VIENTIANE, Dec 5: The official inauguration of the Laos-China railway took place on December 3. This historic event is not only a milestone in Laos’ efforts to shake off the shackles of its landlocked status by becoming a land bridge within the region but will create a lot of development opportunities and enable Laos, one of the least developed countries in the region, to thrive in coming decades.
Laos is a landlocked country located in the middle of the Mekong region between the emerging economies of China, Thailand and Vietnam.
Having no direct access to seaports, Laos has faced development challenges due to the high cost of transport, which has been a barrier to foreign investment and economic growth.
Knowing of this development barrier for several decades, the ruling Lao People’s Revolutionary Party has made a determined effort to improve transport networks in Laos. At the 4th Party Congress held in 1986, the Party endorsed an opening-up policy aimed at attracting foreign investment and boosting economic growth.
To fulfil this ambition, the Party endorsed a new development strategy which placed transportation as the spearhead of national development and turned its focus to the construction of transport infrastructure, mainly road networks.
At the same time, the Party began to consider the possibility of building railways. As part of this effort, the government sent a number of citizens to study railway engineering overseas, hoping that one day the country would have the necessary resources to build a railway.
But this plan was scrapped because at that time none of the socialist countries were prepared to support such a large-scale project as they thought it was economically unviable and irrelevant.
With increasing regional trade relationships, the 7th Party Congress endorsed a new policy to connect the country’s transport system to neighbouring countries.
With support from the international community and friendly nations, a number of bridges, roads and airports were built to improve transport between Laos and neighbouring countries.
As part of efforts to transform Laos from landlocked to land-linked, the government asked China to finance railway development in Laos. But this plan was also scrapped as the project was considered not to be relevant to the development needs of the two countries.
Laos persisted with its request and finally China agreed to sign a Memorandum of Understanding with Laos, outlining the various stages of a railway development plan. The first stage was to build a railway from the Chinese border to Vientiane, which would then connect to Thailand.
The next stage is to build a railway from Vientiane to Thakhaek and from there to a Vietnamese seaport and to Cambodia. China also agreed to undertake studies on railway development in Laos.
With support from China’s Road and Belt Initiative, which was designed to facilitate Chinese trade with the international community, China and Laos agreed to kick off construction of the Laos-China railway on December 2, 2015.
This US$6.9 billion project saw the building of a railway from the Chinese border to Vientiane. The Laos-China railway is one section of the Kunming-Singapore railway, which will run through Laos, Thailand and Malaysia.
Construction of the railway and train stations has been completed as planned. Lao and Chinese top leaders presided over the official opening ceremony of this historic railway through online platforms on December 3.
The Laos-China railway is not only a symbol of Laos-China friendship and a triumph over Laos’ landlocked status, but will undoubtedly boost economic growth.
Policymakers say the railway will reduce the cost of transport from Laos to China, one of the world’s largest markets. The international market opportunities offered by the railway will make Laos an attractive investment destination.
Laos expects to receive more foreign direct investment as well as modern technology and skilled human resources from China and other countries that want to use Laos as base for trade with China.
One of the main areas of business in Laos that expects to benefit from the railway is logistics. Already, a number of companies have begun investing in logistics infrastructure, including the building of a dry port in Vientiane.
There is a strong possibility that Laos can become a logistics hub and the centre of goods distribution in the Mekong region thanks to improved connectivity with China and other countries in the region.
Tourism is another business that stands to get a major boost from the railway. There are nearly 100 million people living in China’s Yunnan province and neighbouring cities who want to use the railway to explore tourist attractions in Laos and nearby countries.
Realising the huge tourism business opportunities, the Ministry of Information, Culture and Tourism has already outlined plans to develop tourism activities along the railway.
With cheap transport costs from Laos to China and China’s huge demand for food, Laos’ agriculture sector also stands to benefit from the railway and several companies have begun to invest in growing fruit for Chinese markets.
Laos’ economy is based on agriculture so with increasing Chinese investment in agriculture, more people in Laos will have more opportunities to do business and generate income to improve their wellbeing.
However, although the much-anticipated railway is providing a great deal of hope, there are challenges that Laos must address. One of the current barriers to development is the quality of the country’s human resources.
The government is well aware of this fact and in recent decades has invested heavily in educational infrastructure in order to provide Lao people with essential job skills so they can work on foreign-funded development projects.
In conclusion, the Laos-China railway, is not only a symbol of the friendship between Laos and China and a huge boost to Laos’ ambition to build on its landlocked status by becoming a land bridge, but also has huge potential to drive economic growth.
The railway brings new hope and opportunities for Lao people, especially in the fields of logistics, tourism and agriculture. But in order to gain the maximum benefit from the railway, Laos must speed up the development of its human resources. The government is aware of this challenge and has sought to improve education infrastructure so that more people gain the skills needed to meet the growing demands of the job market. - Opinion by the Editorial Team of the Vientiane Times