Most impressed by the under-construction China-Laos railway project. The 414km railway will connect Kunming, a major city in Southwest China, with Vientiane, Lao’s capital. Bridges and tunnels account for 60% of the project making it an expensive engineering feat. The project is strategically important as it will ultimately plug China into Thailand’s rail network and onward to Malaysia and Singapore.
3 key points:
1) The new railway will permanently change land-locked Laos’ commercial future. I visited one Chinese-invested industrial park (pictured) near the railway’s terminal in Vientiane, attracted by low wages and agricultural resources. Many more will follow.
2). Laos will pay 30% of the railway’s $5.8 billion construction cost. That’s a heavy burden for a country with a GDP of just $16 billion. Most likely the cost will be paid in a resources-for-infrastructure deal. In this case, potash deposits.
3). Freight is a priority. I’m less convinced about passenger demand. Our data analytics indicates that there are already 40+ daily flights between cities in southwestern China and Thailand. Most are low-cost carriers, meaning a 10+ hour rail journey may struggle to compete.