World Bank Document

1 KunmingVientianeBangkokLAOSCHINATHAILAND FROM LANDLOCKED TO LAND-LINKEDUNLOCKING THE POTENTIAL OF LAO-CHINA RAIL CONNECTIVITYP ublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure Authorized 2020 The World Bank1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: rights reservedThis work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work.

2 The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such and PermissionsThe material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for non-commercial purposes as long as full attribution to this work is Please cite the work as follows: From Landlocked to Land-Linked: Unlocking the Potential of Lao-China Rail Connectivity World Bank. All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625.

3 E-mail: From Landlocked to Land-Linked: Unlocking the Potential of Lao-China Rail ConnectivityFROM LANDLOCKED TO LAND-LINKEDUNLOCKING THE POTENTIAL OF LAO-CHINA RAIL CONNECTIVITYA dvisory Services and Analytics (P168595) Lao People s Democratic Republic East Asia and PacificPAGE 2 PAGE 6 AcknowledgementsPAGE 7 AbbreviationsPAGE 8 Executive SummaryPAGE 13 Introduction to the Lao-China RailwayPAGE Background and ObjectivesPAGE General Characteristics of the Railway CorridorPAGE Framework of StudyPAGE 26 Understanding the Demand for Transport, Trade, and Logistics ServicesPAGE Freight Demand for Railway ServicesPAGE Understanding Passenger DemandPAGE 37 Understanding Bulk Shipment CostsPAGE 42 Assessment of the Transport Connectivity GapPAGE Lao PDR s Transport Infrastructure ChallengesPAGE Strengthening Key Corridors Crossing the RailwayPAGE Facilitating Access to Tourism AreasPAGE Managing the Transport Network under Funding ConstraintsPAGE Key Policy RecommendationsTABLE OF CONTENTSC hapter 1.

4 Chapter 2 Chapter 3 PAGE 3 From Landlocked to Land-Linked: Unlocking the Potential of Lao-China Rail ConnectivityPAGE 51 Assessment of Logistics Development ChallengesPAGE Logistics and Transport Infrastructure: Developing Inland Clearance DepotsPAGE Availability of Transport Logistics Services in Lao PDRPAGE The Changing Requirements of a Rail-Linked EconomyPAGE Logistics Performance and Operational ChallengesPAGE 67 Key Policy RecommendationsPAGE 69 Trade Facilitation Reforms and PrioritiesPAGE Benefits of Trade Facilitation Reforms for the Railway Corridor and the BRI NetwortPAGE Trade Facilitation Performance along the CorridorPAGE 75 Trade Facilitation Performance in Lao PDRPAGE Challenges of a Rail CorridorPAGE Key Policy RecommendationsPAGE 90 AnnexesPAGE 91 Annex A Lao PDR and the Belt Road Initiative.

5 Key Facts and FiguresPAGE 98 Annex B Annexes on Trade Facilitation ChapterLao PDR s alignment with the WTO TFAR egulatory Trade Facilitation Reform Priorities based on WCO RKCPAGE 100 Annex C Potential Social Impacts of the Lao-China RailwayChapter 4 Chapter 5 AnnexesPAGE 4 FIGURESF igure 1: Lao-China Railway is One of the BRI Projects Connecting China with Southeast Asia 14 Figure 2: China-Lao-Thailand Sections of the CICPEC 15 Figure 3: Lao-China Railway Project s Financing Structure 20 Figure 4. LAO PDR s Key Road Corridors 22 Figure 5: Kilometers of Roads below Fair Condition by Province 23 Figure 6: Analytical Framework 25 Figure 7: China s Trade with Lao PDR, Thailand, Malaysia, and Singapore by Land, 2016 28 Figure 8: China s Land-Based Trade with Thailand, 2016 29 Figure 9: China s Land-Based Trade with Malaysia and Singapore, 2016 29 Figure 10.

6 China s Imports from Lao PDR, 2016 30 Figure 11: China s Exports to Lao PDR, 2016 30 Figure 12: Chinese Mineral Imports from Lao PDR by Transport Mode, 2016 31 Figure 13: Destination of Chinese Mineral Imports from Lao PDR by Sea, 2016 31 Figure 14: Projection of Land-Based Trade between China and Thailand, Malaysia, and Singapore by 2030 32 Figure 15: Projection of Land-Based Trade between China and Lao PDR by 2030 32 Figure 16: Projection of Bilateral Trade by Commodity by 2030 33 Figure 17: Distribution of Cross-Border Trips at Boten by Province in Lao PDR, 2015 34 Figure 18: China-Lao-Thailand Trade Scenarios 38 Figure 19: Estimated Costs for the Transit-Trade between Laem Chabang and Kunming 39 Figure 20: Estimated Cost for Bilateral Trade between Laem Chabang and Luang Prabang 41 Figure 21: Estimated Cost for the Bilateral Trade between vientiane and Kunming 41 Figure 22.

7 Estimated Cost of Domestic Trade between vientiane and Luang Prabang 41 Figure 23: China-Thailand Transport Corridor 45 Figure 24. Thailand-Lao PDR-Vietnam Corridor 45 Figure 25: Luang Prabang Area 46 Figure 26: The Road Fund compared to Road Maintenance Needs, 2018 48 Figure 27: Improve Infrastructure Connectivity 49 Figure 28. Adopt an Integrated Transport Asset Management Approach 49 Figure 29: Implement Plans and Regulations for the Railway 50 Figure 30: Policies and Regulations Related to Dry Ports 54 Figure 31: Rail Box and Well Cars 60 Figure 32: Encourage Effective Competition in the Logistics Sector 67 Figure 33: Ensure Public Access to Railheads and Other Rail Infrastructure 68 Figure 34: Recommendation 3.

8 Regulate the Use of Containers 68 Figure 35: Main Reasons for Extended Delays at Rail Border Crossings 86 Figure 36: Develop a Trade Facilitation Reform Plan and Improve Coordination and Collaboration 87 Figure 37: Determine the Locations and Staff Levels of Border Control Stations 87 Figure 38: Reform and Modernize Operational Practices 88 Figure 39: Increase the Transparency and Predictability of Regulations 88 Figure 40: Increase the Use of ICT 88 Figure 41: Reform the Regulatory Practices of All Relevant Public Agencies 89 Figure 42: Establish an Effective Transit Regime 89 PAGE 5 From Lendlockgd to Lend-Linkgd: Unlockina thg Potgntiel of Leo-Chine Reil ConngctivityTABLEST able 1: Technical and Main Engineering Data 19 Table 2: Tourism Sector Data 21 Table 3.

9 GDP in Lao PDR and the Capital of vientiane , 2016-17 21 Table 4: GDP Growth Rate by Sector, 2017 21 Table 5: Road Length (Km) and Condition by Road Class and Province 23 Table 6: Destination of Lao PDR s Land-Based Agricultural Exports to China, 2016 31 Table 7: Total Mineral Production by Province 31 Table 8: Trade between Selected Provinces in China and ASEAN by Mode of Transport, 2016 33 Table 9: Cross-Border Passenger Projections 34 Table 10: Estimated Rail Trips Made by Residents within Lao PDR by Province, 2030 36 Table 11: Scenarios under the Supply-Chain Analysis 37 Table 12: Estimated Costs for Selected Transport Routes and Scenarios 40 Table 13: Minimum Infrastructure Needed to Handle Containers in Lao PDR 53 Table 14: Multimodal Transport and Value-Added Logistics Services 59 Table 15.

10 Types of Railroad Cars Required for Unitized and Containerized Freight 60 Table 16: Key Regulations That Affect Business Operations in the Transport and Logistics Sector 65 Table 17: ASEAN Liberalization Timeline 6