Opening of Cambodia Railroad Puts Pan-Asian Railway Firmly on Track

The Auto Channel

PHNOM PENH, CAMBODIA - October 24, 2010: The first segment of a new international standard railroad officially opened in Cambodia today, a major step towards the creation of a long-awaited Pan-Asian railroad.

The Asian Development Bank (ADB) is providing $84 million in support of the reconstruction and repair of 650 kilometers (404 miles) of rail stretching from Cambodia’s border with Thailand, through the capital city of Phnom Penh, and southward to Sihanoukville, the country’s main seaport.

The Government of Australia is providing an additional $21.5 million in support of the $141 million project.

Freight rail service has commenced along a 120 kilometer (75 mile) stretch of rail between Phnom Penh and Touk Meas, near the Vietnamese border. The entire rail line is scheduled to be operational by 2013.

“We are on the cusp of a contiguous Iron Silk Road stretching from Singapore to Scotland,” said Kunio Senga, Director General of ADB’s Southeast Asia Department. “This possibility has been talked about for decades, but today the dream has finally taken a big step toward becoming reality.”

Decades of conflict have left Cambodia’s railroad in serious disrepair, with rail traffic slowly declining to a trickle.

In some parts of the country homemade lorries – simple, makeshift bamboo platforms powered by water-pump motors – are the main form of rail transport along the antiquated tracks.

Cambodia’s less developed transportation network and the country’s higher transportation costs result in higher prices for imported and locally made goods compared to neighboring countries.

The new railway will help lower the cost of staple commodities that poor Cambodian families rely on for sustenance.

“This new railroad represents another important step for Cambodia in overcoming its legacy of conflict,” said Mr. Senga. “With better infrastructure and closer economic ties with its neighbors, Cambodia’s people are enjoying a peace dividend more than ever before.”

Once Cambodia’s new railroad is finished, only one remaining link, between Phnom Penh and Ho Chi Minh City, Viet Nam, will remain before a pan-Asian railway is complete.

Cambodia and Viet Nam have already signed an agreement to link their railways, and the People’s Republic of China is supporting a design study on a rail link from Phnom Penh to Loc Ninh, Viet Nam.

The railway rehabilitation project is a vital component of the Greater Mekong Subregion’s southern economic corridor – linking Thailand, Cambodia and Viet Nam – and is a key component of ASEAN’s Singapore-Kunming Rail Link Project.

Other co-financiers of the rail project include the OPEC Fund for International Development ($13 million) and Government of Malaysia ($2.8 million grant in kind).

The Government of Cambodia is providing $20.3 million towards the rail project.

Toll Holdings, an Australian company, has been awarded a 30-year contract to operate and maintain the rehabilitated railway system.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2009, it approved a total of $16.1 billion in financing operations through loans, grants, guarantees, a trade finance facilitation program, equity investments, and technical assistance projects. ADB also mobilized cofinancing amounting to $3.2 billion.