This is a 120km section in Cambodia of the Pan-Asian railroad, stretching from the capital, Phnom Penh, to Touk Meas, near the Vietnam border.

Soon the Cambodian branch will run to the Thai border, down to Sihanoukville, the country's main port, and up to the Vietnamese capital, Hanoi. Overall, the new rail section will stretch 650km. The Australian government is providing $22 million of the $145m Cambodian part of the project.

Australian logistics giant Toll Holdings has been awarded a 30-year contract to operate and maintain the Cambodian railway system, where recently home-made trucks have been ferrying people and freight along war-ravaged train lines.

Kunio Senga, the Asian Development Bank's Southeast Asia head, said: "We are on the cusp of a contiguous Iron Silk Road stretching from Singapore to Scotland. This possibility has been talked about for decades, but today the dream has finally taken a big step towards becoming reality."

Once Thailand, Cambodia and Vietnam become connected by rail, they will also be linked to the southwestern Chinese city of Kunming, the capital of Yunnan province, and then via Bangkok down the Malay Peninsula to Singapore.

China has already completed its sections of three rail links that extend from Kunming to Vietnam, Laos and Burma.

Four years ago, China signed an agreement with 17 other Asian countries to develop an 81,000km network.

From Kunming, the Iron Silk Road then heads north, reaching Europe through two routes - one via Urumqi, capital of China's Xinjiang, and then the central Asian republics, and the other via northeast China - with a spur route to the Korean peninsula and then Russia.

The boom in railways in Asia is being led by China, which is in the middle of a $300 billion investment in the sector. China already has 7000km of high-speed rail - with speeds above 200km/h - and plans to have a network of 16,000km of high-speed tracks in 10 years.

Rail has been the weak link in Asian infrastructure. But as intra-Asian trade grows rapidly, and as fuel costs keep rising, reliable rail freight routes are becoming vital.

The Australian - October 25, 2010

All aboard the Pan-Asian railway

Two thousand years ago the world's most famous trade route was being forged between the heart of Asia and the doorstep of Europe. At its peak, southern strands of the grand Silk Road extended into Southeast Asia, forming a transcontinental trade route from the Mekong River to the Mediterranean Sea.

Asia is once again emerging as a global economic force, but infrastructure bottlenecks are choking the region's development. Asia desperately needs new silk roads – road, rail, air and water transport networks – to fully unleash its economic capacity.

Railways are the weak link in Asia's connectivity puzzle. The region's rail networks actually contracted between 1996 and 2005, with many rail lines falling into disrepair.

In Cambodia, homemade bamboo lorries still zip along parts of the country's war-ravaged rail line, which ceased ferrying passengers and cargo between Bangkok and Phnom Penh half a century ago. But the situation is rapidly changing.

Today in Cambodia, the first leg of a modern railway system has become operational. The country's new railway should be complete by 2013, and Cambodia has already entered into an agreement with Viet Nam to construct a rail network between the two Mekong nations.

Once this final rail link is finished – possibly as soon as 2015 – a contiguous Iron Silk Road will stretch from Singapore to Scotland, bringing with it the potential for new levels of prosperity for those living along the route.

All over Asia, railways are making a comeback. Nowhere is this more evident than in the People's Republic of China, which recently approved the equivalent of US$292 billion in new railway investments.

Rail is a more cost-effective way of transporting heavy cargo than roads, particularly in an age of high fuel prices, and railways are less carbon-intensive and more environmentally friendly than other overland alternatives. Modern railways also bolster countries' economies by stimulating foreign direct investment inflows.

Railways are particularly a boon for inland areas and landlocked countries, where transport costs can run 50 per cent higher than coastal areas. As land and labour costs push production centres in Asia further inland, railways present an ever-growing value, and a pathway out of isolation for many remote communities.

There are still many impediments that may prevent the Pan-Asian railway from realising its full promise. One challenge is rooted in hardware. The People's Republic of China utilises standard gauge rail, while other Southeast Asian nations utilize one-metre gauge. These gauge breaks cause transport delays, though this situation is mitigated by the fact that the breaks mostly occur at border points, where trains must stop for customs inspections.

The greatest challenges extend far beyond nuts and bolts. Renowned industrialist Warren Buffet has noted that, "there's nothing... better than a long, long train", and there is certainly good money to be made by investing in rail freight and passenger services operations, rolling stock facilities, and infrastructure maintenance in Asia. For these investment opportunities to provide good value for the private sector, however, more robust, reliable and transparent rules, regulations, and procedures must be put in place. To make rail networks truly cost-effective, border procedures also need to be streamlined, tariff and freight rates need to be lowered, and transport and logistics networks need to be better integrated.

Regrettably, this ‘soft' sector development in Asia is not keeping pace with the rapid growth of the region's infrastructure.

Forging agreements on these measures is no easy undertaking, particularly in a world still smarting from the sting of the global financial crisis. The magnitude of the challenge should not dissuade Asian nations from action, however, as there is much to be gained from closer integration and better cooperation for each and every country along the Pan-Asian railway. For ASEAN nations, better connectivity means better access, and therefore a greater ability to compete in leading markets from the People's Republic China to the Eurozone. Conversely, stronger transport and economic linkages provide other nations with greater access to ASEAN's growing market – 500 million people strong and with a combined GDP of some $1.5 trillion, placing it amongst the world's ten largest economies if viewed as a region.

Much like the Silk Road of yesteryear, closer connectivity also provides new conduits for better understanding amongst people and nations. If these Asian neighbours have already found a way to move beyond their conflicts of the past, these current challenges should be imminently surmountable.

Still, it will take dedication and good will on the part of all to help the Iron Silk Road make good on its potential. To paraphrase the illustrious Robert Frost, there are many promises to keep, and miles to go before we sleep. So let us begin – full steam ahead.

By Kunio Senga - Vietnam News - October 25, 2010

Kunio Senga is the Director General of the Asian Development Bank's Southeast Asia Department