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Lao-China railway – an opportunity for more sustainable transport in ASEAN

Photo credit: Shutterstock/Chuyuss

The inauguration of 414 km electrified standard gauge Lao-China railway line has a potential to change the dynamics of international transport among the ASEAN member States and beyond.

The railway line would link ASEAN’s railway network with the wider railway corridors along the Trans-Asian Railway Network, opening new prospects for international railway transport for these countries.

It can transform the Lao People’s Democratic Republic from a landlocked developing country to a land-linked one by integrating the rail network of the ASEAN countries.

And it will give a big push to railway transport that has hitherto been underutilized in ASEAN opening opportunities for enhancing sustainability of transport.

However, due to the focus on road transport for the past decades and consequent under investment in rail, ASEAN countries would need to exert extra efforts to take advantage of emerging opportunities in rail transport.

According to a recent World Bank report the Lao-China line has the potential to more than double the transit trade through Lao PDR by 2030 to 3.9 million tons from 1.6 million tons in 2016. A part of this shift would come from goods currently transported between ASEAN and China through maritime routes.

There is also huge potential for container transport between ASEAN and Europe through this railway line along the wider routes of the Trans-Asian Railway network.

Harnessing these opportunities, however, would require not only investing in hard infrastructure, but also, creating an appropriate institutional mechanism at the ASEAN level for articulating a common vision and providing coherence to the initiatives for developing rail transport among the ASEAN member States.

Such a mechanism would also ensure that rail investments create catalytic and synergetic impact in the ASEAN as well as make transport more sustainable supporting them in realizing the Sustainable Development Goals.

While improving rail infrastructure, ASEAN countries would concurrently need to enhance rail interoperability as a lever to improve rail competitiveness.

ESCAP has region-wide expertise in promoting international railway transport for many years that has been reaffirmed in the recently adopted Regional Action Programme on Sustainable Transport Development in Asia and the Pacific (2022-2026).

An intergovernmental agreement on the Trans-Asian Railway network that was formalized by ESCAP member States in 2006 entered into force in 2009 and  has  currently 21 contracting parties including most of the ASEAN countries.

The agreement established a working group that serves as a regional platform for countries to harness emerging opportunities in international railway transport. During the last working group meeting that took place virtually in May 2021, it supported ten areas of ESCAP’s work to foster international railway transport.

These ten areas intend to further enhance the competitive advantages of rail transport by (a) streamlining border crossing formalities through, among others, by electronic information exchange; (b) accelerating rail digital transformation;(c) promoting innovative policies to encourage shift to rail; and (d) decarbonizing rail transport.

Given ESCAP’s extensive work in rail transport, together with the ASEAN secretariat, it has engaged ASEAN countries on the ways to enhance rail competitiveness through a series of webinars.

The first webinar held in September 2021 discussed a range of issues such as accelerating rail digital transformation, streamlining border crossing formalities for international rail transport as well as setting up institutional mechanism for enhancing rail interoperability.

The second webinar that took place in February 2022 focused on streamlining customs formalities through potential use of the ASEAN customs transit system for international rail operations.

This webinar, among others, recommended that the railway consignment note being used in ASEAN countries need to be harmonized along the common consignment note that is widely used in international railway transport and this could also be used as a customs transit declaration.

It also reiterated the need to enhance rail interoperability in all its dimensions to improve rail competitiveness and supported the proposal to develop a strategic plan for enhancing rail interoperability to augment rail competitiveness in ASEAN.

Such a strategic plan while providing political assertion and coherence to the initiatives would create synergies through partnerships as well as bring the expertise of global railway organizations for ASEAN member States. ESCAP stands ready to provide its expertise and leverage its strengths to support ASEAN community in this endeavor.

The operationalization of Lao-China rail may well turn out to be a watershed event that could provide much needed momentum to boost railway transport and thereby deepen sustainability of transport in ASEAN. The task of shifting towards rail would by no means be easy, however, in the decade of action for the sustainable development goals, it is time for bold and transformative actions.

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Sandeep Jain
Economic Affairs Officer
Transport +66 2 288-1234 [email protected]