ASEAN-China trade to receive a boost with Southern Transport Corridor: Chan Chun Sing

ASEAN-China trade to receive a boost with Southern Transport Corridor: Chan Chun Sing

Fruits, seafood, and Chinese medicinal herbs are examples of some goods which could flow more easily between western China and Southeast Asia once trade on the Southern Transport Corridor (STC) takes off. Linette Lim reports.

SINGAPORE: Fruits, seafood, and Chinese medicinal herbs are examples of some goods which could flow more easily between western China and Southeast Asia once trade on the Southern Transport Corridor (STC) takes off.

Jointly developed by Singapore and China under the Chongqing Connectivity Initiative G2G (government-to-government) project, the STC is a multimodal transport route linking Chongqing in western China to Singapore via rail and sea.

The STC will provide new opportunities for ASEAN companies to tap into growing demand in western China, said Singapore Trade and Industry Minister Chan Chun Sing on Tuesday (Aug 28).

He was speaking on the second and final day of the FutureChina Global Forum and Singapore Regional Business Forum in Singapore, where growing connectivity between China and Southeast Asia was a key focus.

Last year, bilateral trade between China and Southeast Asia reached a record high, totalling more than US$515 billion (S$701 billion).

Chongqing Mayor Tang Liangzhi, who was speaking at the forum, noted that the STC has already reduced travel time between western China and Southeast Asia by two-thirds.

ECONOMIES OF SCALE

Mr Chan added that the STC is an open platform, as having more users will expand its network, build economies of scale, and benefit all by reducing costs.

At a separate panel session in the afternoon, Mr Chan noted that it took Singapore "very long" to develop a new concept for partnering China on bilateral infrastructure projects.

He referred to the Chongqing Connectivity Initiative as a "breakthrough" which departed from previous approaches, as it focused on developing networks that yield economies of scale, such as railroads, rather than on a specific property such as an industrial park or a city.

"Once upon a time, when we go and build an industrial park in China, somebody will say, 'why not I build an industrial park next door and I will give it cheaper rate and compete with you'. So if the company comes to industrial park A, it won’t go to industrial park B. It is a zero-sum game in some sense," he said.

"We asked ourselves: 'How do we transcend this concept, whereby the more people coming to join you in your project, the better it is?'. That’s why we went on an open concept, whereby we’re trying to build a network rather than an industrial park or a city."

NEXT STEPS

Mr Chan also spoke on the next steps for the project, including streamlining customs processes, improving last-mile connectivity, and developing a strong network of regional distribution centres.

“With the cold chain (facilities) in place, we can also expect new types of goods that will be transported both North and South along the corridor," he said.

"What previously was impossible - the transport of perishable products from Southeast Asia into the inner western region of China - is now possible. What used to take three weeks, now will take one week and we continue to try to reduce this time even further."

According to Mr Teo Siong Seng, Pacific International Lines managing director, the STC can potentially connect Singapore and Southeast Asia with more than 50 countries and some 100 ports on China’s Belt and Road Initiative.

It can also serve as an alternative to conventional sea routes, said Kerry Logistics chairman George Yeo.  

“The traditional link to the Pearl River Delta is hard to replace, because it is very developed, logistics costs are cheap. But China wants to develop the Southern Transport Corridor because this will open up inland provinces which are otherwise cut off,” noted Mr Yeo.

Pacific International Lines and Kerry Logistics are investors of two Sino-Singapore joint venture companies formed to drive the development of the STC - the Sino-Singapore Chongqing Connectivity Solutions Company and the Sino-Singapore (Chongqing) Connectivity Solutions Multimodal Logistics Company.

The Chongqing Connectivity Initiative is also seen as an important part of China's drive to reduce the income disparity between its coastal and inland and Western regions. It does this by promoting greater trade in the regions and provinces of Guizhou, Guangxi and Gansu via Chongqing.

Source: CNA/ec(hm)

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