Laos is developing into a regional logistics hub, thanks to its rail connections with its neighbors.The construction of a railway to connect the Laotian capital, Vientiane, with the Port of Vung Ang in central Vietnam, will possibly start in November.
According to the Vientiane Times newspaper, the move is the Laotian government’s latest effort to turn the capital into a logistics hub by forging rail links with China, Vietnam and Thailand.
“A groundbreaking ceremony to kick off construction will take place in November,” Chanthone Sitthixay, chairman of Petroleum Trading Lao Public Co. (PetroTrade), was quoted by the daily as telling Xaysomphone Phomvihane, president of the National Assembly. Feasibility studies for the project were completed in mid-March.
Last December, Vientiane Logistics Park opened in the city, the day after the China-Laos high-speed railway — the first of its kind in Southeast Asia — was completed as part of China’s Belt and Road Initiative.
The logistics facility was built under a joint project that began in 2020 between the Laotian government and a subsidiary of PetroTrade. The 3.82 million-sq.-meter logistics center, built at a cost of US$727 million, includes the Thanaleng Dry Port and other facilities. The project will see additional construction this year, including an export processing zone, and office and commercial sections.
On the opposite side of the Mekong River from Vientiane, a plan is taking shape to build a logistics center in Thailand that will take advantage of the China-Laos high-speed railway.
The State Railway of Thailand (SRT) plans to open the 430,000-sq.-meter logistics center in 2026. It is to be linked to the Port of Laem Chabang, the country’s biggest trading port, by rail. The state-owned railway operator envisages building a container yard, freight loading facilities, warehouses and other facilities under a public-private partnership. The plan calls for freight to be transported via a bridge over the Mekong into Laos and then on to China by the China-Laos railway, which began operating last December.
SRT, which at present operates only two round-trip freight trains a day between Thailand and Laos, plans to raise the number to 24 by 2026. It intends to build a new railway bridge, as the existing First Thai-Laos Friendship Bridge, which has only one track, is unlikely to be able to handle the expected rise in freight traffic. While the existing bridge uses Thai rail gauge, the new bridge will be able to accommodate Chinese and Laotian trains.
Laos lacks major industries, aside from hydropower, which takes advantage of the country’s abundant water resources. The country’s per capita income was US$2,630 in 2020, the third-lowest in the Association of Southeast Asian Nations, ahead of Cambodia and Myanmar. Its GDP per person was less than 5 percent that of Singapore.
When a railway connecting Kunming, in China’s Yunnan Province, and Vientiane opened in December 2021, a project to make the railroad the backbone of logistics between China and Asean quickly became feasible.
Although rail freight transportation between Thailand and Laos began in 2019, demand was limited as most freight was transported by truck. But the China-Laos railway has greatly reduced the time it takes to ship goods from Thailand to China via Laos.
In January, Thailand exported 1,000 tons of rice to China via the China-Laos high-speed railway, the Ministry of Agriculture and Cooperatives announced. According to the Ministry of Transport, following the opening of the railway, exports from Nong Khai Province increased 2.6 times in weight and about 50 percent in value from the previous year. Fruit such as durian, and natural rubber, which are in high demand in China, are also important goods transported by the railway.