The Asian Voice

The train of opportunities as Laos builds rail link with China: Vientiane Times contributor

In the article, the writer calls for measures to enable Laos to make the most of new opportunities, with the high speed rail link with China taking shape.

The flags of Laos and China seen during a meeting between officials of both countries at the Diaoyutai State Guesthouse in Beijing, China, on Aug 26, 2018. PHOTO: REUTERS

VIENTIANE (VIENTIANE TIMES/ASIA NEWS NETWORK) - Laos is speeding up construction of the high speed railway link with China hoping this historic and major investment project will be completed and operational over the next two years.

The railway line, from the Chinese border in the northern province of Luang Namtha to the capital Vientiane, will serve as a key link in the land transportation system between southern China and Asean.

This regional rail connectivity will help Laos to realise its decades-long ambition of transforming itself from a landlocked country to a land link or a land bridge for the region, creating favourable conditions for the nation to become more prosperous.

This claim is based on evidence that many countries, which serve as transit routes or hubs, gain a lot of benefit from regional trade. A small country like Singapore provides us with a good example on how to become prosperous using its strategic location.

However, a key question being asked by the public, scholars and policymakers is whether Laos will truly benefit from serving as a regional land bridge?

The answer would be quite diversified, depending on the position, knowledge, values and capacity of the people who are answering this question.

However, as a business and economic news writer and scholar, I would like to share my thoughts on this matter and hope everyone can add other recommendations.

Based on my personal knowledge and experience as a journalist and scholar who has been writing on business and economic affairs in Laos, I think there is a high possibility for the country to serve as a key regional goods and services distribution hub once the high speed rail link is operational over the next few years.

This is based on my own understanding that Laos is located in the middle of growing economies, particularly between China and emerging Asean economies such as Thailand, Vietnam, Malaysia and Singapore.

I predict that trade between China and Asean will witness massive growth over the next few years. Bilateral trade for 2017 was US$514.8 billion (S$711.93 billion), a 13 per cent increase compared to the previous year.

China expects to use the China-Asean railway as an alternative route for export products to Asean due to cheap transportation costs while Asean countries will be able to reciprocate.

Based on this scenario, Laos can act as a distributor of goods and services located in the middle of the region.

This is an opportunity for businesses to purchase goods from neighbouring countries and export them to others. For example, Laos can purchase rice from Thailand and export it to China or purchase consumer goods from China and export them to Thailand.

The counterargument to this recommendation is that it is unrealistic in the current context given the nation's capacity to develop into a middleman.

While many Lao people are skilful most have no international trade knowledge.

Well, my rebuttal is that no one has knowledge when they are born.

People need to learn and apply this knowledge.

Look at Singapore as an example; several decades ago, not many believed this resource-poor nation could become a modern power. Today, this small country has proved itself as a successful nation using its strategic location and turned itself into regional oil supplier and shopping centre.

Examining Singapore, the reason for its success is not only its location but its vision and investment in human resources and infrastructure and persistently overcoming difficulties to make its dream a reality.

Looking at Laos, of course, there are not many skilful businesspeople but I believe we can train them and some have the talent to work as middlemen in international trade.

Recently, I had a discussion with a trader in an import-export business. She said every year, her business imports several thousand tonnes of sugar from Thailand and exports it to China.

She is now thinking of building a warehouse in Luang Namtha to store goods before exporting them to her Chinese business partners.

Based on her experience, I am convinced there is much potential for Lao businesspeople to identify what goods they can import for export to the regional market.

Today there are many goods, for example, mobile phones, which Vietnam exports to Thailand before they are redistributed in Laos.

It's a shame to see this as Laos's shares borders with Vietnam but cannot purchase goods from the neighbour to sell to Thailand, which has no border with Vietnam.

In addition to importing goods for export, Laos can serve as a key tourist destination. People who want to travel from China to Thailand will have a chance to stopover in Laos.

There should be facilitation to attract these tourists.

To build Laos as a regional goods and services distribution centre, business people must see the Lao-China railway as an opportunity to operate import for re-export businesses.

I think the government has the policy to support business people. The country is also improving its business regulations and infrastructure to support business operations.

The most important thing business people need is a growth mind-set and a strong belief they can do it.

I am convinced that if we start building a sound vision and an enabling environment to support business people to import for re-export, Laos will benefit from being the land link of the region.

The big investment project will bear more fruit if Laos has the right strategies to make use of the mega infrastructure.

In a nutshell, there are many opportunities for Laos to make use of the Laos-China railway project and I hope that everyone can make a contribution to this discussion.

For my personal point of view, one of the best advantages Laos can gain from this mega project is to develop the country into a regional goods and services distribution centre. This development concept will be possible when the government creates an enabling business environment and businesspeople and policy-makers have the right growth mind-set.

The Vientiane Times is a member of The Straits Times media partner Asia News Network, an alliance of 23 news media organisations.

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