Expert outlines opportunities, challenges of railway and expressway

Despite the huge opportunities presented by the Laos-China railway and Vientiane-Boten expressway, Laos needs to address the challenges they pose in order to reap the full benefits they offer.
Acting President of the Lao National Economic Research Institute, Dr Sathabandith Insyxiengmay, told Vientiane Times last week that the railway and expressway are part of China’s Belt and Road Initiative and in line with the Lao government’s strategy to convert the country from being landlocked to a land link within the region.  

“The question ‘What will Laos gain from the railway and expressway’ is not relevant at present. The key question to be asked now is ‘how and what can we do to benefit from the railway and expressway’,” he said.
Dr Sathabandith said all forms of investment involve a certain amount of risk and the possible loss of anticipated benefits. The railway and expressway will have a significant impact on the economy and will provide huge momentum in strengthening Laos’ connectivity with the rest of the region.
First of all, these two routes give people the option to travel conveniently and comfortably, and to save time and money.
Secondly, the railway and expressway will enable faster movement of people and workers. People will no longer have to worry about travelling long distances but can travel and do business in other areas without concern for time constraints.
Thirdly, investors can more easily operate businesses in other areas because they can reach other towns and cities in a few hours. This will lead to the improvement of services and facilities in towns situated along the railway and expressway.
Fourthly, these routes will create purchasing power synergy. Two or more towns will be connected so that people in one can spend their money in another area easily.
For instance, it’s now possible to travel from Vientiane to Vangvieng in just 90 minutes, significantly less than the three hours it took previously. The new routes will boost productivity, leading to economies of scale. 
Fifth, the railway and expressway will expedite the growth of urban areas as development is closely linked to population size.
However, there are considerations that need to be addressed in order to reap more benefit from infrastructure developments.
Firstly, it will be necessary to build roads that link the railway with production sites so that goods can easily be transported.
Secondly, logistics and cross-border services must be integrated to facilitate the transport of goods by rail. In the first nine months of 2020, trade between China and Thailand was valued at US$66.4 billion, according to a report by Xinhua.
If China and Asean countries conduct trade using the railway passing through Laos, there will be more benefits for Laos.
Thirdly, the development of smart cities is critical to attract more trade and investment and build larger populations as a way of increasing purchasing power.
Fourth, it will be important to create interesting cities and improve facilities to draw more foreign visitors to Laos. If cities have nothing to offer, then people will just pass through them.

BySomsack Pongkhao
(Latest Update January 5, 2021)