Laos keen to lift trade via China rail link

Businesses in Laos, especially smaller enterprises, need more support to help them better seize the opportunities arising from a landmark railway connecting the country with China and enhance their competitiveness in regional trade, officials and experts say.

"The China-Laos Railway is a very good project that has been started and implemented successfully. We can see so far that… the railway is fully in use," said Xaybandith Rasphone, president of the Association of the Lao Garment Industry and vice-president of the Lao National Chamber of Commerce and Industry.

However, Xaybandith believes that it is still difficult for Laotian companies, especially small and medium-sized enterprises, to make full use of the railway, which opened to freight services on Dec 3 last year. On the broader trade front, it is challenging for Laotian companies to compete with larger enterprises in neighboring countries when it comes to boosting exports to China, the businessman said.

"The capacity and the products that we produce here have not yet been of the volume that can be supplied to the Chinese market," said Xaybandith, adding that government support is needed.

The volume of cross-border goods transported by the China-Laos Railway had exceeded 1 million metric tons by Aug 9, according to Xinhua News Agency. Of that total, the Laotian section of the railway transported 1,076,500 tons of goods; some 263,400 tons went from China to Laos, and 813,100 tons went in the other direction. There has been an average monthly growth rate of nearly 17 percent.

The 1,035-kilometer line connects Kunming, the capital of Southwest China's Yunnan province, with Vientiane, the capital of Laos. With a speed of up to 160 kilometers per hour, the cross-border services slash the travel time between the two cities to 10 hours, from 30 hours by road.

Litthikay Phoummasak, president of the Small and Medium Enterprise Promotion Association of Laos, said business communities in Laos and neighboring countries like Thailand have been working since the beginning of the year to improve collaboration on the use of the China-Laos Railway to promote trade.

"Many local investors invest in agriculture, logistics, warehouse and industrial property, as (they expect that) the China-Laos Railway will make Laos the trade and logistics hub of the region," Litthikay said.

However, improvements are needed to provide better access to the railway for Laotian businesses, Litthikay said, adding that hurdles include high logistics prices charged by agents and the lack of an online ticket booking platform for passengers.

Noting news reports of an influx of Thai tourists as a result of the railway, Litthikay said it is important to make the ticketing process smoother and better regulated to support the recovery of the tourism sector, a key contributor to Laos' economy.

Diversified goods

In the past, Laos and China traded mostly copper and rubber, but the railway has made it easier for other goods, such as agricultural products, to be exported to China, said Philaiphone Vongpraseuth, vice-president of the Young Entrepreneur Association in Laos and chief executive of consultancy Solver Laos Sole.

Philaiphone said that young entrepreneurs, especially those who live along the railway route, have been preparing to enter the cross-border trade business and seize new opportunities from the line.

The total value of Laos' trade in July was $968 million－$427 million in exports and $541 million in imports, according to the website Lao Trade. China remains the country's top export destination.

Most of the young Laotian entrepreneurs are focused on agricultural products for export to China, as well as tourism, which Philaiphone expects to increase threefold if pandemic-related border restrictions are lifted.

Xaybandith said he hopes that more guidance can be provided to smaller enterprises, as many of them still do not know much about how to make use of the railway. A more comprehensive logistics network around stations is also needed, he said.

Xaybandith said the railway provides opportunities for Laos to grow the production capacity for high-end agricultural products related to green and healthy concepts, such as organic food, for export to China.