The Laos-Vietnam railway when completed, will further boost Laos’ ambitions to become a regional logistics hub. The rail route will connect the capital Vientiane to the port city of Vung Ang in Vietnam. The port will give Laos crucial access to the South China Sea and the large markets of South Korea and Japan, among others.
The Laos-Vietnam railway with a 555km track, estimated to cost US$5 billion, will further transform Laos into a land-linked country that can facilitate more trade between its provinces. Construction is expected to start in November 2022 with no completion date yet announced.
Crucially, the line connects Vientiane to Vung Ang’s deep seaport, which is the closest feasible seaport to Vientiane. The line would connect with the Laos-China railway, meaning the catchment area for freight shipment would extend to Northern Laos and South China. Further, the railway will interchange with Vietnam’s North-South railway, which opens the prospect of a Hanoi-Vientiane route.
Laos inaugurated the Laos-China high-speed railway in November 2021, the first of its kind in Southeast Asia. The railway connects Vientiane to Boten, on the Laos-China border. At Boten, the line heads north to the Chinese city of Kunming, the capital of China’s Yunnan province. Before the 414km Boten-Vientiane railway, infrastructure-poor Laos had only four kilometers of railway.
Vietnam’s Vung Ang deep-sea port plays a vital role in boosting Laotian economic activity through maritime trade and transportation exchanges The Laos government owns a 60 percent share in the port, which provides Laos access to the South China Sea, Central Vietnam, Northeast Thailand, and to larger Asian markets, such as South Korea, China, and Japan. The Vietnamese government has authorized a 50-year concession to Laos.
Currently, the port can accommodate cargo ships of up to 50,000 deadweight tonnage and container ships of up to 2,000 twenty-foot equivalents (TEU). By 2030, the port is expected to handle over 20 million tons of dry bulk cargo.
Supporting infrastructure in place
In addition to the Laos-China railway and the Laos-Vietnam railway, Laos began the development of the Thanaleng Dry Port (TDP) and Vientiane Logistics Park (VLP) — two mega infrastructure projects under the Lao Logistics Link (LLL) program. According to Aseanbriefing.com, the LLL is a government initiative to transform into a logistics hub in Asean.
Built over 300 acres of land, the TDP and VLP are expected to be completed in the third quarter of 2022, providing an array of freight and cross-border transport services that will also be linked to the Laos-China railway, and the Laos-Vietnam railway. Located near the 1st Lao-Thai Mekong Friendship Bridge, the TDP and VLP are expected to reduce transport costs by up to 40 percent from current prices by 2025, and ultimately become an alternative route for ASEAN exporters to the European markets.
Shipments from Southeast Asia to Europe could take just over 10 days by rail. Currently, Asean exporters utilise Singapore’s huge seaport as the main transport hub, which takes approximately 45 days to reach Europe.