Asia Travel Re:Set #17 – Surge or Slowdown?: What's Next for Travel & Tourism Infrastructure in South East Asia - Part 1
Asia Travel Re:Set #17 – Surge or Slowdown?: What's Next for Travel & Tourism Infrastructure in South East Asia - Part 1
“Slightly bigger than the combined size of Disneyland and Disney California.”
Hello. Welcome to Asia Travel Re:Set
Steering clear of Travel Bubbles and Vaccine Tourism, this week’s report turns a little more constructive.
During Tuesday’s excellent PATA webinar, International Visitor Arrivals into Asia Pacific in 2020 and Expectations for 2021, Prof. John Koldowski, asked this question:
“Has anyone even started to think about how unemployment will affect a destination's travel source markets?”
Beyond impacting outbound demand, higher pandemic-related unemployment (and lower incomes among workers retaining their jobs or transferring to the ride-share economy), will impact domestic consumer spending and travel flows.
This partly explains why South East Asian governments are reluctant to shelve big infrastructure projects that create employment now, and hope to generate economic benefits in future.
It’s not quite that simple.
Government borrowing is reaching record levels. Although interest rates are low and lowering - Indonesia and the Philippines cut rates this week - the cost of stimulus budgets, vaccine acquisitions and debt interest will spread spending extremely thin.
So there’s every chance that expansive transport and travel developments - several of which were signed and funded under China’s Belt & Road infrastructure programme - will be delayed, or shunted into the long grass.
Or will they?
One of the contradictions of COVID-19 in South East Asia is a proliferation of shuttered shop lots, hotels, bars and cafes, while others are taking the opportunity to undergo expansive renovations and refurbishments. Meanwhile, giant construction sites continue to build new apartment towers and mixed-used developments.
With international travel mostly on pause, new infrastructure projects are still being announced.
Among those given a green light this week were a new airport in Vietnam, a “bigger than Disneyland” themed resort in Cambodia, and a cross-sea bridge in Malaysia.
So, today’s edition is the first of a 2-part scan of South East Asia’s airports, railways, highways and mega-resorts being planned, constructed or, in some cases, delayed.
It’s not an exhaustive list - but a snapshot of how South East Asia is taking its cues from China, and forging ahead - even in these constrained times - with a “Build, and they will come” philosophy.
Up today are Brunei, Cambodia, Indonesia, Laos and Malaysia. Next week, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Thanks for being onboard.
Gary
Each Sunday, Gary Bowerman charts the week’s key developments for travel economies across Asia Pacific. If you are enjoying this issue so far, please feel free to…
The Sunday Itinerary
- DashBoard
A Low-Scoring Data Set
- QuoteBoard
Air Travel Bubble Delay, Cambodia, Thailand
- Surge or Slowdown?: What’s Next for Travel & Tourism Infrastructure in South East Asia - Part 1
Setting the Scene: South East Asia’s Travel Outlook
Brunei: Birth of a Mega-Bridge
Cambodia: An Outsized Resort, Casinos & a ‘Luxury’ Airport
Indonesia: 5 ‘Super Priority’ Destinations, High-Speed Rail & 2032 Olympics
Laos: Chinese-Funded High-Speed Rail and a National Highway
Malaysia: A Terminated Port, Uncertain Railways and a Cross-Sea Bridge
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DashBoard
A Low-Scoring Data Set
19%: Singapore Airlines Group increased its capacity forecast at end of January 2021, from 16% (of the pre-COVID level). (Singapore Airlines)
15: The countries in Asia Pacific that signed the RCEP (10 ASEAN members, plus China, Japan, South Korea, Australia & New Zealand). (ASEAN)
8: Number of cities in ASEAN from which Jetstar Asia passengers will be able to transit at Singapore Changi from 1 December. (Jetstar Asia)
6: The countries represented at this week’s Vietnam International Travel Mart in Hanoi, down from 27 in 2019. (Nhan Dan Online)
3.1%: Annual contribution of the air transport sector to the GDP of Asia Pacific. (Association of Asia Pacific Airlines)
QuoteBoard
You heard it here…
"This is a sober reminder that the COVID-19 virus is still with us, and even as we fight to regain our normal lives, the journey will be full of ups and downs."
Ong Ye Kung, Singapore’s Minister of Transport, on the postponement of the Singapore-Hong Kong Air Travel Bubble (Straits Times)
“A technical team from China is coming in December to help us carry out our plans for the closing and opening ceremonies [of the 2023 South East Asian Games].”
Vath Chamroeun, Secretary General, National Olympic Committee of Cambodia (Khmer Times)
“The new Special Tourist Visa was and is completely useless. As long as there is still a quarantine and a lot of bureaucracy to be done, the tourists will not return.”
Christian Stoeckli, General Manager of Diethelm Travel Thailand (TTG Asia)
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Setting the Scene: South East Asia’s Travel Outlook
If you glean only one thing from this week’s report, here’s a stat deck that highlights why governments in the 10 ASEAN countries - in many cases with the support of China - will continue to invest in transport infrastructure.
Driving new growth in jobs, tourism and trade will be a vital to rebuild economic growth across the next decade - and beyond.
In 2019:
Around 140 million visitors arrived in the 10 countries of South East Asia - nearly double the 70.5 million in 2010.
The UNWTO noted that South East Asia was the world’s leading growth region for visitor arrivals, up 7.8% on 2018.
In 2020:
25.1 million international visitor arrivals are predicted into South East Asia according to the Pacific Asia Travel Association (PATA).
In 2021:
The ‘best case’ scenario at present is 28.8 million arrivals, rising rapidly to reach 141.9 million in 2023, according to PATA.
Brunei
The Sultanate of Brunei, which counts a population of just 460,000, assumed the rotating chairmanship of ASEAN this week from Vietnam. It last recorded a COVID-19 (imported) infection on 22 October.
Opened in March, the 30km-long Temburong Bridge is the largest infrastructure project in Brunei’s history, and South East Asia’s longest ocean-span bridge. Described as “a new national landmark,” it spans Brunei Bay and links the Bruneian capital, Bandar Seri Begawan, with the beautiful Temburong region.
Built by China State Construction Engineering, the bridge creates a customs-free road link between Brunei’s 2 land masses, which are separated by Malaysia’s Sarawak state.
Temburong is located in the easternmost district of Brunei. Its largely untapped gem is Ulu Temburong National Park, a 50,000-hectare tract of tropical rainforest described by Brunei Tourism as “The crown jewel of Brunei’s green landscapes.”
The bridge is expected to catalyse investment in the Temburong region, and support tourism growth, once Brunei reopens its borders.
Cambodia
Cambodia’s current infrastructure paradox spans an army of “crack gardeners” deployed to tackle the trees and weeds strangling the largely tourist-free ancient Khmer ruins of Angkor Wat to the development of a Siem Reap mega-resort and a self-appointed 'luxury airport.'
This week, the National Assembly approved the long-discussed new Law on the Management of Integrated Resorts and Commercial Gambling. Ostensibly designed to regulate commercial gambling, the objective is to stimulate investment into new Singapore or Macau-style ‘integrated’ resorts - which combine casino gaming with luxury hotels, dining, retail and entertainment.
Meanwhile, NagaCorp - which owns and operates Phnom Penh’s sole casino resort, NagaWorld - confirmed plans for a “non-gaming resort” in Siem Reap. The Angkor Lake of Wonder resort is scheduled to be completed in 2025, and will feature hotels, a water park, MICE facilities, dining, shopping and cultural attractions.
According to the official press release:
“The Angkor Lake of Wonder resort has a land area of about 75 hectares, slightly bigger than the combined size of Disneyland and Disney California.”
NagaCorp plans to co-promote its NagaWorld Phnom Penh and the Angkor Lake of Wonder resorts and is looking at transport service upgrades:
“The Group shall implement a number of strategies to connect Siem Reap and Phnom Penh via road, air and the Mekong River.”
As reported in Issue #12, the almost completed USD3.5 billion Dara Sakor International Airport in Koh Kong province is scheduled to open in mid-2021.
Located in southwestern Cambodia, near the Gulf of Thailand, it will be the air gateway to a multi-billion-dollar tourism and casino resort and a cruise terminal.
Funded and developed by the Tianjin-based Union Development Group under a 99-year lease, Dara Sakor claims to count the longest runway in Cambodia. Although an international airport, it will operate principally for charter and so-called ‘special’ flights for “high-class tourists” - most likely from China.
Dara Sakor will also serve as a transit point for charter travellers en route to destinations such as Siem Reap and Sihanoukville.
Continuing the China theme, this week Cambodia unveiled more plans for hosting the 2023 South East Asia Games - and attracting visitors from across the region. The centrepiece SEA Games venue will be a new 55,000-seat stadium in Phnom Penh built and financed by - you guessed it - China.
In addition, Khmer Times reports that:
“A technical team from China is coming in December to help us carry out our plans for the closing and opening ceremonies.”
Indonesia
In August, Indonesia’s government allocated IDR414 trillion for infrastructure development, including transport, tourism and telecommunications projects.
Among the designated ‘national strategic projects’ are 5 “super priority” tourism infrastructure build-outs in Labuan Bajo, Borobudur, Likupang, Lake Toba and Mandalika. This represented a slimming down of the previous, more ambitious, plan to build “10 new Balis”.
The most controversial of these 5 ‘super priorities’ is the so-called Jurassic Park development on Rinca Island, Labuan Bajo - home to the famous Komodo dragons, the world’s largest lizard species - which has drawn widespread criticism from conservation groups. The Komodo National Park is a UNESCO World Heritage Site.
The USD6 billion Jakarta-Bandung high-speed railway is a flagship of Indonesian President Widodo’s multi-billion dollar infrastructure programme, and a signature development of China’s Belt & Road initiative in South East Asia.
Rubber stamped in 2017, the 142-kilometre railway is being built by a consortium of state-owned Indonesian and Chinese companies, including China Railway International and China Railway Engineering Corp.
Once operational, passengers will be able to travel between Indonesia’s current capital and its third-largest city at up to 350k/ph, with a journey time of 40 minutes. However, the project – which is scheduled for completion in 2021 – has been beset by delays. It is now slated for completion in late 2022 or early 2023.
In February, proposals were revealed to build a 760km “semi-high-speed railway” from Jakarta-Surabaya, in partnership with a consortium from Japan. Mystery continues to surround this project, amid counter claims that the original Jakarta-Bandung high-speed railway may itself be extended to Surabaya.
Hosting major sports events also forms part of Indonesia’s economic expansion plans.
Earlier this month, President Joko Widodo confirmed that the government will prepare a “road map” for hosting the 2032 Olympic Games. The intention is to build entirely new sports event infrastructure in East Kelanatan province to showcase the relocation of Indonesia’s capital from Jakarta to the island of Borneo. The process to select the host city for the 2032 Olympics is expected to begin in 2023.
The capital relocation is, of course, Indonesia’s largest infrastructure project in history. Development of the 180,000-hectare new capital city is expected to continue. Funding of IDR256 trillion will be allocated over the next four years, and local media recently reported that the government is “finalising” the city’s design. The race is on to speed up the project by 2024, when President Widodo’s second term is completed.
Meanwhile, this week, the motor racing world was in enraptured by the under-construction MotoGP circuit in Mandalika, which is “set to be one of the fastest” in the world. Scheduled for completion in mid-2021, the racetrack site on the island of Lombok will feature “luxury hotels” and “leisure facilities.” The goal is to host the 2021 Indonesian MotoGP, but it remains an “unconfirmed” entry on the official 2021 race calendar.
Laos
One of 14 countries sharing a land border with China, the marquee infrastructure project in Laos is a product of geography.
Laos’s tourism economy lags behind its ASEAN counterparts. A small population, low urbanisation rate and a narrow economic base are compounded by slow progress in upgrading tourism facilities and highways and insufficient air routes.
Hence, the government - which, along with Cambodia, counts the closest relations with Beijing among ASEAN members - agreed to a high-speed railway connecting China’s southwest Yunnan province with destinations throughout Laos. China is, by some margin, the largest foreign investor in Laos.
Currently being developed by Chinese construction companies, the 414km China-Laos railway is scheduled for completion in 2021. Trains will run at speeds of up to 160kph.
This week, Laotian media reported the project is “88% complete”, but:
“The railway construction project is not without its fair share of challenges… some railway components, particularly rail bolts, have been stolen, while local people have constructed makeshift bridges across sections of the railway without permission.”
The longer term goal extends beyond Laos. Designed to boost overland trade and tourism between China and South East Asia, it is the first piece in a geo-strategic jigsaw that would create a Pan-ASEAN Railway.
Directly connected to China’s nationwide high-speed rail network, the new railway begins at the border post of Mahen (Boten). It will include stations at Luang Prabang, Vang Vieng and Phonhong en route to the terminal in the Laotian capital, Vientiane. The journey time from Kunming in Yunnan Province to Vientiane will be “half a day”.
Vientiane’s positioning beside the Thai border will enable the China-Laos railway to segue with Thailand’s own high-speed railway (more next week!) which will be built over the next decade.
From rail to road. As reported in Issue #5, a highway linking the Laotian capital Vientiane with the resort town of Vang Vieng (formerly infamous for its river tubing backpackers) will open in December.
This, week a new government report revealed that over 1 million visitors - 80% of which were international tourists - visited Vang Vieng during the past 5 years. It is planning for a major uplift over the next half-decade.
The 113km expressway has been constructed by Chinese investors, who will operate 95% of the road concession (with 5% owned by the government) on a 50-year lease.
A second phase of development will extend the highway to the Chinese border.
Malaysia
Malaysia’s stop-go infrastructure strategy is impacted by the pandemic and political turmoil. The country has had 3 governments in the past 30 months. Moreover, public debt is rising, with a borrowing cap of 55% of GDP recently raised to 60%.
The harbour-front development of residences, hotels, a port and entertainment venues in the historic city of Melaka (previously known as Malacca) involved sizeable land reclamation. Work was underway to carve out three brand new islands.
Environmental groups and local communities have long claimed the Melaka Gateway project was destabilising the coastal ecosystem. A legal counterclaim against the state government’s termination of the project may be pending.
Bridge building made news this week in East Malaysia, on the island of Borneo. A long-anticipated cross-sea bridge connecting the Malaysia state of Sabah with the duty free island/offshore financial services base of Labuan was given the go-ahead. Financed by a private-public sector partnership, the tender process will take one year.
The bridge will likely connect to the under-development, but severely delayed Pan-Borneo Highway. The 2,239km road link through the East Malaysian states of Sabah and Sarawak - large portions of which are being constructed across pristine areas of natural beauty - has faced innumerable delays. Scheduled for completion in 2022, that now looks a highly ambitious target given the government’s fiscal challenges.
The current status of Malaysia’s highest profile (potential) infrastructure project remains shrouded in mystery. Promulgated in 2010, the Kuala Lumpur-Singapore high-speed railway agreement was signed in 2016. However, in September 2018 - following his victory in Malaysia’s May 2018 election - Prime Minister Mahathir Mohamad negotiated for construction to be postponed until the end of 2020.
In early November, Malaysia’s current government under Prime Minister Muhyiddin Yassin, stated it wishes to resurrect the KL-Singapore high-speed rail project because it would "generate a positive multiplier effect on the national economy."
The Singapore-KL high-speed railway was scheduled to begin operations in January 2031. Discussions are ongoing.
A bilateral deal was struck in July, however, for a cross-border Rapid Transit rail link between the southern Malaysian city of Johor Bahru and Woodlands in Singapore. It’s due to begin operations in 2026.
Another long-running rail saga is the East Coast Rail Line (ECRL) - the nation’s largest Belt & Road-backed project, which is designed to revitaliseMalaysia’s under-developed eastern states.
Originally signed with China in 2016 to connect Port Klang with Kota Bharu, Prime Minister Mahathir re-negotiated the RM65.5 billion deal with China to reduce the cost and shorten the route.
In mid-February 2020, the then Transport Minister, Anthony Loke, said ECRL construction was 15% completed. However, Malaysia’s government changed once more, and recent reports suggested the original route plan may be reinstated.
2020 has been a hugely damaging year for Malaysia’s aviation sector, with its three airline groups, Malaysia Airlines, AirAsia and Malindo, struggling to survive.
Malaysia is embarking on a study to produce the National Airports Strategic Plan. Ahead of the study, the slated expansion of Penang International Airport was postponed. Scheduled to begin in June for completion in 2024, the upgrade would have almost doubled annual capacity from 5.5 million to 12 million passengers.
Penang International Airport’s future positioning is also clouded by a prospective new privately funded international airport at Kulim in the northern state of Kedah. Kulim International Airport was approved in principle by the Transport Ministry on 27 October subject to the findings of the National Airports Strategic Plan.
On The South East Asia Travel Show podcast this week, we pondered where Asia Pacific’s tourism sector turns next after Thailand’s Special Tourist Visa and the (now postponed) Hong Kong-Singapore Air Travel Bubble.
We also reported the latest from Australia and New Zealand, where hopes for a 2-way bubble in 2020 are receding - and a ‘private’ travel bubble between Qatar and Maldives.
Plus, the long-mooted ASEAN Travel Corridor. Will it ever happen?
Listen to this week’s podcast HERE
And, that’s a wrap for Issue 17.
Until next Sunday, you can catch me on Twitter and LinkedIn, and at Check-in Asia.
Feel free to send thoughts and feedback to gary@check-in.asia
Speak soon,
Gary