Opening address – 4th Annual
Modern Railways conference
Opening address to the 4th Annual Modern Railways conference by Conference Chairman, Howard Rosen
“The privilege falls to me to welcome you to the 4th Annual Modern Railways Conference here in Bali. It will be my pleasure to host you throughout what I believe will be a fascinating and highly stimulating conference. We have an immensely rich programme with diverse and accomplished speakers who will bring to you unique insights into various aspects of the rail industry and where it is going.
The unusual title to this event gives a clue as to where we will be going in the next three days. This is not just a conference about railways but we are meeting together to talk about modern railways. Because railways appeared earlier than motor cars and trucks Europeans, at least, have a fixed view that the auto industry is more modern than the rail sector. But this could not be further from the truth. The railways have become the most modern response to the key social, economic, congestion, environmental and safety issues you will all know well.
Transport is responsible for 23% of global CO2 emissions. As a result, both urban and interurban rail systems are now being built across the world at an unprecedented rate. Asia leads the way. Who would have thought that the Middle East with its vast reserves of oil, would now be a leading geographical region in the development of railways and yet, as a result of careful and perceptive strategic thinking, countries such as Saudi Arabia, the UAE and Oman as well as their sister GCC States as well as other Middle Eastern States are investing unprecedented amounts in the development of rail systems.
Singapore has just announced further investment in its metro system. Mumbai has just inaugurated its first metro line. China’s continuing commitment to rail was emphasised again last week when the 253 km line between Lhasa and Xigase was opened. Closer to us here, construction began last week on the first phase of a railway network on Sulawesi island – with over Km 2,000 of railways already announced.
In the last few years, technology has played an extraordinary role in the development of rolling stock and in the conceptualisation of rail networks. Induction powered and supercapacitor light rail systems are on the horizon. Variable bogie wagons are also now making transfers of freight and passengers between rail systems much more efficient. A new type specialist tanker wagon has recently been announced by one of the major players in that market.
The biggest problem is that we do not recognise, as an industry, what we have become. In many parts of the world we are still applying old, if I may say, statist approaches not just to the design and objectives of new railways but also towards the execution of those strategic objectives. In my view the first is right but the second is wrong.
It is clearly correct that governments have to be involved in setting the strategic agenda in the rail industry just as they do for the transport sector as a whole. Only government can look at transportation holistically and make those key decisions as to where it best serves the community to focus on road, rail or for that matter air or water transportation. But the inevitable result of this is, I am pleased to say, that an enormous amount of investment needs to be put into both infrastructure and rolling stock in the coming years to be able to achieve those objectives.
If we restrict ourselves such that only the state can provide the implementation both in terms of building, operation and finance, we will not achieve those objectives. On the one side there is not enough money in most government budgets just to pay for the projects, bearing in mind that most governments have competing priorities funding transportation but then also having to find resources for health care, defence and other key areas for the state. In many cases the funding has to come from local government where the coffers are empty (particularly relevant now that over 50% of the world’s population now live in cities and there is a growing need for investment in light rail and other urban rail solutions.
We cannot continue to restrict new rail projects by reference to government fiscal constraints, rather than long term social and economic returns, when the investment is clearly needed. And it is not just financial resources that are at a premium in government. It is also the technical and intellectual expertise to ensure that projects are delivered to the right specification on time and on budget. This is still 20th century thinking. The modern approach to railways is to let the private sector take the strain, to let it leverage in its expertise and work with government in partnership. Many governments are gradually waking up to this new approach – for example the recent welcome announcement by the new Indian government encouraging up to 100% FDI in major rail projects.
Over the next three days we will look at all the different aspects of how that partnership can work and, just as importantly, where certain approaches to that partnership are not in the interest ultimately of the state. But think about this rationally. It is perfectly in order for government to play a key role in financing the build of infrastructure. If left completely to the private sector, the length of the investment time together with the inherent uncertainties and, in some parts of the world, even political risks mean that money from the private sector will be more expensive than what can be borrowed by the commissioning government. So governments need to be involved in the building of roads and for that matter railways. But if I said to you that because governments were involved in the planning, building and financing of roads they should therefore design manufacture and own every car that runs on the roads you would dismiss this immediately as absurd.
And yet in some parts of the world that is still happening in the rail sector. The group I represent, the Rail Working Group, is a not for profit organisation pulling together different parts of the rail industry, arguing for the speedy implementation of the Luxembourg Rail Protocol which will make it much easier for the private sector to provide finance for rolling stock and hopefully they will do so relieving government of a key financial burden. We need to look on the infrastructure side and operation side to see also to what extent government can just set policy and regulate rather than also provide the delivery. We also need to look at transportation needs and solutions more on a multi-modal basis.
As we will explore today, we know that the development of the rail sector, both passenger and freight, is an essential element in growth in every economy and in the improvement of standards of living for the community. In certain cases around the world, such as in Korea, it could also be the key to political rapprochement. These are huge projects. I congratulate the government of Indonesia on its initiatives in developing the railways here and I am convinced that the success of the rail industry in the coming decades will depend on us all doing in practice what we are already doing this week, namely sharing contacts, ideas, technology and key resources between the public and the private sector – and governments and their transport agencies recognising that they need to empower the private sector to provide the solutions urgently needed by the Community. That must be what a truly modern railway system will be about in the coming years and what a modern railway conference will need to cover this week.
I wish you a successful conference ahead.”
Reproduced with permission.