The government is talking up the potential of the railway, emphasising a shift in mindset about what was always considered Laos’ major geographic weakness – the fact it is land locked.
Now, with a physical infrastructure connection to the world’s biggest population coming, it is the land links that Vientiane wants to seize upon.
“Previously we had been talking about the disadvantage of the geographic location of the country. But we are seeing this disadvantage turn into an advantage,” said Dr Leeber Leebouapao from the National Institute of Economic Research, a key policy advisor to the central government.
With the agreed-upon Vientiane-Hanoi highway also in the mid-term pipeline, Dr Leeber said he expected the capital to be “booming” as the central point between China and the region’s other hubs.
“After the railway and highway are completed, connectivity will be facilitating more economic relations, more flow of people and money. Flowing in and out. It is a new phenomenon here,” Dr Leeber said.
“This will become a trade centre for investors, factories, banks. Things will change very fast.”
While the economic viability of the US$6 billion project is yet to be tested, with fears Laos could be crushed by debt, the Asian Development Bank (ADB) in Vientiane believes the market opportunities will be “incredible” for the city and country.
“Will the train help Laos by helping create economic opportunities in the context of it being a land-linked country? Definitely,” said Stephen Schipani, the officer in charge of the ADB-Lao PDR Resident Mission.
“I always say ‘does Laos have access to the sea?’ And people look at you funny because they know Laos doesn’t have direct access to the sea. But in fact it does. It has access to a sea of people.”
That sea could bring new waves of visitors, including millions of tourists from southern China, as well as up to 100,000 overseas workers expected to be needed to complete the project, given Laos’ lack of expertise in the rail industry.
It could also bring new migration from abroad and domestically, as more people chase opportunities in the capital.
Vientiane is expected to see an increase of population of more than 50 per cent in the next decade, swelling it from a sleepy riverside city into, possibly, a strategic axis for trade and growth.
Laos’ relatively small population means it will unlikely be able compete in sectors like manufacturing, but reduced import and export costs are expected to drive potential in other sectors.
“There are opportunities for value-added food, niche agricultural produce and organic crops are a big potential advantage,” Schipani said. “Scheduled train services can move that produce across borders.”
The proposed fast train will travel at 160kmh, reducing travel time from Vientiane to Kunming to just 10 hours.
But the true value of the project may only be realised if and when Laos’ southern counterparts complete their own segments of the railway, at the behest of Beijing. Negotiations about sections elsewhere are ongoing.
“We are just a small country and there is a big market in China,” Dr Leeber said. “The question is how to take advantage of the opportunity. If we don’t, someone else will.”