeng Food Products Co Ltd told Dushi Shibao that transport costs for frozen dumplings and ice cream made in Chengdu and sold in Kunming will go from a total of eight percent of the products' retail cost to between 10 and 12 percent.

In addition to varying affects upon food prices, the jump in fuel costs is also affecting how people are getting around the city – retail sales of electronic bicycles in Kunming were up 20 percent, according to the Dushi Shibao report.

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Tags: food oils, frozen dumplings, gasoline, ice cream, inflation, logistics, oil, pork, rice, transportation, World Bank

The highway linking the town of Xinjie in Hekou County in southeastern Yunnan province with Lao Cai province in northern Vietnam was opened yesterday, marking completion of the first highway linking Yunnan with a neighboring country from the Association of Southeast Asian Nations (ASEAN).

The 56.3 kilometer, 3.58 billion yuan Xinhe highway is one of the numerous infrastructure projects that will increase connectivity between Yunnan and ASEAN and facilitate the transport of people and goods between the two regions, which are expecting to see a major increase in tourism and trade in the coming years.

Yunnan is preparing to serve as a main gateway for trade between China and ASEAN, especially after the launch of the first phase of the China-ASEAN Free Trade Area (CAFTA) in 2010. CAFTA will be the world's largest free trade area in terms of population, with more than 1.8 billion people.

In 2007 trade between Yunnan and ASEAN grew nearly 40 percent year-on-year, totaling more than US$3.03 billion. Yunnan exports to ASEAN states reached US$2.17 billion last year, with Vietnam replacing Myanmar as Yunnan's top trading partner.

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Tags: ASEAN, CAFTA, Hehou, Lao Cai, logistics, Vietnam, Xinhe highway

China's State Administration of Work Safety spoke up on Friday regarding recent large-scale spills of sulfuric acid in Yunnan, criticizing the state of the country's chemical transport and directing the blame at chemical logistics providers, according to a Xinhua report.

The Administration said on its website that the state of safety in chemical transportation in China was "grim", asking local authorities nationwide to learn from three accidents in the last three weeks in Yunnan that have resulted in more than 70 tons of highly toxic sulfuric acid being released into rivers and potentially poisoning local water supplies.

On February 11, a tanker truck owned by Dali Zhongyun Transportation Trading Co that was carrying 30 tons of sulfuric acid plunged into the Mojiang River in Dali Bai Autonomous Prefecture in northwestern Yunnan, dumping its cargo into the river. Only five hours later, another tanker truck – also owned by Dali Zhongyun – overturned near the Xingsu River, injuring two and releasing 24 tons of sulfuric acid into the river.

On January 28, less than two weeks before last week's accidents, a tanker truck was part of a pileup on the old highway connecting Anning with Chuxiong, roughly 51 kilometers outside of Kunming. The truck leaked 17 tons of sulfuric acid. Cleanup crews dumped 20 tons of lime on the spill, which created a massive cloud of smoke (see photo above) that caused another accident involving five cars.

According to the Xinhua report, the State Administration of Work Safety blamed January's accident on the tanker being overloaded and its driver suffering from long work hours.

Transport of dangerous goods like sulfuric acid – which burns skin when touched and lungs when breathed – is less regulated in China than in developed countries. Logistics companies looking to cut costs on transport of dangerous goods often overload vehicles and overwork drivers – who often take poor backroads in order to avoid paying tolls on newer, safer highways.

Image: www.clzg.cn

Tags: Dali, DG transport, environment, logistics, Mojiang River, State Administration of Work Safety, sulfuric acid, toxic spills, Xingsu River

Trade in 2007 between Yunnan province and the 10 member states of the Association of Southeast Asian Nations (ASEAN) reached US$3.03 billion, up nearly 40 percent over 2006, with Vietnam replacing Myanmar as the province's top trading partner, according to a Xinhua report.

Recent rapid growth of trade with ASEAN has made the region Yunnan's largest trading partner. According to Kunming customs statistics cited in the report. Yunnan's exports to the region were up 32.9 percent, reaching US$2.17 billion.

Yunnan – bordered by Myanmar, Laos and Vietnam – is being groomed by the Chinese government to serve as China's gateway to ASEAN as the two emerging economic regions prepare for the China-ASEAN Free Trade Area (CAFTA), the first phase of which will launch in 2010. CAFTA will reduce and eliminate tariffs on goods moving between the two regions, with analysts expecting raw materials and natural resources to flow into China and finished products to flow out.

Major road, rail and air transport infrastructure projects in Yunnan and its Southeast Asia are currently underway to further facilitate trade with ASEAN. Some of the more notable projects include a highway linking Kunming with Singapore, a rail network linking Kunming and Singapore via three trunk lines passing through Myanmar, Laos, Thailand, Vietnam, Cambodia and Malaysia, a new international airport in Kunming and a road/rail transport corridor linking Kunming with Haiphong, Vietnam – the closest seaport to Kunming.

Last month the Asian Development Bank announced its largest-ever financing project, a US$1.1 billion highway project that will connect Vietnamese capital Hanoi with Yunnan.

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Tags: ASEAN, Asian Development Bank, business, CAFTA, foreign trade, Haiphong, Hanoi, Laos, logistics, Myanmar, Singapore, Vietnam

Last week the Asian Development Bank (ADB) announced plans to finance a US$1.1 billion highway project that will connect the Vietnamese capital of Hanoi with Yunnan province via a 244-kilometer (151 mile) highway. The road is the largest single financing project by the ADB to date.

At present, travel times for passenger cars and trucks traveling from Kunming to Hanoi are two and three days, respectively. After the road in Vietnam is completed, the trip between the two cities will take less than a day. Completion of the highway is projected to take place in 2012.

Hanoi and Lao Cai province – on the Vietnamese border with China – are part of the Haiphong transport corridor that is expected to provide economic opportunities to impoverished northwest Vietnam plus greater access to social services for communities near the highway.

The road will also give Kunming greater access to the port of Haiphong, the closest seaport to the Spring City. This will make it easier for companies in Kunming and Yunnan to ship goods internationally. Similarly, agricultural and maritime products from Vietnam will have greater access to Yunnan, Sichuan and elsewhere in China's landlocked west.

The highway is also expected to be a boon to tourism between northern Vietnam and Yunnan, both of which are home to major tourist destinations such as Ha Long Bay and Sa Pa in Vietnam and Xishuangbanna, Dali, Lijiang and Shangri-la (Zhongdian) in Yunnan.

Traffic on the existing roads between Hanoi and Lao Cai has been averaging an annual increase of 12 percent in recent years. More than 5.5 million vehicles are projected to use the new road in 2012, with traffic expected to triple to 17 million over the following ten years.

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Tags: Asian Development Bank, business, Ha Long Bay, Haiphong transport corridor, Hanoi, Kunming-Hanoi highway, Lao Cai, logistics, Sa Pa, tourism, Vietnam