Expansion of Rail Networks in India and China Bolster the Asia Pacific Market
The thrust given to the development of railway infrastructure and routes in the Asia Pacific, particularly in China and India, has resulted in the emergence of the rail market as a high-growth potential area. The sustained economic growth in these two countries has provided the support required to implement their rail network expansion plans. The growing demand for freight and passenger transport, one of the highest population growth rates in the world, increased industrialization and urbanization, and road traffic congestion have all driven the countries in the Asia Pacific to develop their railway infrastructure. “Metro trains, mass transit systems, and suburban rail services in urban areas are likely to take the traffic off the roads, offering an ideal solution to the problem,” say the analysts of this research.
Countries in this region are adopting different strategies to deal with their internal transportation issues. While China is focusing on high-speed rail, India is looking to revamp its existing lines and expand its metro rail network. Japan has plans to expand its bullet train (Shinkansen) services and the Malaysia rail company, Keretapi Tanah Melayu Berhad (KTMB) is expected to introduce a rapid intercity service between its two main stations. Meanwhile, the State Railways of Thailand intends to broaden Bangkok’s mass rapid transit system to surrounding provinces and launch an elevated metro system for Bangkok. Not to be left behind, South Korea hopes to start a high-speed express train service linking its capital to two major cities. However, such ambitious expansion and modernization plans require significant investments and technology expertise. “The expansion of railway networks includes laying of new tracks, their electrification, revamping of rolling stock, and setting up new stations,” notes the analyst. “These involve substantial expenditure on raw materials, machinery, technology, and skilled workforce - not all of which are available locally.” Therefore, market participants are relying on tie-ups or collaborations with global companies specializing in this field to acquire the required technical know-how.
As for the funds, most of the infrastructure development is financed by the government or rail authorities with aid from private enterprises. The Asia Pacific rail market has gone from being largely state-owned to being mostly privatized. China’s rail market will benefit from both public and private funding as its Ministry of Railway, implementing its five-year plan ending in 2010, will invest $190.00 billion to lay new tracks and acquire rail equipment. The country’s rail market has received a further boost with Bombardier, a Canada-based global leader in rail equipment, signing contracts worth nearly $1.50 billion with China's Dalian Locomotives and Rolling Stock to produce 500 electric freight locomotives. “Additionally, Alstom of France has signed two contracts worth more than $465.0 million with the Chinese Railways Ministry to build electric freight locomotives and to electrify high-speed lines on the mainland,” observes the analyst. “Other leading global rail equipment companies such as Siemens of Germany, trading company Mitsui (MITSY), and Kawasaki Heavy Industries (KWHIY) of Japan also have a significant role to play in China’s railway network expansion plans.”
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