Loke’s proposed ECRL extension into Thailand has merit

 

Transport minister Loke Siew Fook’s proposal to extend the East Coast Rail Link (ECRL) from Kota Bharu into Thailand is indeed a very commendable idea.

Thailand is Malaysia’s sixth biggest trading partner, with a yearly export value of US$15 billion in 2022, making up 4.2% of Malaysia’s total exports. In the same year that country’s exports to Malaysia were valued at about US$12.5 billion.

Seamless movement

Traditionally, much of the import and export of goods between Malaysia and Thailand was confined to cross border traffic and largely took place via road transport.

These days, however, excellent transport infrastructure is required to facilitate the smooth and seamless movement of goods and passengers between the two countries.

Rail transport is an important component of that infrastructure as it allows for the movement of bulky commodities, including liquid bulk and dangerous goods, between Thailand and Malaysia.

For that reason, both countries should look seriously beyond mere cross-border traffic to the proper establishment of country-to-country rail connectivity services, such as Bangkok-Kota Bharu and Bangkok-KL.

Lower logistics costs

The proposed ECRL line across the two countries will enhance the flow and movement of goods by improving and increasing capacity.

Rail transport is more cost effective for the long haul. It is known to have a lower unit cost compared to road transport. In some cases and for some commodities rail costs can be lower than even the cost of shipping. This allows for a more feasible movement of bulky commodities.

For instance, at the moment, the average cost to move a 20ft container by sea between Bangkok and Kota Bharu is approximately US$2,000, whereas the same container can be transported by rail at almost half the price. That’s the sort of long-term economic benefit that both countries will enjoy.

So, in this case, I would say that our transport minister is talking about an important piece of the puzzle that is still missing in our logistics infrastructure master plan – a rail link between Kota Bharu and the Thai side.

New industries

The proposed ECRL rail connection will improve logistics linkages between Thailand and Malaysia, especially for Kelantan, Terengganu and Pahang, three of the most economically challenged states in Peninsular Malaysia at the moment.

The presence of this new railway line will also provide an opportunity for these three states to plan new industrial and economic activities.

It will also attract some new investments, for instance in the redistribution of consumer and industrial goods imported from Thailand, and encourage export-based industries to be located near some of the rail stations in the three east coast states.

Basic challenges

Tourism offers another big opportunity for these three states, provided they relax some of the existing hardline local rules governing tourists and tourism activities, and can lead to increased investments in resort development, retail, food and beverage, and property sectors.

However, failure to develop any of the economic, industrial and tourism opportunities will result in the outflow of new investments into Thailand instead.

That is because Thailand already has an advantage in terms of labour (workforce) and a more relaxed regulatory environment.

The country is seen as tourists friendly and more geared towards entertainment, with fewer restrictions compared to Kelantan or Terengganu, which do not even allow cinemas to exist, let alone other forms of entertainment, including cultural shows.

What this means is that even with the proper infrastructure in place, other basic challenges exist that may impede the potential economic, industrial or tourism growth of the three east coast states.

We need to improve and manage those challenges in parallel. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.