New freight train between Selangor and Yunnan to boost Malaysia-China trade

This is set to boost trade between the countries and provide businesses with access to new markets as part of China’s Belt and Road Initiative.

This new freight service will build on existing trade routes via land, by connecting Yunnan’s rail hub in Kunming to Malaysia, aimed at enhancing trade in vegetables and halal products.

According to an invitation for the launch seen by ST, the “Kunming-Malaysia Railway Freight Service” is meant to enhance regional interconnectivity and deepen international cooperation.

On Aug 17, China will conduct a trial service of the freight train, which will begin from Kunming and pass through neighbouring countries Laos and Thailand, go through Padang Besar in Perlis – near the Malaysia-Thailand border – and continue to Petaling Jaya in Selangor, which is the most industrialised state in Malaysia.

The journey will take about 10 days, Malaysia’s Deputy Prime Minister Zahid Hamidi told ST.

This route is significantly faster than by sea, potentially reducing transit time by more than half. It takes more than 20 days to ship goods by sea between Kunming and Selangor.

The trial freight train will pave the way for future rail services and is anticipated to be fully operational by September.

“This initiative not only strengthens the existing cooperation in the rail transport sector but also opens the door to future collaborations, potentially even in the development of high-speed rail projects between China and Malaysia for passengers,” said Zahid.

Zahid said that China State Railway Group Corp (China Railway) will be the operator for this route and that Malaysian railway company Keretapi Tanah Melayu (KTM) should take this opportunity to establish its cooperation with China Railway.

A source told ST that both China Railway and KTM are likely to cooperate as operators for the new cargo rail route.

KTM declined to respond to ST’s queries on plans for the new freight train service, while China’s embassy in Malaysia was unreachable.

China has been ramping up new rail links bridging its southern provinces with countries in ASEAN, which is its largest trading partner. In 2023, it pledged to push Yunnan – which borders Myanmar, Vietnam and Laos – as a gateway to the vast market of Southeast Asian countries and to forge closer ties with the region.

In June 2024, representatives from Malaysia, China, Laos and Thailand launched the Asean Express cargo train, which is operated by KTM. The weekly service connects Selangor to the Chongqing municipality in south-west China, via Thailand and Laos.

The first Asean Express train carried electrical appliances and agricultural products. KTM said in August 2022 that the Asean Express train will be the main choice for importers of electrical and electronic goods because of its lower cost.

China has been Malaysia’s top trading partner for the past 15 years, with total trade in 2023 valued at RM450.84 billion.

In the first half of 2024, Malaysia’s bilateral trade volume with China rose by more than 10 per cent, surpassing US$100 billion, as a result of the Belt and Road Initiative, said Chinese Embassy Minister Counsellor Lin Shiguang in July.

Zahid said: “In line with the 50-year diplomatic ties between Malaysia and China this year, Malaysia aims to export halal products produced by SMEs with lower logistics cost, while China plans to export its fresh vegetables from Yunnan to Malaysia.”

China is emerging as a key consumer market for Malaysia’s halal exports such as durians and birds’ nests, said Malaysia External Trade Development Corp deputy chief executive Abu Bakar Yusof in July.

Malaysia’s halal exports are expected to reach RM65 billion by 2025 from RM54 billion in 2023.

As China expands new trade routes to Malaysia, economists say that small and medium-sized enterprises (SMEs) in Malaysia will benefit from greater access to regional markets involved in the rail link at a lower cost.

Economists expect logistics costs to be reduced by 20 %, similar to the savings Malaysian Transport Minister Anthony Loke said the Asean Express achieved.

Shankaran Nambiar, a fellow at think-tank Institut Masa Depan Malaysia, said: “SMEs such as food manufacturers in Malaysia will find these additional routes faster and less expensive due to lower logistics costs. We will see bilateral trade increasing by at least 5 per cent annually between Malaysia and China with new cargo rail links.”

Zunaira Saieed

The Straits Times

Asia News Network