19 Feb, 2008

Cambodia’s ‘Bamboo Railway’ Goes Modern

Imtiaz Muqbil

The Asian Development Bank (ADB) and the Government of Cambodia launched a project that will restore rail traffic between Thailand and Cambodia by 2010.

In this dispatch:

1. CAMBODIA’S ‘BAMBOO RAILWAY’ GOES MODERN

2. PUTTING CAMBODIA BACK ON TRACK

3. CAMBODIA GETS $71 MILLION LOAN FOR ROADS, EDUCATION & MARKET REFORM

4. U.S. MORTGAGE CRISIS, RISING PRICES SPELL FINANCIAL TURMOIL – U.N. ASSEMBLY PRESIDENT

5. PRICE OF TEA TO MAINTAIN UPWARD TREND IN 2008

6. BIG RISE IN WORLD CEREAL PRODUCTION SEEN, BUT PRICES REMAIN HIGH

7. U.N. RIGHTS EXPERTS WELCOME AUSTRALIA’S APOLOGY TO INDIGENOUS PEOPLES

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1. CAMBODIA’S ‘BAMBOO RAILWAY’ GOES MODERN

Sisophon, Cambodia, 18 February 2008 — The Asian Development Bank (ADB) and the Government of Cambodia today launched a project that will restore rail traffic between Thailand and Cambodia by 2010. The new project will rehabilitate approximately 600 kilometers of track, and reconstruct another 48 kilometers near the Thai border that was completely destroyed during wartime.

ADB is providing a $42 million concessional loan for the project from its Asian Development Fund. “This is one of the last steps in the creation of a regional railway that will stretch from Singapore to Beijing,” said ADB President Haruhiko Kuroda at the inaugural ceremony in Sisophon, near Cambodia’s border with Thailand. Soon, trains will be running from Singapore to Sihanoukville,” he added.

Railway services in Cambodia are presently intermittent, and unofficial trolleys with bamboo floors operate along portions of the railway. In addition to supporting the repair of tracks and bridges, ADB is providing technical assistance to Cambodia to restructure the railway by appointing an international railway operator to operate, maintain and invest in the railway over the next 30 years.

Investing in rail upgrade, maintenance, and better service delivery will help revitalize Cambodia’s railways, enhance internal commerce and international trade, reduce transport costs, and ease road traffic. The railway rehabilitation project is a vital component of the Greater Mekong Subregion’s southern corridor, which links Thailand, Cambodia and Viet Nam.

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2. PUTTING CAMBODIA BACK ON TRACK

By Christopher Bruton, Dataconsult, Bangkok

Railway enthusiasts the world over adore old and decrepit rail tracks and the sight and smell of rusty locomotives, reminiscent of a bygone age. By such standards, the Royal Cambodian Railway should qualify for five star status – except, unfortunately, that deterioration has reached the point where the entire system: track, rolling stock and stations, has begun to disintegrate into rust and dust. Putting the whole system back into shape, and linking it with the ambitiously-planned Pan-Asian Railway system, has long been proposed, but there are now hopes of realization.

Cambodia entered the railway age a little late in life, long after the Malayan Railway enabled adventurous travelers to journey from Singapore, link up with the Royal Siamese Railway, and reach the cool Northern climate of Chiang Mai, or the majestic Mekong at Nong Khai and take the ferry boat across to Vientiane.

The so-called Cambodian Northern Line, which is actually more like an East-West Line, was commenced in 1929, reaching Pursat, South of the Tonle Sap Lake in 1931, on to Battambang in 1932, to Mongkol Borey in 1933, but not to the Thai border at Poipet until 1942. By that time, the Second World was under way, and further development was interrupted.

The second phase of railway building in Cambodia was the Southern Line, commenced during what is now known as the “Golden Age” of Cambodia, under Prince Sihanouk’s premiership. It took six years to construct the 75 kilometres of line from Phnom Penh to Takeo, reaching the seaside at Kampot in 1967, and finally Sihanoukville in 1969.

Just in the same way that the first phase of railway building came to a grinding halt with the Second World War, so also the second phase led to the anti-Sihanouk coup d’etat under General Lon Nol in 1970. This was followed by the complete halting of rail traffic during the slippery slide to the Khmer Rouge takeover in 1975.

The Khmer Rouge displayed no enthusiasm for railways, and, indeed, sensing the risk that they might convey invaders rather than goods, promptly removed 48 kilometres of line from the Thai border to Sisophon, a missing link to this day.

During the Khmer Rouge era, the stately railway station of Phnom Penh remained deserted, but was saved the fate of the adjoining cathedral, which was dismantled stone by stone, and dumped unceremoniously into the nearby lake.

The 338 kilometres of track from Phnom Penh to Sisophon, on the northern line, lay abandoned. The 49 stations along this route, along with the 175 bridges, likewise fell into various stages of disrepair. Similarly, the Southern Line, of 264 kilometres, along with 27 stations and 97 bridges also steadily deteriorated.

Following the restoration of democracy in Cambodia in 1993, a number of emergency rehabilitation projects took place. From 1993 to 1995, there was rehabilitation of track, bridges, wagons and Phnom Penh Station. From 2001 to 2003, some further limited rehabilitation took place. These emergency repair projects were inhibited by the risk of landmines, especially in the Western portion of the Northern Line, closer to the Thai border area.

During the relatively grand days of the Royal Cambodian Railway, traffic had grown from 270,000 tonnes of goods and luggage in 1961 to 370,000 tonnes in 1969. During the same period, passenger traffic grew from 1.3 million to 2.4 million travelers.

Given the decay of the railway system and lack of repairs from 1970 to 1980, one might have expected that there would have been little or no rail traffic at all during the post Khmer-Rouge period. However, thanks to the vitality and improvisation capacity of Cambodia and its institutions, the rail system struggled onward, despite its many handicaps.

In 1981 after the 1979 ouster of the Khmer Rouge, the railway managed to carry only 84,000 tonnes of freight but, during the 1980’s and early 1990’s reached around 140,000 tonnes per year, and by 1998 was achieving close to 300,000 tonnes, back to pre-1970 days, reaching a peak of 560,000 tonnes in 2002. Since that time, however, the continuing decline of rail track conditions, and improvements in competitive road conditions and transport, has resulted in a falling away of rail traffic.

The only viable prospect for revival of the Royal Cambodian Railway at this stage would be a complete rehabilitation of the entire system, with an estimated cost of US$64 million, including both the Northern and Southern lines, together with the missing link with the Thailand railway system. Fortunately this scheme fits well into the Greater Mekong Subregion project of the Asian Development Bank, and more specifically, into its grand design, for an Asia-wide railway network. Without the inclusion of the Cambodian rail system, including rebuilding of the Thailand link, and also ultimately a new line from Phnom Penh to Loc Ninh in Vietnam, this scheme cannot be fully achieved. Add-on schemes include airport, seaport, and industrial zone linkages, facilitating passenger as well as goods transport.

The Asian Development Bank has agreed to help fund the rehabilitation scheme through concessional loans. The basis of the funding would be a 30 year facility at low interest. Management would need to be turned over to a private company operating on the basis of a longterm lease, assuring repayment of Asian Development Bank loans. Furthermore, the operating company would need to undertake the full maintenance of railway operations, expansion when necessary, together with assurance of safety and quality standards.

An added opportunity to achieve viability might be use of railway land not needed for future transport operations, especially in the vicinity of Phnom Penh railway station. Utilisation of such prime land for alternative development could result in massive funding opportunities for the railway scheme, particularly in view of the land price boom currently gripping Cambodia.

Ultimately the whole scheme will rely upon the economic viability of the renovated railway and the willingness of a reputable, competent international operator to undertake the risk and the long term operational management burden.

Economic viability will depend on recovering the lost traffic of the railway and expanding its role in the total national transport system. Hitherto, the main traffic has been petroleum products, cement, and containerized goods. With high GDP growth, the overall market in Cambodia has high potential. Furthermore road congestion will favour transfer of traffic back off the road and onto the railway. This requires that speed and efficiency can be achieved at a cost competitive to road transport.

The new cement plants in Kampot province, in Southeast Cambodia, will offer great opportunities for nationwide transport, especially since a rail branch link can access the cement plants directly. Furthermore, once the Cambodian and Thailand rail system can be reconnected, two-way traffic, composed of Thailand exports to Cambodia, and Cambodian exports via Thailand to be shipped from Laem Chabang, could greatly increase traffic opportunities.

Based on Asian Development Bank consultant forecasts, the rehabilitation and operating project could be reasonably viable, enabling loan financing to be repaid, operating costs covered, and profits commensurate with risks achieved. Even the Bank’s most optimistic traffic projections could prove conservative, given the soaring performance of the Cambodian economy at the present time, along with the encouraging outlook.

After initial delays, implementation of the project is proceeding apace. The French firm TSO, leading a construction consortium, has gained the rehabilitation contract, while Australia-based Toll Holdings was recently reported to be a front-runner for a 30-year operating concession, working together with a Cambodian partner, well-known for successful joint ventures in service industries with foreign operators.

Certainly this is no easy project, and profits, even if substantial, will be hard-earned. The Royal Railway of Cambodia has been renowned for rough rides and derailments throughout its almost 80 years of development. But if all goes well, Australia will proudly record yet another well-deserved success in Asia. Meanwhile an enterprising Australian company will be doing well for itself, and doing well too, for the people they seek to serve.

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3. CAMBODIA GETS $71 MILLION LOAN FOR ROADS, EDUCATION & MARKET REFORM

The Asian Development Bank (ADB) has signed off on a $71.8 million grant and loan package for Cambodia that will improve secondary education, support farmers living around the Tonle Sap Lake, foster financial system reform, and rehabilitate major roads throughout the country.

The largest component of the package is a $27.1 million grant that will improve the quality of secondary education by providing 350,000 upper secondary students with textbooks, training 14,400 secondary teachers, and equipping teacher training colleges with better facilities.

Rural farming families will be able to improve crop yields and boost their incomes through a $20 million assistance package (a $10.1 million loan and $9.9 million grant) that will provide better irrigation facilities and improved rural infrastructure. This assistance will benefit over 350,000 people living in 40 communes around the Tonle Sap Lake.

“Educational opportunity and increased agricultural productivity are two indispensable components of Cambodia’s continued growth,” said ADB President Haruhiko Kuroda at today’s signing ceremony. “The ADB remains committed to working with Cambodia to help more people in the country escape poverty and attain a better quality of life,” President Kuroda said.

ADB is also providing an $11.7 million assistance package (a $10 million loan and $1.7 million grant) from its concessional Asian Development Fund to support market-oriented financial system reforms, including legal and regulatory reforms, improved disclosure standards, better financial transparency and development of financial infrastructure.

The final components of the assistance package are a $7 million loan to support the rehabilitation of a 15 kilometer stretch of the Southern Coastal Corridor, which runs along the Gulf of Thailand from Bangkok to Nam Cam, Viet Nam, and an additional $6 million loan to help maintain 950 kilometers of roads managed by the Ministry of Public Works and Transport.

The overall value of these five projects is approximately $115 million, including a $12.8 million grant from the Government of Australia and an additional $30.5 million contribution from the Government of Cambodia.

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4. U.S. MORTGAGE CRISIS, RISING PRICES SPELL FINANCIAL TURMOIL – U.N. ASSEMBLY PRESIDENT

New York, Feb 14 2008 — The sub-prime mortgage market collapse in the United States, rising oil and commodity prices and other factors could combine to hamper the economies of developing countries, the President of the United Nations General Assembly said today.

Srgjan Kerim recalled that in the last quarter of 2007, macroeconomic and fiscal management had improved in many developing countries, creating higher savings, investments and consumer demand. Expenditures on social programmes went up while extreme poverty went down – but globally inequality was still rising, he said.

“Since then, the fall-out from the collapse of the US sub-prime mortgage market has spilled over into global equity and bond markets, eroding confidence in the financial system,” Mr. Kerim told the Assembly. “In addition, high oil and commodity prices, particularly in the agricultural sector, and rising global imbalances are storing up inflationary pressures.”

Mr. Kerim made his comments as the General Assembly began the first of six review sessions on the “Monterrey Consensus,” a 2002 agreement by which developing countries took primary responsibility for mobilizing domestic resources and developed countries agreed to promote an environment conducive to this effort.

The Assembly President warned that the ongoing financial turmoil could reduce “demand in developed countries with significant spillovers into emerging markets and developing countries.”

At the same time, he noted that markets in developing counties have continued to expand. “Overall, developing countries have benefited from strong domestic demand, better governance, more disciplined economic management, and in the case of commodity exporters, from high food and energy prices.”

But he said that unless growth is translated into human development that creates opportunities and benefits for all, “growing inequality and the sheer scales of global poverty will create destabilizing economic and political pressures in many countries.” Addressing climate change is central to ensuring sustainable economic development and poverty reduction, he said, adding that “its policy implications also embrace issues of equity, ethics, human rights and security.”

The Financing for Development process “has a special responsibility to support those countries most affected to adapt to climate change; and, to create incentives for investment in climate-friendly energy production, energy efficiency and new technologies to ensure that all the Millennium Development Goals (MDGs) are met – not at the cost of economic growth, but to achieve it.”

The Assembly’s meeting is being held in preparation for the conference to review the implementation of the Monterrey Consensus, to be held in Doha, Qatar, toward the end of this year.

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5. PRICE OF TEA TO MAINTAIN UPWARD TREND IN 2008

14 February 2008, Rome – In 2008, world tea prices are expected to maintain their upward trend as a result of a tight supply on the world market exacerbated by a projected 10% decrease in Kenyan production due to civil unrest, according to report by the UN Food & Agricultural Organization on current and future trends in the tea market prepared for the Global Dubai Tea Forum 2008 (February 19-20).

This follows a review of the world tea market for 2006 which indicated an improvement in the fundamental oversupply situation that had persisted for many years. Indeed, the FAO Composite Price, as a world indicator price for tea, increased by 11.6% to reach US$1.83 per kg in 2006. The market fundamentals for 2007 suggest that this trend is likely to continue as the FAO Index has increased a further 6.5% to US$1.95 per kg in 2007.

World tea production grew by more than 3% to reach an estimated 3.6 million tonnes in 2006, according to latest available figures cited by the report. The expansion was due to another record crop in China with 1.05 million tonnes – an increase of 9.5% over the record established in 2005 – and a record 28% increase in output in Viet Nam which pulled its production up to 133 000 tonnes.

A rehabilitation and expansion programme implemented by Viet Nam explains the impressive growth in output as tea bushes reached optimum yields. In China, government policies to increase rural household incomes and major rationalization of the farming systems including the replacement of low yielding bushes also boosted production.

An increase was also recorded in India, the second larger producer, where harvests were 3% higher, totalling 945 000 tonnes for 2006. The increases in China, India and Viet Nam should offset declines in major producing countries, according to the report.

World tea consumption grew by 1% in 2006, reaching 3.64 million tonnes. For the first time, China’s consumption surpassed that in India, recording a dramatic increase of 13.6% in total consumption. For India, although the annual tea consumption growth was not as spectacular as that of China – at 2.51% – this level was considerably higher than the annual trend of 1.6% on average over the previous decade.

World trade in tea remained relatively unchanged at 1.55 million tonnes in 2006, as increased shipments from Sri Lanka, India and Viet Nam offset major declines in Kenya and Indonesia, according to the report.

In the medium term, FAO projections for the next 10 years to 2017 indicate that world black tea production will grow at 1.9% annually to reach 3.1 million tonnes while world green tea production is expected to grow at a considerably faster rate of 4.5% annually to reach 1.57 million tonnes.

In terms of consumption, black tea is projected to reach 2.8 million tonnes, indicating an oversupply of about 300 000 tonnes as the stronger consumption growth in producing countries is unlikely to offset declines in traditional net import markets.

“The projections suggest that although supply will outstrip demand, the gap will be closer than it has never been. However for black tea there is a danger of supply overreacting to the current price hikes,” FAO tea expert Kaison Chang said. “Strategies must be launched to continue the improvement in demand. Opportunities for an expansion in consumption and improvement in prices exist in producing countries themselves as per capita consumption levels are relatively low.”

“The imposition of quality standards to segment the world tea markets should also be exploited further. Even the impact of imposing a minimum quality standard as a means of improving the quality of tea traded internationally, would by default, reduce the quantity of tea in the world market and improve prices, at least in the short to medium terms,” Chang also said.

The Global Dubai Tea Forum is a biennial event which includes an exhibition space. It attracts a broad range of representatives from across the global tea industry. The focus is on sharing industry-specific knowledge and best practices for improving tea production and marketing worldwide.

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6. BIG RISE IN WORLD CEREAL PRODUCTION SEEN, BUT PRICES REMAIN HIGH

13 February 2008, Rome — Early prospects point to the possibility of a significant increase in world cereal production in 2008, but international prices of most cereals remain at record high levels and some are still on the increase, FAO said today.

The forecast increase in production follows expansion of winter grain plantings and good weather among major producers in Europe and in the United States, coupled with a generally satisfactory outlook elsewhere, according to FAO’s latest Crop Prospects and Food Situation report.

With dwindling stocks, continuing strong demand for cereals is keeping upward pressure on international prices, despite a record world harvest last season, the report said. International wheat prices in January 2008 were 83% up from a year earlier. Although prices are high, total world trade in cereals is expected to peak in 2007/08, driven in great part by a sharp rise in demand for coarse grains, especially for feed use in the European Union, according the report.

Cereal imports for all Low-Income Food-Deficit countries in 2007/08 are forecast to decline by about 2% in volume, but as a result of soaring international cereal prices and freight rates, their cereal import bill is projected to rise by 35% for the second consecutive year. An even higher increase is anticipated for Africa. Prices of basic foods have also increased in many countries worldwide, affecting the vulnerable populations most, the report said.

In order to limit the impact of rising cereal prices on domestic food consumption, governments from both cereal importing and exporting countries have taken a range of policy measures, including lowering import tariffs, raising food subsidies, and banning or imposing duties on basic food exports.

“High food prices and market uncertainties have become major global concerns, and wide access to up-to-date information and analysis is becoming critical,” said Henri Josserand of FAO’s Global Information and Early Warning system. To address this need for information and facilitate analysis on current developments in world food markets, FAO today announced the launch of a new web portal bringing together relevant FAO studies and data on the world food situation.

In North Africa, early prospects for the 2008 winter cereal crops are mixed, but in Southern Africa the overall outlook is satisfactory, despite severe localized floods. In several countries of Eastern Africa, another bumper cereal crop was gathered in 2007, but poor secondary crops are expected in Kenya and Somalia, according to the report. In Asia, early indications point to a 2008 aggregate wheat crop around last year’s record level.

Overall prospects for the 2008 maize crop are satisfactory in South America, although the outlook remains uncertain in Argentina. Heavy rains have caused severe flooding in Mozambique, Zimbabwe, Zambia and Malawi. Farmers in affected areas are in urgent need of seeds and other inputs for replanting during what is left of the main cropping season, which runs from October to April, and to prepare for the next planting season.

FAO and its humanitarian partners yesterday launched an appeal for $87 million for emergency assistance to flood-affected populations in the four countries. Of this, over $9 million will support FAO’s agricultural relief activities aimed at improving food security in flood-hit regions.

In Bolivia, severe floods have adversely affected over 42 000 families, who are in need of emergency humanitarian assistance, with numbers on the increase. Large cropped areas have been partially or totally lost.

Exceptionally low temperatures in several central Asian countries, in particular China, Mongolia, Afghanistan and Tajikistan, have caused human casualties and resulted in crop and livestock losses. Worldwide, 36 countries are currently facing food crises, according to the report.

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7. U.N. RIGHTS EXPERTS WELCOME AUSTRALIA’S APOLOGY TO INDIGENOUS PEOPLES

New York, Feb 18 2008 — A group of independent United Nations human rights experts have welcomed Australia’s recent apology to its indigenous peoples for the pain and indignity they endured under the Government’s past laws and policies. The apology, made in a speech delivered by Prime Minister Kevin Rudd at the Federal Parliament on 13 February, “will strengthen the moral fabric of the country and reinforce the Aboriginal contribution to Australian society,” the experts said in a statement issued today in Geneva.

“We are specially moved by the apology offered to the members of the Stolen Generation and their families, victims of a deliberate policy of assimilation of the Aboriginal culture that contradicted the basic human rights principles of equality and dignity,” the group added.

“Australia’s efforts to acknowledge historical injustices and to promote reconciliation set an example of how to enhance harmonious and cooperative relationships between indigenous peoples and States, in the spirit of the UN Declaration on the Rights of Indigenous Peoples.”

In carrying out measures to protect and promote the rights of Aboriginal peoples, the experts encouraged the Government to examine the recommendations made by several Special Rapporteurs who visited the country in recent years.