The opening of the China-Laos Railway last December marked a key milestone for business exchange between Asean and China. Much has been said about how the project could help strengthen the economic presence of Thailand in the region, China's western provinces and the Belt-and Road networks, and propel regional economic development.
As well as bridging so-called missing transport links and facilitating cross-border business, the policy discourse has not yet focused on its long-term impacts to Thailand's competitiveness, despite the rail project being a game-changer in the region's geo-economy.
The Lao PRD's is becoming a land-linked connectivity hub. It is perhaps timely to rethink Thailand's long-standing connectivity concept, considering that the comparative advantage of its geography may no longer be as prominent as before partly due to the rail project.
Geography still matters, no doubt, and connectivity too. But at this conjuncture, Thailand should shift its focus beyond connectivity towards building an open, business-conducive 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 also constitute essential elements.
The train operated by China-Laos railway is the first railway project built with Chinese investment.
Exporting business
To maximise the developmental impacts of the project, careful planning of our northeastern region is required.
While the rail industry, BCG economy, logistics business, digital economy and healthcare services should be prioritised, we should also discuss whether the expected tourist increase actually helps spur the region's long-term competitiveness, given high crisis-sensitivity and relatively low R&D investment in tourism.
Moreover, Thailand's business presence in the Lao PDR, China and in BRI networks must be strategically and systematically promoted, especially in sectors linked to Thai domestic supply chains and global market, to create a business-friendly, cost-effective ecosystem. "We must help Thailand export its business," Dr Kanit Sangsubhan, secretary-general of the Eastern Economic Corridor Office (EECO) says.
Renewing strength
Looking ahead, the world economy will likely remain volatile and unpredictable. Tight-knitted global value chains could amplify crisis-vulnerability of local supply chains.
At the regional level, with the Regional Comprehensive Economic Partnership having entered into force in January 2022, the economic interactions between China and Asean are expected to intensify.
Thailand will be able to improve its economic presence in the region, only if it plays a significant role in supporting growth and integration and strengthening macroeconomic stability in the region. This, in turn, can be realised through engaging all partners in creating resilient value chains, adopting international standards and promoting economic compatibility within the region and beyond.