Thailand looks to China-Laos railway

Thailand will further boost international trade and inject greater stimulus into its domestic economy by speeding up its connection to the China-Laos railway, experts said.

"The China-Laos railway project has opened a new logistics mode in the region," said Joe Horn-Phathanothai, founder and CEO of Thai investment consultancy Strategy613 focusing 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 new railway.

Horn-Phathanothai praised the Thai government's efforts to enhance the country's connection to 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 Yunnan province to Bangkok and Singapore.

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

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 last week to build a second bridge from Northeast Thailand's Nong Khai to Laos, connecting Thailand to the China-Laos railway.

Piti Srisangnam, an associate economics professor at Chulalongkorn University, said Thailand needs to accelerate the connection to 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.

Alternative route

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

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

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, reported 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 will link Bangkok to the northeastern Thai province of Nakhon Ratchasima, aiming to make it operational in 2026.

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

Horn-Phathanothai said it is also important for Thailand to utilize its existing transport system to connect to 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 Thai government's efforts to enhance its connection with the China-Laos railway and establish 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 build an integrated logistics system of the China-Indochina Peninsula Economic Corridor," Surasit said. The Indochina Peninsula is an important link in the BRI blueprint.