The construction of a high-speed railway from Vientiane to China has gained impetus after the Thai government announced it would build a new rail link from Nong Khai province to Bangkok.
Prime Minister Yingluck Shinawatra told visiting Deputy Prime Minister Thongloun Sisoulith that her government would build a high speed railway from Nong Khai province to Bangkok, which could connect with the planned railway from Vientiane to China.
The Thai government is formulating a law to authorise its finance ministry to obtain a loan to expand its rail network. However, according to Thai media, the government will build a Bangkok- Chiang Mai rail link before the Nong Khai-Bangkok connection.
Analysis of the situation reveals this will boost the confidence of Chinese bankers considering providing a loan of US$7 billion to the Lao government for the construction of the 421km Vientiane-Boten railway. China would benefit not only from a rail link through Laos, but is also looking to extend the connection southwards through Thailand and Malaysia to Singapore.
China hopes the high-speed rail link between Yunnan province and Singapore will not only boost trade cooperation with Laos but also with other Asean member countries after the two parties enacted a free trade agreement in 2010. The value of China-Asean trade currently stands at about US$360 billion.
Officials from the Ministry of Public Works and Transport and Ministry of Planning and Investment said the Lao government was discussing the loan agreement with China but could not confirm when the agreement might be finalised.
The Lao government has been considering building a railway for several decades, hoping that expansion of the transport network will turn the landlocked country into a land link within the region. In 2011, the National Assembly adopted high-speed rail construction as one of its mega investment projects.
The Assembly also gave approval for the government to seek a US$7 billion loan from China at the end of last year. The government hopes to start construction of the Laos-China rail link during the current 7th National Socio-Economic Development Plan which runs from 2011 to 2015.
The government believes that building a rail link at a time when the region is undergoing unprecedented integration will help to cut the high cost of transporting goods from Laos to world markets.
At present, Lao businesses have to ship exports via Thailand and Vietnam. Most of the goods are carried by truck, which is more expensive than train freight. The higher transport costs incurred by Lao businesses drives up the prices of their goods, making them uncompetitive in the export market.
Laos is now a member of the World Trade Organisation and will be part of the Asean Economic Community in 2015. The government needs to improve transport infrastructure so that its citizens can benefit from the integration of the economy with that of the region and the world.
LNTV Lao News