China-Laos railway to bolster Thai industries and trade

"The China-Laos railway project has opened a new logistics mode in the region," said Joe Horn-Phathanothai, founder and CEO of Strategy613, an investment consultancy in Bangkok that focuses on China and Thailand. One of his clients has already been able to transport goods including packaging materials, consumer products and accessories from China to Thailand through the railway.

Horn-Phathanothai hailed the Thai government's efforts to enhance the country's connection with the China-Laos railway, which he said will be highly beneficial for industries and trade.

The China-Laos railway, which began operations on Dec 3, is an important part of the pan-Asian railway network that will ultimately connect Kunming, in Southwest China's Yunnan province, with Bangkok and Singapore.

Thailand's Transport Ministry has said it is looking to connect the country with the China-Laos railway to create a seamless inter-border transport link, Bangkok Post reported on Jan 18.

The railway link presents a substantial opportunity as Thailand currently operates passenger and cargo train services to Thanalaeng station in Laos' capital Vientiane, said Transport Minister Saksayam Chidchob.

In addition, the State Railway of Thailand was ordered by the Thai cabinet on Jan 13 to build a second bridge from Nong Khai in Northeast Thailand to Laos, to connect with the China-Laos railway.

Piti Srisangnam, an associate professor of economics at Chulalongkorn University, said Thailand needs to accelerate the connection with the China-Laos railway as it can encourage the country to speed up reforms in its logistics and transport system while providing an alternative option for trade.

For example, throughout the pandemic, the logistics cost to transport a container box via sea routes from Thailand to European countries and the Americas has increased at least 200 percent, and on occasion up to 10 times higher than pre-pandemic levels, he said.

The alternative route enabled by the China-Laos railway will also allow Thailand to transport goods to China, Central Asia and even European countries taking part in the Belt and Road Initiative, said Piti.

Connecting 15 Chinese cities with Thailand, Singapore and several other countries involved in the BRI, the China-Laos railway has so far carried over 1 billion yuan ($157.49 million) worth of international freight, according to Xinhua News Agency, citing Kunming Customs.

In March 2021, the Thai government and a Chinese construction consortium signed an agreement for the first phase of the planned China-Thailand high-speed railway project that links Bangkok with northeastern Thai province of Nokhon Ratchasima, aiming to make it operational in 2026.

The project will eventually link Bangkok with Nong Khai on the border with Laos to connect with the China-Laos railway.

Horn-Phathanothai of Strategy 613 said it is also important for Thailand to utilize its existing transport system to connect with the China-Laos railway.

"We can use the existing one to build a kind of little interchange hub," Horn-Phathanothai said. 

Surasit Thanadtang, director of the Thai-Chinese Strategic Research Center at the National Research Council of Thailand, said the government’s efforts to enhance Thailand’s connection with the China-Laos railway and establishing the transport and logistics alliance of the China, Laos and Thailand economic corridor is “happening at the right time and at the right place”. 

“This model can (help) build an integrated logistics system of the China-Indochina Peninsula Economic Corridor,” said Surasit. The Indochina Peninsula is an important link in the BRI.   

By Yang Han in Hong Kong

China Daily