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China Business Weekly

Greater China, Thailand connectivity opens up new opportunities

There was a major breakthrough in connectivity between Thailand and China in December when the 4th Mekong Friendship bridge opened, linking Thailand and Laos between Chong Khong and Huay Xai. This is the last and crucial link in the Kunming-Bangkok expressway which is part of a grand infrastructure plan known as the Greater Mekong Subregion's (GMS) North-South corridor, and will create more efficient and rapid transport between China and Southeast Asia.

The long-awaited bridge was originally conceived in the late 1990s, but its construction was stalled for many years due to various political, administrative and economic issues. While connecting three countries, Thailand, Laos and China, it is particularly critical for China, as it provides the land-locked province of Yunnan with convenient access to Bangkok and the deep-sea port of Laem Chabang.

Until fairly recently, the main method for transporting goods between China and Thailand was by barge along the Mekong River. This is not only slow and cumbersome, but it is becoming increasingly difficult due to the increased frequency of dry spells in the river.

The first major stage in the road corridor was the construction by the Chinese and Laotian governments of a major highway across Laos connecting China with Huay Xai, which was completed in 2008. Before that the roads were very basic and extremely difficult for trucks to navigate. Although the completion of the highway was a major step forward, trucks still needed to cross the Mekong to Thailand by barge and this naturally meant long queues and delays.

Now that the bridge has been finished, new customs facilities have been established at Chong Khong. Once roads on the Thai side of the bridge are upgraded, the traveling time from Kunming to Bangkok should be reduced to less than 18 hours - a considerable improvement on the previous travel time of several days.

Although clearly China will be a major beneficiary of the Kunming-Bangkok expressway and bridge, the benefits for Thailand are also considerable. Already there has been an influx of investment into Chiang Rai, which is expected to become a manufacturing hub for Chinese industry, as goods will be finished and re-exported to markets in ASEAN and elsewhere. Land prices have shot up in the area and tourism will increase. Laos will gain new economic opportunities as it goes from being a land-locked country to a regional trade crossroads.

The rapid economic development in Chiang Mai is a sign of things to come as Thailand becomes integrated into a larger regional economic community. New transport links always have an economic impact and the North-South corridor could provide an even bigger boost to the regional economy than the ASEAN Economic Community.

For more columns in this series please see www.bangkokbank.com




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