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BENEFITS OF THE PROJECT TO LAOS

1. PROJECT IN LINE WITH POLICY OF LAO PDR GOVERNMENT

The realization of the Savannakhet - Lao Bao Railway Link is in line with the Lao Government’s policy in boosting the nation’s socio-economic infrastructure. This railway project is critical as it offers enormous opportunities for boosting the investment scenario in the southern part of Lao. With CONNECTIVITY and ACCESSIBILTY being fundamental elements in bringing about economic prosperity, the efficient railway mode will complement a good road network format in ensuring economic dynamism. Thus allowing access into strategic parts of the country for economic development via local and foreign investments.

 

2. MACNIFICIENT POSITIVE IMPACT OF SAVANNAKHET -  LAO BAO PROJECT ON LAO PDR ECONOMY

2.1 Significant Contribution to Gross Domestic Product (GDP) with Foreign Direct Investment (FDI)  

From the perspective of macroeconomics, the massive persuasive foreign direct capital investment in the railway project of US$6 (Six) Billion over the 10 years period are expected to contribute easily to 10% of the country’s GDP based on current estimated GDP of US$5 Billion annually. The implementation of the railway project will generate economic multipliers that will contribute to greater growth in the country’s’ GDP and their per capita income. The railway infrastructure represent the new backbone of the economic complexion in southern Lao  with the added development of the Designated Development Zones  (DDZs) to further spur other private catalyst projects which will have significant impact on Lao’s future economy

2.2  Job Creation

During the construction stage, a project of this magnitude will create more than 1,000 direct work force and easily 10,000 indirect employment. The majority of these construction jobs can be undertaken by local workers. For job requiring higher skills, local Laotian worker will be able to learn by working side by side with expert expatriates and acquire the specialized skill in railway engineering, project management, financial management sector and Research & Development (R&D). Skillsets of the Lao labour force will be further enhanced as construction work will be based in international standards thereby raising Lao people’s construction quality and also making it possible for expending Laos workers to work overseas.

The subsequent railway operations will generate up to 500 direct jobs and 10,000 indirect employments; including downstream services. These jobs require higher skilled and will command higher salaries, adding further value to the GDP. 

2.3 Transforming ‘Borders Land-Locked’ To ‘Borders Land-Linked’ Advantage  

Giant Rail Company Limited (GRCL) is committed to working closely with Government of Lao PDR in the long term logistic link development for Lao PDR. Development of the railway link from Savannakhet to Lao Bao would have larger benefit to Lao PDR. This railway link becomes much greater benefit once crucial link in the East West Economic Corridor and even the greater Singapore-Kunming railway Link implementation established  

 The Vietnam Government has gazetted for tapping-up the Lao Bao railway end and develop a link to Dong Ha in the Quang Tri Province and then to the  “A Deep-Seaport”, the deep sea port through a separate agreement with the GRCL’s associate company . Discussions are ongoing with the Thailand Authorities in pursuing a railway link to Savannakhet City from its border town to Khon Kaen which is on the Khorat Plateau, and is the center of the mid-northeastern provincial group of Thailand (across the Mekong). The realization of these connecting projects would transform the ‘land-locked’ disadvantage of Lao into ‘logistic land linked’ benefit. It will improve connectivity and accessibility of Lao PDR to foreign tourists and vice versa. In addition, it will improve Lao’s connectivity and accessibility to the world market and bolster commodities trade abroad. This potential logistical transformation will generate a plethora of business opportunities for local and foreign investors that will propel Lao PDR into a credible international trade presence. 

More significantly, the railway link will expedite Lao’s export of goods and commodities and enhance Lao’s competitiveness in the International market.   

2.4  Creation of Critical Link of Intra-ASEAN East-West Economic Corridor

When the planned railway connection to Khon Kaen (Thailand) is realised, it will spur even greater economic activities and travelling among people of these countries. It will be a crucial link in the “East West Economic Corridor” that will link up four Indochina countries, i.e. Laos, Vietnam, Thailand and Myanmar, an economic corridor of 1,450 km, starting at the seaport of Mawlamyine (Myanmar) and thereon railling through Thailand and also traversing Savannakhet Province to Vietnam through Laos and ending at the My Thuy Deep Sea Port in Quang Tri Province, Vietnam.

 Such exposure to vast lands and population will undoubtedly further boost Laos local and cross border trades and economic activities.

 2.5  New Sources of Foreign Exchange Earnings 

With the logistic land-linked advantage, Laos can be positioned as a crucial logistic and industrial hub that enable greater transit of goods, commodities and raw materials in both directions between neighbouring countries of Thailand and Vietnam particularly; and ASEAN and China generally. This will positively surge source of foreign exchange for Lao’s economy and also bodes well for investments keen on exploiting Laos “Generalised Scheme of Preferences” (GSP) positions with the U.S.A and the European Union.

2.6  New Sources of Direct & Indirect Income to The Government of Lao PDR  

The business and employment opportunities created will generate added sources of income to the Government of Laos in both direct and indirect ways. With the proposed railway and the 11 Designated Development Zones  (DDZs) , more imminent foreign investors will be coming into Laos. The railway system will pave the way forward in satisfying the pent-up demand for better connectivity and accessibility for foreign investors.

3.  IMPACT OF PROJECT ON LAO SOCIO-ECONOMY

3.1 Time-saving

Though the distance of the railway compared with the road is about similar, the travelling speed of Railway is higher with safeness considerations, therefore the travelling time of passengers and freight will be reduced and economic, thus saved the time value for local passengers and freight. 

3.2 Reducing Poverty through Unleashing Economic Opportunities 

With the simplification of the cross border process for passengers and freight for train, and the eventual completion of the railway link to Lao Bao to Dong Ha to a Deep Sea Port, the time saving would be even more significant. This will improve the trade and travelling between Savannakhet and Dong Ha, Quang Tri Province in Vietnam. More importantly, this will open up Lao’s economy and provide operational sea port access to Laos for its import as well as exports. 

The completion of cross border railway links with Vietnam and Thailand, Savannakhet Province, Lao PDR in general, would enjoy tremendous opportunities to develop social economy and reduce poverty through:

  • Increase the volume of exported goods; widen the market of goods and services to potential markets such as: Laos, Thailand and other countries in the region.
  • Exploit the transportation, loading, transiting goods, related logistical services, in particular between Vietnam & Thailand.
  • Fully utilize the local available potentialities of ecological and further boost tourism industry.
  • Connection at  a Deep Sea Port enables connection to the South China Sea and provides access and integration into regional and world economy, in particular East Asia Market.

The increased income would lead to improvement in the standard of living level and increases the productivity of the land uses nearby.

 3.3 Improvement in Safety of Land Transportation

Railway transport is convenient, comfortable and safe. Reduction of heavy freight transportation from the road will improve the safety and reduces maintenance cost of national road no. 9 highway and with transport accident minimised.

3.4 Improvement in Lao’s International Image 

Once the project has been developed and fulfilled according to the plans, this will have a good effect to the society and international. It will bring a new image to the country in terms of tourism, convenient in communication, promotion of investment and distribution of civilization population to rural areas, strengthening the economy and enhance the peacefulness of the society.

 3.5 Other Benefits 

  • Development of the country’s hinterland and increase in per capita income of its habitants; 
  • Increase land value at some locations related to the project; 
  • Spin-off socio and economic benefits.
  • Lao’s Increasing Importance in ASEAN and EWEC.
  • Cascading Effects To Basket of Other Opportunities.