Urban Rail boom in Southeast Asia could mean major Opportunity for India’s Infrastructure & Service Business

Urban Rail boom in Southeast Asia could mean major Opportunity for India’s Infrastructure & Service Business

Thailand has been accusing China of overlooking laws and environmental protection standards. Some countries appreciate the Chinese way of doing business, because “their work is fast and inexpensive, but breach of local laws and lack of concern for environment are a cause of serious concern” according to a source from the Thai construction industry

Projects to construct and extend Urban Railway systems – an indispensable mode of transportation in major cities, are being planned throughout Southeast Asia.

Hopes are high that subways, elevated railways and other urban rail systems will ease the traffic congestion plaguing metropolises that have seen population growth as a byproduct of economic development.

Expansion opportunities abound for Japanese firms, given the nation’s outstanding reputation for safety and precision in the field, but Chinese companies have entered the race in recent years and are quickly catching up.

In the north of Bangkok, construction of Bang Sue MRT Station is under way at the former site of a 200-hectare cargo terminal. The anticipated opening date is 2019.

The station is a part of a 26.3-kilometer-long Red Line elevated railway project that has an expected total price tag of more than ¥370 billion. It will be connected to a separate high-speed railway that is expected to employ Shinkansen technology and a railway linking two suburban airports.

With help of local general contractors, international consulting firm Nippon Koei Co. is overseeing the construction. “We actually hope to develop an area like Shinjuku,” said Toshimasa Kiuchi, a senior adviser at the company.

The Thai government plans to extend Bangkok’s urban railways to 515 kilometers in total by 2029, a big increase from roughly 85 kilometers at present. The Red Line is part of that overall plan. Trains account for only 6 per cent of Bangkok’s use of public transit, far below Seoul’s 51 per cent and Hong Kong’s 46 per cent. The Thai government hopes to raise the figure to at least 40 per cent.

Thai Finance Minister Sommai Phasee has stressed the importance of urban railways that make it easier to commute within the city and end traffic jams by providing connections to the suburbs. According to Phasee, such systems are indispensable for accelerating economic development and growth.

Technological advantages

Many Japanese companies are already involved in the construction of urban railways in Southeast Asia. For a new line scheduled to open partially in 2018 in Ho Chi Minh City in southern Vietnam, an underground section is being built by Shimizu Corp. and Mazda Corp. Sumitomo Corp. and local general contractors are handling the portion above the ground.

“Japanese firms excel at building underground tunnels in urban areas where old buildings remain,” explained Toshiyuki Sarashina, deputy director of Shimizu’s Hanoi office. The Vietnamese side has given Japan high marks in this respect.

In Jakarta, two subway lines are set to be constructed with Japanese financial assistance. Japanese companies earn high marks for the quality of their work, but that work is expensive, according to Surapong Laoha-Unya, chief executive officer of the Bangkok Mass Transit System Public Co., which operates the capital’s elevated railways.

In Bangkok, Japanese firms were asked to lead part of the urban railway construction, but German and Chinese companies were tasked with building the cars and train operation systems. The Japanese companies involved – Marubeni Corp., Toshiba Corp. and East Japan Railway Co. – finally received orders for the production of cars and other manufactured products for the Purple Line scheduled to open in 2016.

The total cost of building a railway can run as high as several hundred billion yen. There is fierce international competition to win contracts for such projects in major Asian cities.

China has been elevating its profile, particularly in the field of maintenance and infrastructure improvement. But unlike the Japanese government and firms, China has been accused of overlooking laws and environmental protection standards. Some countries appreciate the Chinese way of doing business, because “their work is fast and inexpensive,” according to a source from the Thai construction industry.

Launched in June after a merger of two companies, China’s state-run automaker is by far the world’s largest firm in the industry.

A signing ceremony took place last Monday for the founding of the China-led Asian Infrastructure Investment Bank, which is expected to start operations within the year.

“After the bank launches, China will get more aggressive and competition to win infrastructure development contracts in Southeast Asia will become even more intense,” a Japanese government source said.