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The rail link poses unique challenges

The rail link poses unique challenges

The China-Laos railway is a “game changer” for the regional economy that Thailand cannot afford to miss, writes Cherdchai Chaivaivid, director general of the Department of International Economic Affairs at the Foreign Ministry.

The opening of the China-Laos railway last December marked a milestone for trade between ASEAN and China. Much has been said about how the project could help strengthen Thailand’s economic presence in the region, China’s western provinces and Belt and Road networks, and propel regional economic development.

Besides filling the so-called missing transport links and facilitating cross-border business, political discourse has yet to focus on its long-term impacts on Thailand’s competitiveness, although the rail project has changed the gives in the geoeconomics of the region.

Lao PDR is becoming a terrestrial connectivity hub. It may be timely to rethink Thailand’s long-standing concept of connectivity, given that the comparative advantage of its geography may not be as important as it once was, in part because of the rail project.

Geography still matters, no doubt, and so does connectivity. But at this point, Thailand should shift its focus beyond connectivity to building an open, business-friendly ecosystem. This includes interoperable regulatory infrastructure, fair competition policy and regional digital trade platforms that MSMEs have access to.

In addition, transparent cross-border financial transactions, a stable macroeconomic and fiscal environment, as well as a regional arrangement on rail transport are also essential elements.

The train operated by China-Laos Railway is the first railway project built with Chinese investment.


Exporting company

In order to maximize the development impacts of the project, careful planning of our northeast region is required.

While the railway industry, the BCG economy, logistics activities, the digital economy and health services should be priorities, we should also ask ourselves whether the expected increase in tourism is really helping to boost long-term competitiveness. term of the region, given the high sensitivity to crises and the relatively low R&D investments in tourism.

In addition, Thailand’s commercial presence in Lao PDR, China and BRI networks should be strategically and systematically promoted, especially in sectors related to Thai domestic supply chains and the global market, to create an ecosystem profitable and business-friendly. “We need to help Thailand export its business,” said Dr Kanit Sangsubhan, secretary general of the Eastern Economic Corridor Office (EECO).

renew strength

Going forward, the global economy is likely to remain volatile and unpredictable. Closely linked global value chains could amplify the crisis vulnerability of local supply chains.

At the regional level, with the entry into force of the Regional Comprehensive Economic Partnership in January 2022, economic interactions between China and ASEAN are expected to intensify.

Thailand can only improve its economic presence in the region if it plays a significant role in supporting growth and integration and enhancing macroeconomic stability in the region. This, in turn, can be achieved by engaging all partners in building resilient value chains, adopting international standards and promoting economic compatibility in the region and beyond.