Although Cambodia’s land area covers approximately 181,035 square kilometers, the country has only two railway lines, with a total combined length of 650 kilometers. Until the late 2000s, Cambodia’s rail network was in extremely poor condition, as a result of prolonged civil conflict and decades of neglect.
Photo credit: Paul Arp, 2012. Location: Kampot province.
http://www.flickr.com/photos/slapers/6659925405/
Recent initiatives by the government and development partners to revitalize the railways have raised the prospect of stronger economic growth and closer trade ties between Cambodia and countries in the Southeast Asia region and beyond. This briefing provides an overview of the railway sector in Cambodia, focusing on its recent development, the various actors involved, the potential benefits and challenges that this development faces.
Content
Background on Cambodia’s Railway
Legal Framework for Cambodia’s Railway Systems
Rehabilitation
Expansion
Actors involved in Cambodia’s railway sector
Development partners
Private sector
Prospects for the Future
Background on Cambodia’s Railway
Cambodia’s first rail line was built by the French colonial authority in the 1930s. This “northern” track is 386 km long and connects Phnom Penh with Poi Pet town in Banteay Meanchey province on the Thai border, via Pursat and Battambang. In 1942 the final part of this line was linked with Thailand’s railway network, although security concerns and political standoffs between Thailand and Cambodia in the late 1940s cut short the international service. The second line, known as the “southern” line, was constructed with the assistance of Australia, France, West Germany and China between 1965 and 1969. This line stretches 266 km, and runs south from Phnom Penh to the seaport of Sihanouk Ville, passing through Takeo and Kampot[1].
Until 1969, the Cambodian railway system was in good condition, and the amount of rail transport reached its peak just before the beginning of the civil war[2]. The war, which started in 1970, in addition to interrupting rail operations, caused considerable damage to the rail network. The 48 km section of the line that linked Sisophon to the Thai-Cambodian border, for example, was completely destroyed during the war[3].
Subsequent decades of neglect have led to further deterioration of the rail infrastructure. In the 1980s the rail service resumed limited operations, but by the early 1990s there was a rapid increase in rail traffic. This was partly due to the improving security and economic situation, and partly due to a lack of better transport alternatives[4]. However, by 2008 passenger service of both lines ceased. Freight service continued, but only on the Southern line and with minimal traffic. The worsening state of the railways made rail services increasingly slow and dangerous, and major improvements in road infrastructures gave rise to more reliable alternative carrier services[5].
In its National Strategic Development Plan, the government noted that the Cambodia’s railway system is “in dire need of rehabilitation and upgradation[sic]”[6]. Restoring and expanding the rail network have been listed as one of its top development priorities[7]. The government argues that rehabilitating the network will cut down transportation costs and reduce the rate of traffic accidents. It also states that it will promote trade between Cambodia, its neighbors, and other countries in the region, and in the process contribute to economic growth and poverty reduction in Cambodia[8].
Legal Framework for Cambodia’s Railway Systems
Initially, the main institution responsible for Cambodia’s railways was the state-owned public enterprise Royal Railway of Cambodia (RCC) which was established in 2002[9]. A combination of a lack of funds, poor maintenance of the railroad, train delays and cancellations resulted in the Royal Government of Cambodia granting Australian company Toll Holdings a 30-year concession agreement to rehabilitate the entire railway network in 2009[10]. At this point the legal status of the Royal Railway of Cambodia was terminated[11] and a new Department of Railway was created within the Ministry of Public Works and Transport (MPWT)[12].
The Department of Railway was given the responsibility of modernizing the railway communication network, maintenance, repair and development of all infrastructures related to the railroad. The department is also tasked with developing standards and guidelines for security and operation of the railway.
For example, the Law on Concessions (2007) requires any railway project to have an infrastructure concession.[13] Article 11 of the Sub-decree on the Functioning of the Council for Development Cambodia (CDC) provides that all investments that are worth over US$50 million and may have a negative effect on the environment must be approved by the CDC[14]. Under the Law on Protection and Natural Resource Management (1996) environmental impacts assessments must be carried out on every public or private project[15] inclusive of proper consultation with affected communities[16].
In relation to resettlement issues, Article 44 of the Cambodian Constitution and Article 5 of the Cambodia’s 2001 Land Law protect land ownership and require that a person should only be deprived of their land if it is in a public interest and that just and fair compensation is provided. The Law on Expropriation should be followed if people do need to be moved for the railway. Article 23 of Cambodia’s Land Law 2001 requires developers to respect and not interfere with the rights of indigenous communities which may also have a bearing on railway development in Cambodia.
Rehabilitation
In 2006, a project to rehabilitate the dilapidated railway was launched, with the total cost estimated to be at just over US$143 million. A significant share of funding for the project came from the Asian Development Bank, the Government of Australia, and OPEC Fund for International Development, who agreed to provide US$84 million, US$ 22.96 million and US$ 13 million respectively. The Cambodian government was to contribute US$20.3 million[17]. The project aimed to restore the existing 650km long tracks, re-establish connection with Thailand’s railway network and develop a major railway facility in Phnom Penh[18]. TSO-AS & Nawarath, a French-Thai joint venture, was contracted to carry out the rehabilitation work[19]. Although scheduled to be completed by the end of 2013[20], cost overruns and resettlement problems have significantly slowed down the progress of the project[21]. Heavy flooding[22], poor construction job, and disputes among contractors also reportedly contributed to the project’s delay[23]. Despite the slow progress, Asian Development Bank announced in March 2013 that the 266 km long southern track was fully rehabilitated[24]. In December 2012, Toll Royal Railway, a company holding a 30-year rail operation license, announced the inauguration of rail services on the southern line. But rail services apparently would not start until eight months later, when the company announced in August 2013 that rice was being shipped for the first time from Phnom Penh to Sihanoukville[25]. Work on the Northern line has also suffered significant delays[26]. Just 63 Km of the Northern track was restored by late August 2013. This included the 41 km missing link between Sisophon and Poipet town. The state-owned newspaper Agence Kampuchea Press (AKP) reported in the same month that the Northern line project needs an additional US$75 to US$125 to be completed[27].
Rehabilitation Issues
In a briefing paper, ADB estimated that the project would affect approximately 4,000 families living alongside the tracks, a quarter of which would have to be relocated to make way for the project[28]. As part of the funding agreement, the Cambodian government is responsible for the resettlement process, ensuring that the affected households will be fairly compensated and “that no affected person will be worse off as a result of the railway project”[29].
Implementation of the resettlement by the government, however, has drawn concerns from human rights NGOs that have been monitoring the process since the start of the project. In 2010, a coalition of NGOs issued a statement highlighting serious issues facing communities displaced by the rehabilitation, such as a lack of access to clean water, health care and electricity[30]. In 2011, Sahmakum Teang Tnaut (STT), a land rights NGO, released results of its study which found that many affected households received inadequate compensation. Contrary to the pledge by ADB, AusAID and the Cambodian government to improve the livelihoods of the impacted families, the study concluded that the project has actually made their lives harder[31]. A two-year study, conducted between 2010 and 2011, by international NGO Bridges Across Borders Cambodia (BABC) arrived at a similar conclusion: that the project has infringed the rights of many affected families and that it was impoverishing them[32]. In October 2012, through two land rights NGOs, Equitable Cambodia (EC) and Inclusive Development International (IDI), thirty families displaced by the project filed a complaint against the Australian government, alleging that the project had seriously violated their rights[33]. In May 2013, 90 families, whose homes were wholly or partly demolished to accommodate the project, petitioned the ADB and the government, arguing that they were unfairly compensated[34].
Responding to the concerns, AusAid announced in March 2013 that due to relocation issues, it was allocating a small share of its funding to support families displaced by the project[35]. On the government side, however, the growing criticism was apparently seen as an attempt to interrupt the rehabilitation project. In August 2011, for example, the government issued a warning to the monitoring NGOs, requesting them to “readjust” their activities. In the same year, STT was ordered to suspend its operation for almost six months[36]. It should be noted that concerns related to the resettlement process came not only from civil society groups. A 2013 independent review of the resettlement commissioned by ADB, the project’s main financer, found that many relocated families were in huge debt incurred through the resettlement process. The review suggested that the families were at a great risk of losing their home by selling their new plots of land to settle the debt[37]. In February 2014, ADB publicly admitted that it failed to properly compensate families affected by the project[38].
Expansion
In addition to the current rehabilitation project, the government has put forward a number of expansion plans for Cambodian railways. The 2012 annual report published by the MPWT listed five new rail lines that the government intends to construct in the future[39]. These include:
A new rail line (Batdeng-Loc Ninh line) that will link Batdeng, in Kampong Speu, with Loc Ninh, a border town between Cambodia and Vietnam;
A new track (Preah Vihear-Sihanouk Ville line) that will connect Preah Vihear with Sihanouk Ville, via Kampong Thom, Skun, Batdeung and Phnom Penh.
According to the document, “the primary purpose of this line is to export mine particularly iron ore from mineral rich province of Preah Vihear to the world through Sihanouk Ville port”;
A new 105 km stretch of line that will run from Sisophon to Siem Reap; A 239 km long track that will connect Siem Reap with Skun through Kampong Thom; and
A 273 km long line that will run from Snuol to Lao P.D.R border, passing through Kratie province and Thalaborivat of Stung Treng province.
Aside from a brief mention in this annual report, detailed plans of the five projects are apparently not made available for the public. Xinhua, however, reported in July 2011 that a feasibility study of the Batdeng-Loc Ninh line on the Cambodian part was completed by a Chinese company[40]. The track, according to the report, will stretch 257km from Batdeng to Kratie on the Cambodia-Vietnam border. The cost of the construction was estimated to be at approximately US$686 million. A Vietnamese newspaper reported soon after that the government of China would provide US$500 million to fund the project[41]. But by June 2012, the Phnom Penh Post reported that the government was still seeking loans from China to finance the proposed development[42]. Again, the government has revealed little information about this potentially massive project, including who will be involved and when it is set to start.
The Batdeng-Loc Ninh railway project would, nonetheless, be tiny if compared to another proposed project: the Preah Vihear-Koh Kong railway and seaport development project, which was estimated to cost US$11 billion. If the project goes ahead as planned, it “will be the biggest development in Cambodia’s history”[43]. Like the proposed Batdeng-Loc Ninh railway line, most of the information concerning the project came from the media, while official information from the government is scant. The project, according to media reports, consists of several components, a major part of which would see Chinese companies build a 405 km long railway track, linking mineral-rich Preah Vihear with Kong Kong, via Kampong Thom, Kampong Chhnang and Kampong Speu. The main purpose of this rail line is to facilitate the transportation of raw materials from a steel plant in Rovieng, Preah Vihear province, to a seaport in Koh Kong. A feasibility study of the project has reportedly already been done by a Chinese company, although the Environmental Impact Assessment has not been conducted. Construction was reportedly set to commence in January 2013 and complete by 2017[44]. Other important details of the project remain obscure, and at the time of writing, actual work on the railway project has yet to start[45]. It should be noted that in the annual report of MPWT, the plan was to construct a rail line that will connect Preah Vihear with Sihanouk Ville, not Koh Kong. It is thus unclear if the plan has been revised or if this is another newly proposed rail line.
Actors involved in Cambodia’s railway sector
Aside from the government, several national and international bodies have been involved in the development of the post-war Cambodia’s railways.
Development partners
Development partners play a key role in providing financial and technical support to the ongoing project to rehabilitate the Cambodian rail system. As mentioned earlier, ADB, AusAID and OPEC Fund for International Development (OFID) have been the main financers of the project, whose funding come largely through loans. The government of Malaysia, meanwhile, provided a small amount of in-kind assistance in the form of used rails. On the technical side, ADB provided training to the Cambodian government on matters related to project procurement and implementation, and secured consultancy services for major aspects of the project, such as quality assurance, resettlement planning, socioeconomic impact assessment, and project performance monitoring. Both ADB and AusAid also monitor the implementation of the resettlement process[46].
Given the extremely vague nature of the proposed railway expansion projects, it is difficult to determine if any development partners are or will be involved in them. Media reports indicate that Chinese investors have been connected to a number of railway expansion projects, but it is not clear how these projects will be financed if they go ahead. It is also unclear whether ADB will continue to be a partner in the Cambodia’s railway expansion. What is clear is that ADB’s involvement is not only limited to railway rehabilitation in Cambodia. As part of its commitment to enhance economic growth in the Greater Mekong Sub-region[47], ADB has been actively supporting the improvement and expansion of railway networks in other countries across the region[48].
The Korean international Cooperation Agency (KOICA) is another development partner that has recently been involved in the Cambodian railway sector. While railway rebuilding and expansion are considered to be a top development priority, no master plan exists for railway development in Cambodia. With a view to fulfill this gap, a project to establish a comprehensive 30-year plan (2010-2040) for the development of the rail network was signed by the Cambodian government and KOICA in June 2011. The master plan, according to KOICA, will facilitate “efficient and systematic development” of the railway system in Cambodia.
Private sector
Private companies have also been involved in the recent Cambodian railway development, providing construction, renovation, operation and maintenance services.
TSO-AS & Nawarath is a contractor responsible for the civil works of the railway rehabilitation project, which include repairing and rebuilding both the Southern and the Northern lines. The company has subcontracted part of its construction package to Sino Pacific Construction Corp., a Vietnam-based company.
Toll Royal Railway, a joint venture between Australia-based Toll Holdings Limited and Cambodia’s conglomerate Royal Group, is in charge of operation and maintenance of the railway network, with the company holding a 30-year operational concession.
While the current rehabilitation project does not seem to involve any Chinese company, many Chinese construction firms were reportedly linked with proposed railway expansion projects. Chinese state owned firms China Railway Group, for example, was identified as a lead developer of the proposed Preah Vihear-Koh Kong railway project, a component of the massive proposed Preah Vihear-Koh Kong railway and seaport development project. China Railway Group has reportedly subcontracted parts of the construction to its subsidiary, the China Railway Major Bridge Engineering Co. Ltd. (MBEC). China Ocean Engineering Construction General Bureau (COEC), another Chinese firm, was awarded a contract to develop the Koh Kong seaport. Meanwhile, another proposed railway line linking Cambodia’s Batdeung town with Vietna’s Loc Ninh also reportedly involves several Chinese firms. These include, again, the China Railway Group, and its subsidiary the Third Railway Survey and Design Institute which, according to media reported, has already completed a feasibility study of the project on the Cambodian side. Aside from these, China Railway Siyuan Survey and Design Group Co. Ltd., a subsidiary of China Railway Construction Corporation has also been linked with a feasibility study of another proposed Kampong Thom-Preah Vihear-Stung Treng railway line[49].
Prospects for the Future
An improved railway system could bring substantial benefits to Cambodia. From an economic point of view, railway transport, particularly over long distance, is both cost and time saving. It is can be an efficient mode of transport as trains usually have a large carrying capacity. A fully functioning railway could benefit both private businesses and people, by providing better transport links and access to goods. It will also ease traffic congestions and protect the roads and highways from damage caused by heavy trucks and could reduce the rate of traffic accidents in Cambodia, which is currently alarmingly high. Railway development may also create job opportunities in the immediate and long term. From an environmental perspective, rail transport can improve air quality as trains will consume less fuel and emit less CO2 than the fleets of trucks currently responsible for transporting goods in Cambodia. There is also the potential for Cambodia’s railway to eventually link into the planned Greater Mekong Region railway network. This proposed regional transport connection links six countries: Cambodia, China, Laos, Myanmar, Thailand, and Viet Nam, and it is hoped that it will further improve trade activities between Cambodia and countries in the region.
While potential advantages brought about by rail development are numerous, there are also challenges associated with it. Railway development often involves relocation of communities to accommodate the projects. If not appropriately managed, the resettlement process could have significant negative impact on the lives of those displaced families. Inadequate compensation could lead to protests by affected people, which can result in disruption or delays to the project. Unfortunately, this seems to be the case with the current rail rehabilitation project in Cambodia, in which resettlement dissatisfaction brought protests and complaints from the impacted communities as well as delays to the project. Railway development could also pose dangers to the environment. Railways often span vast territory which may comprise agricultural lands, forest, rivers and other sensitive areas. Environmental impacts could be felt if the project is not properly studied, or if there are inadequate plans or mechanisms in place to minimize and mitigate potential impacts.
For rail development in Cambodia to be successful, it is important that the public as well as potential investors are well informed about it. This seems to be a challenge in Cambodia’s current context. Access to information concerning the proposed expansion projects discussed earlier is a problem facing the public and private investors, but also the involved government ministries. In multiple instances, it is the media that broke the news about new developments related to Cambodia’s railways, while the ministries appeared to have little knowledge of that. Without fixing, such a problem could slow down the implementation of the proposed development.
These challenges, needless to say, are not unsolvable, and given the government and development partner’s commitment to improve railway system in Cambodia, there is a high expectation that more attentions will be paid to these issues.
*This briefing was jointly written by ODC researchers Chunly Serey Vicheth and Kimberley Ogonda. Ogonda prepared the section on legal framework while Serey Vicheth contributed to the rest of the paper. Last update: April 2014.
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Ibid, and RGC. “Rectangular Strategy” for Growth, Employment, Equity and Efficiency Phase II.” Speech by Prime Minister Hun Sen at the First Cabinet Meeting of the Fourth Legislature of the National Assembly at the Office of the Council of Ministers Phnom Penh, 26 September 2008. Phnom Penh, 2008. Available at: http://www.cdc-crdb.gov.kh/cdc/aid_management/Rectangular%20Strategy%20-%20Phase%20II.pdf.
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Law on Concessions 2007, Article 5 (b),
Sub-decree #149 on the Organization and Functioning of the CDC_081003, Article 11.
Law on Protection and Natural Resource Management (1996), Article 6.
Ibid, Article 10.
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