Beijing to Sydney by Train: The Potential Development of a Singapore, Indonesia & Australia Rail Network
The China-Singapore rail project has been getting a lot of attention over the past few years as these routes continue to develop. Essentially a round-ASEAN route that initially fans out from Kunming, heading south through Vietnam with branches heading west to Laos and Myanmar and south down to Bangkok, it then heads further south through Malaysia and ends at Singapore. It is already possible to buy a through train ticket from Singapore to China, although it currently requires changes and customs / immigration clearances. When completed, however, it will be a high speed route that will cover the distance from Beijing to Singapore in 36 hours, averaging 200km an hour. Progress is on track and although delays can be expected with some of the high speed sections, it is planned to be operational by 2020.
But why stop at Singapore? How about taking the train from Beijing to Sydney?
Singapore through to Indonesia & Australia
Such a route does not yet exist and is not part of China’s Silk Road Economic Belt plan. However, as Indonesia and Australia are nearby and represent vibrant members of Asia, it makes sense to look at the potential for a route to be developed. It certainly fits in with the overall China and ASEAN strategy of better integrating Asia – and such a network could eventually come to a logical conclusion at some point in the future. Most Singapore ferries go to the nearby Indonesian Bintan Island, which has been developed both as a resort facility and also contains jointly developed industrial parks. However, the nearest point from Singapore to connect with Indonesia’s transport network would be Pekanbaru, on the east coast of Sumatra.
Indonesia’s Rail Infrastructure
At present, Indonesia’s rail network exists on the main islands of Sumatra, where it is divided into four separate and unconnected routes; and in Java, where a better developed network stretches from the Western ports servicing Jakarta to the eastern, second city of Surabaya; and across to Banyumandi, where just across the straits is the island of Bali.
Any viable link from Singapore would necessitate the linking of the four separate rail lines in Sumatra, which collectively possess some 1,348km of usable track. Infrastructure projects are underway to renovate an additional 500km of disused track and to connect the lines into one network under the Trans-Sumatra Railway plan. If completed, that would create a route that would extend from Medan in Sumatra’s north, through to the southern port of Padang and east to Prabumulih. The uniting, extending and upgrading of the Sumatran rail network is part of the Indonesian Government’s 2015-2019 National Mid-Term Development Plan, released by the National Development Planning Board (Bappenas) in late 2014. This intends to increase the facility to a 2,168 km network, stretching from Aceh to Lampung, connecting Sumatra’s major cities, seaports and airports to ease traffic and reduce logistical costs. Much of the planning is centered on freight transportation, and will go hand in hand with a toll road network following more or less the same routes. A connection through to Lampung would then facilitate a route across to the main island of Java, and immediately through to nearby Jakarta and Java’s larger and better integrated rail network.
The Javan network, which like Sumatra has its origins in essentially passenger travel, is also being upgraded in terms of capacity by adding double tracks to the current routes. Again, this is to facilitate increased freight transportation, and has been of particular benefit to the Jakarta and Surabaya route on the North Coast line to increase the number of container trains between both cities. Many container loading/unloading ports have also been built on intermediate cities and towns. This effort is already attracting logistics customers who previously shipped their products through the road.
At present, much of Indonesia-Australia shipping goes through the Tanjung Priok Port, north of Jakarta, and then goes back south through the Sunda Straits, or from Surabaya and back through the Lombok Straits. Both of these routes are congested at the Straits points, and both necessitate a long route around Australia to reach either Perth, to the West, or East, to Cairns then down to Sydney. However, sea routes between Surabaya and Darwin are also now being used.
Surabaya is a major manufacturing hub in East Java, while Darwin is relatively nearby in Australia’s Northern Territories. The distance between them is 2,063km, as opposed to 3,017km from Tanjung Priok to Perth and 5,500km from Tanjung Priok to Sydney. The viability of routes then becomes a direct cost issue related to savings between shipping rail, time, and infrastructure. On our journey we would need to take a ferry from Surabaya to Darwin. However, Darwin possesses a rail line capable of both freight and passenger traffic, with the first freight train arriving in Darwin relatively recently in 2005. That heads directly south to meet up with the Australian trans-continental line that runs west-east from Perth to Melbourne and Sydney.
Whether or not the Australian rail network would ever be a viable overland alternative to the longer shipping routes from Indonesia or other parts of Asia depends in part upon logistics and cost issues, the future development of Darwin as a city, and indeed upon improvements and diversification of Indonesia’s own manufacturing industry when it comes to servicing the wealthy Australian consumer market. Such a route would be dictated by the economics of freight transportation rather than a viable passenger route.
The likelihood of a rail network eventually extending from Singapore through to Indonesia looks feasible at some point in the future, being essentially dependent upon how well the Indonesian government manages to unify and upgrade the four networks in Sumatra. But as I already pointed out, that project is already on the drawing board as part of the current National Development Plan. When completed, we can then get to Surabaya on existing networks in Java. Getting to Sydney then just involves an ocean crossing to Darwin, and a connection.
The Beijing-Sydney Rail Route may become reality sooner than we think.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
The Asia Sourcing Guide 2015
In this issue of Asia Briefing, we explain how and why the Asian sourcing market is changing, compare wage overheads, and look at where certain types of products are being manufactured and exported. We discuss the impact of ASEAN’s Free Trade Agreements with China and India, and highlight the options available for establishing a sourcing and quality control model in three locations: Vietnam, China, and India. Finally, we examine the differences in quality control in each of these markets.
The 2015 Asia Tax Comparator
In this issue, we compare and contrast the most relevant tax laws applicable for businesses with a presence in Asia. We analyze the different tax rates of 13 jurisdictions in the region, including India, China, Hong Kong, and the 10 member states of ASEAN. We also take a look at some of the most important compliance issues that businesses should be aware of, and conclude by discussing some of the most important tax and finance concerns companies will face when entering Asia.
Human Resources and Payroll in China 2015
This edition of Human Resources and Payroll in China, updated for 2015, provides a firm understanding of China’s laws and regulations related to human resources and payroll management – essential information for foreign investors looking to establish or already running a foreign-invested entity in China, local managers, and HR professionals needing to explain complex points of China’s labor policies.