China-Laos Railway: ASEAN's Economic Opportunity
October, 30 2021
Economic Impacts of the China-Laos Railway
1. Boost in Trade Between China, Thailand, Malaysia, and Singapore
- The World Bank estimates that China-ASEAN trade will increase by 200%, from 2 million tons in 2016 to 6.3 million tons in 2030.
- China-Laos trade is expected to grow by 350%, from 1.2 million tons in 2016 to 5.4 million tons in 2030.
2. Surge in Foreign Tourism
- In 2020, Laos welcomed 5 million foreign tourists, with 21% visiting Vientiane and 10% traveling to Luang Namtha.
- The China-Laos Railway is expected to double the number of foreign tourists to 10 million by 2030, benefiting Thailand’s tourism industry as well.
3. Reduced Cross-Border Transport Costs (Transit Trade)
- Transportation costs from Vientiane to Kunming will drop by 40-50%.
- Costs along the Kunming-Laem Chabang route could be cut by 50%, if Thailand connects its railway to the China-Laos Railway.
4. Increased Foreign Direct Investment (FDI) in Laos
- Investments will focus on hydropower, mining, services, and agriculture.
- Service sectors such as hospitals, construction, business consulting, IT, and shopping malls are expected to expand significantly.
5. Growth in Trade Along the R3A Route
- Increased trade at the Mohan-Boten Economic Cooperation Zone and the Boten Special Economic Zone (SEZ).
- Duty-free shopping at the Mohan railway station and expanded trade at Nong Khai, Thailand, which has 9 railway stations linked to Vientiane, making it a key trade and investment hub.
Investment Opportunities for Thai Businesses
1. High-Demand Consumer Goods for Kunming and Laos
- Processed food, vegetables, fruits, household items, jewelry, cosmetics, and herbal products.
2. Livestock and Meat Processing
- Beef trade hubs at the Boten-Mohan border, with processing centers for exporting to Vietnam.
- High standards are required to meet international markets.
3. Service Sector
- Hotels, restaurants, tourism services, and support industries are expected to grow rapidly.
4. Thai Fruit Market Expansion
- Cooperation with Vientiane’s fruit markets is crucial since most fruits in Laos come from Thailand and Vietnam.
- If Thailand delays, Vietnamese fruit traders may dominate the market.
5. Logistics and Transportation Business
- Expansion of cross-border transportation, warehousing, and freight forwarding services.