This spring, Laos is rapidly pursuing its dreams.

Text by Zhang Jianhua, reporter for Global Magazine (reporting from Vientiane)

 

Editor/Wu Meina

 

In the spring of 2023, Laos—a nation that endured hardship yet nurtured hope and accumulated strength during the COVID-19 pandemic—is bursting with vitality deep in the heart of the Indochinese Peninsula, passionately pursuing its dreams.

 

The tourism industry is making a strong recovery.

 

On January 20, the General Office of the Ministry of Culture and Tourism issued a notice announcing that, starting February 6, pilot programs will resume allowing travel agencies to organize outbound group tours for Chinese citizens to 20 countries, including Laos, as well as “airfare + hotel” packages.

 

In early February, Daranee, Director of the Tourism Management Department of Laos’ Ministry of Information, Culture, and Tourism, said in an interview with the media that Lao government agencies are working with local travel agencies and hotels to improve tourism facilities and services, in preparation for the return of Chinese tour groups to Laos.

 

Tourism is a top priority for the Lao government in its efforts to revive the economy. The Lao government expects to welcome 1.4 million tourists in 2023, generating revenue of 340 million U.S. dollars. In this context, the role of the China-Laos Railway has drawn considerable attention.

 

“With the launch of the China-Laos Railway, traveling to Laos has become much more convenient. We anticipate a significant increase in Chinese tourists visiting Laos, so we’ve recently set up a new Chinese-language tourism services department specifically to enhance communication with Chinese travel agencies and social media platforms,” said a representative from Laos Intira Group to reporters from Global Magazine. Song Pei, President of the Laos Forest Conservation Ecotourism Company, noted that the China-Laos Railway is now Laos’s greatest asset, as it makes it far easier for tourists to travel to the country.

 

Liu Hong, General Manager of the China-Laos Railway Co., Ltd., which is responsible for operating the Laos section of the China-Laos Railway, introduced that the Laos section of the railway is currently experiencing robust passenger and freight traffic. In 2022, the railway’s annual transportation revenue exceeded the budget by 45%, and investment completion surpassed the planned target by 150%. The railway’s transport service capacity has significantly improved: all 10 passenger stations and 7 freight stations are now fully operational. The number of passenger trains has increased from an initial two pairs per day to five pairs per day. In 2022, the railway carried nearly 1.4 million passengers in total, and the number of cross-border freight trains has risen from an initial one pair per day to seven pairs per day.

 

Speaking at the “One-Year Summary Meeting for the China-Laos Railway” held on December 3, 2022, at Vientiane’s railway station—the capital of Laos—then-Deputy Prime Minister Sonexay said that the China-Laos Railway is a landmark project symbolizing the friendship between Laos and China and has become a source of pride for the Lao people and the nation. He pointed out that since its opening and operation, the China-Laos Railway has profoundly transformed Laos’ transportation landscape, fulfilling Laos’ long-held aspiration of transitioning from a “landlocked country” to a “land-linked country” and significantly enhancing Laos’ international strategic position. Today, Laos has leapt from having only 3.5 kilometers of railway in the past—placing it last among nearly 150 countries with railways—in terms of per capita railway mileage—to rank 28th globally and first within ASEAN. Laos has also emerged as a key transportation hub in the Indochinese Peninsula.

 

The “Road to Dreams” Connects All Directions

 

The China-Laos Railway is not only a dream road for Laos but also the path through which Laos is pursuing its dreams. Thanks to this railway, Laos’ pursuit of its dreams has become more realistic, and its future has grown broader and clearer.

 

“The Laos-China railway has transformed from a distant, unattainable dream into a reality, effectively addressing a key bottleneck in Laos’ development.” Songma, Vice Chairman of the Lao National Assembly, previously served for a long time as Minister of Public Works and Transport of Laos. He personally witnessed the laying of the foundation stone for the Laos-China railway, the preparations for its construction, and even the earlier planning and negotiation stages. Speaking to a reporter from Global Magazine, he said that once the entire Laos-China railway is fully operational, it will bring new opportunities for the development of various sectors in Laos and propel the country’s economy to a new level. “Take agriculture, for example—Laos still has vast tracts of idle land, much of which remains underutilized. In the past, some Chinese enterprises have ventured into farming and animal husbandry in Laos, but they’ve been constrained by transportation time and costs. At times, truck queues before the Laos-China border customs checkpoint stretched for over ten kilometers. The Laos-China railway will surely change this situation. There’s tremendous potential for agricultural development in Laos, especially in further advancing the deep processing of agricultural products.”

 

Laos’s opportunity to realize its development aspirations lies, to a considerable extent, in its endowments of land, climate, and geographic location. Therefore, beyond the promising prospects for tourism and logistics brought about by the opening of the China-Laos Railway and other connectivity projects, and aside from its visible but limited energy and mineral resources, agriculture and forestry represent Laos’s inexhaustible “rich mine.”

 

Adequate rainfall and temperature conditions, combined with vast alluvial plains, can serve as the foundation for the sustainable agricultural, social, and economic development of Laos. Most of Laos’ plains are fertile, while its mountainous regions boast dense forests. With a country that remains free from industrial pollution and is situated close to abundant water resources, as long as there is appropriate investment in irrigation infrastructure, agriculture, forestry, animal husbandry, and fisheries—all sectors have tremendous potential for growth and development.

 

Laos’s agricultural resources have not yet been effectively and safely developed. China is working with the Lao side to promote cooperation, transforming Laos’s natural resource advantages into opportunities for development and prosperity.

 

China has granted Laos a quota of 500,000 head of beef cattle for export, marking a breakthrough in Sino-Lao beef trade. High-value fruit and vegetable cultivation has also become a popular investment option for Chinese agricultural enterprises in Laos. In southern Laos, several Chinese companies plan to invest hundreds of millions of yuan in durian cultivation; in northern Laos, Chinese enterprises are making substantial investments in the cultivation of rubber, bananas, watermelons, and other crops. Across Laos, cassava cultivation and aquaculture aimed at exports to China are booming.

 

“We’ve got to make up for the time we’ve lost. Over the past two months, I’ve been traveling back and forth between China and abroad—more flights than I took in the previous three years,” Xu Guowu, Chairman of the Laos-China Chamber of Commerce, told a reporter from Global magazine in early February. “Many of my chamber colleagues feel the same way—they’re all sensing the robust demand in the domestic market, and the China-Laos Railway has sparked even greater visions and actions for economic cooperation between China and Laos.”

 

At the end of January, Xu Guowu traveled to Laos to accelerate the implementation of the modern agricultural industrial park project in Vientiane, jointly developed by China and Laos. “The Chinese market has a broad demand for Lao agricultural products—especially high-quality tropical agroforestry products that are unique to Laos. However, for a long time, due to insufficient storage facilities, low added value of agricultural products, and high logistics costs, it has been difficult for Lao agricultural products to enter the Chinese market in large quantities,” said Xu Guowu. He expressed his hope that this industrial park could be integrated into the Belt and Road Initiative, leveraging China-Laos cooperation to help Laos establish itself as a major production base for high-quality agricultural products. Through enhanced connectivity initiatives, Vientiane could be transformed into a modern agricultural industry hub and gateway for the Indochinese Peninsula.

 

Optimistic about economic growth in the coming years.

 

Dreams are precious, but realizing them is naturally not easy. Especially in mid-2022, Laos’ economy faced three prominent challenges: high inflation, currency depreciation, and shortages of goods—particularly fuel.

 

At the time, people in Vientiane often had to queue for one or two hours just to buy enough fuel for a few round trips to and from their workplaces. Between May and June, fuel prices doubled year-on-year, triggering a cascading rise in living and production costs nationwide. In 2022, the inflation rate climbed month by month, with the annual inflation rate jumping from 3.8% in 2021 to 23% in 2022. High inflation, the appreciation of the U.S. dollar, and foreign exchange shortages led to a sustained depreciation of Laos’ national currency, the kip. According to official exchange rates released by the Lao central bank, by the end of 2022, 1 U.S. dollar could be exchanged for approximately 17,000 kips, whereas at the beginning of 2022, 1 U.S. dollar was worth about 11,000 kips.

 

 

At the end of December 2022, Sonexay was overwhelmingly elected as the new Prime Minister of Laos. According to an article published by Laos’ Vientiane Times, Laos is now facing the greatest socio-economic development challenges in decades. “I am fully aware that this is a heavy and challenging task—and it’s also a test for me,” said Sonexay. At the cabinet meeting in February of this year, he urged all government departments to take effective measures to address macroeconomic weaknesses and improve people’s living standards, emphasizing that the Lao government’s top priority is stabilizing the currency and controlling prices.

 

To this end, the Lao central bank has adjusted interest rates, issued government bonds, announced restrictions on foreign exchange transactions and usage, promoted exports, and created a favorable environment for attracting foreign investment, among other measures. As of February this year, the kip’s value has remained largely stable, prices related to people’s livelihoods have stabilized, and various sectors are showing signs of recovery. Thanks to adjustments in the mechanism and multi-party funding, fuel supplies have not experienced nationwide shortages since mid-last year. At its February cabinet meeting, Laos stated that it would raise additional funds to repay debts and absolutely prevent the country from sliding into a debt crisis.

 

“Over the past 47 years, Laos has borrowed approximately 5 billion U.S. dollars for infrastructure investment and about 4 billion U.S. dollars for commercial production aimed at exports. These loans have been essential to our country’s development over the past several years,” said Bounthong, former Minister of Finance of Laos, during a parliamentary questioning in June 2022. He added that the public debt continues to rise because Laos is a less developed country that relies heavily on foreign investment to drive its domestic economic growth. “The government-guaranteed public debt management agency remains in a safe zone. We will not allow Laos to become a country that defaults on its debts.”

 

Economic experts here believe that Laos is poised for robust economic growth in the coming years. Moreover, Laos’s debt indicators show that the pace of growth in its external debt has slowed somewhat in recent years. Since Laos’s external debt is predominantly long-term, with short-term external debt accounting for only a limited share, and since most of its external debt consists of concessional loans and bilateral public debt, Laos’s debt indicators are trending positively. Additionally, public external debt is expected to improve steadily as it is being used for profitable projects.