Vietnam and Laos are poised to strengthen their public-private partnerships (PPP) to accelerate infrastructure development, a critical factor in enhancing economic connectivity and promoting sustainable growth. Among the top priorities in these efforts are the Hanoi-Vientiane expressway and the Vung Ang-Vientiane railway, two transformative projects that are set to reshape the region’s logistics and trade networks, positioning both countries for greater economic integration.

On August 16, 2024, a mid-term review meeting was held in Nghe An, co-chaired by officials from the Ministries of Planning and Investment of both Vietnam and Laos. During this session, the progress of the 2024 Cooperation Agreement and the 2021-2025 Bilateral Cooperation Agreement was thoroughly evaluated. Leading the discussions, Laos’ Minister of Planning and Investment, Phet Phomphiphak, praised the substantial achievements in economic cooperation between the two nations. He noted that, since 2021, Laos had approved several key Vietnamese investment projects, totaling $869.9 million, including six new projects valued at $339 million in the first half of 2024 alone.

The Hanoi-Vientiane expressway and the Vung Ang-Vientiane railway are more than just infrastructure projects; they are strategic investments designed to unlock the full economic potential of both nations. As landlocked Laos has limited direct access to seaports, improving its transportation links with Vietnam is crucial. The expressway will provide a vital land corridor, enabling faster and more efficient movement of goods between the Lao capital and Vietnam’s northern regions, and further to the coastal ports, which are essential for Laos’ access to global markets. This infrastructure will open new trade routes, reduce logistics costs, and increase trade volume between the two countries, providing a lifeline for Laos' export-driven economy.

Meanwhile, the Vung Ang-Vientiane railway project, which includes links from Vientiane through the central Lao towns of Tha Khek and Tan Ap to Vietnam’s strategic Vung Ang port, is a key component of Laos’ ambition to transform itself into a land-linked country. This railway will allow Laos to overcome some of the transportation constraints that have long limited its ability to fully integrate into global supply chains. By reducing the reliance on road transport, the railway will enable a higher volume of goods to be transported more efficiently, cutting down on transit times and costs.

Both projects hold enormous potential not just for bilateral trade but for positioning Vietnam and Laos as critical players in the broader Southeast Asian economic landscape. The enhanced connectivity will allow the two nations to tap into the wider ASEAN market more effectively. This could potentially attract more foreign direct investment as businesses look for strategic locations that offer reliable access to both regional and global markets.

Deputy Minister of Planning and Investment Tran Quoc Phuong delivered a speech.

To bring these ambitious infrastructure projects to fruition, both Vietnam and Laos are relying on public-private partnerships, a mechanism that pools the strengths and resources of both the public and private sectors. For large-scale infrastructure investments like the Hanoi-Vientiane expressway and the Vung Ang railway, the financial demands are considerable, and public funds alone may be insufficient to cover all costs. By involving the private sector, both nations aim to leverage additional financial resources while benefiting from the expertise and operational efficiency that private enterprises bring to such complex projects.

PPPs offer a flexible and dynamic model that can accommodate the diverse needs of infrastructure development. For Vietnam and Laos, the strategic use of PPPs allows them to share the risks and rewards associated with these projects. For private investors, participation in these projects provides access to lucrative long-term revenue streams, particularly as the demand for better transport and logistics networks continues to grow across Southeast Asia.

Moreover, the involvement of private investors introduces a layer of accountability and performance incentives, as these partners are driven by profitability and efficiency. This, in turn, ensures that the projects remain on track, both in terms of budget and timelines. In the case of the Hanoi-Vientiane expressway, for instance, private investors are likely to prioritize cutting-edge construction technologies and methods that will enhance the durability and functionality of the expressway, ultimately improving trade efficiency between the two nations.

Minister of Planning and Investment of Laos, Chairman of the Laos-Vietnam Cooperation Committee, Phet Phomphiphak, delivered a speech.

For Laos, the strategic importance of these infrastructure projects cannot be overstated. As a landlocked nation, Laos has historically faced challenges in accessing global markets due to its lack of direct sea routes. By developing its transport infrastructure in partnership with Vietnam, Laos can overcome these geographical disadvantages, significantly reducing its reliance on more expensive or inefficient routes through third countries. The Vung Ang-Vientiane railway will become a crucial lifeline for the Lao economy, allowing for a more seamless and cost-effective flow of goods, not only within the region but also to international markets via Vietnam’s ports.

Furthermore, by connecting Laos with Vietnam’s Vung Ang port, the railway will integrate Laos into the East-West Economic Corridor, a major transnational network that links Myanmar, Thailand, Laos, and Vietnam. This will boost Laos’ position as a transit hub, enabling it to act as a bridge for goods moving between Southeast Asia’s inland regions and coastal ports. Such integration into regional supply chains is critical for the diversification and modernization of Laos' economy, which has traditionally been reliant on agriculture and natural resources.

The expressway, meanwhile, will shorten travel times between Hanoi and Vientiane, further strengthening trade and people-to-people exchanges. Improved road infrastructure will stimulate cross-border trade, boost tourism, and provide better access to essential services. For Vietnamese businesses, particularly in the manufacturing and agricultural sectors, the expressway offers new opportunities to expand their operations into Laos, benefiting from lower production costs and access to new markets.

In parallel with transportation infrastructure, Vietnam and Laos are also expanding their cooperation in energy and digital infrastructure. Vietnam has committed to purchasing electricity from Laos, helping to meet its growing domestic demand while providing a stable revenue stream for Laos. Plans to integrate the power grids of Vietnam, Laos, and Cambodia will further enhance energy security in the region. This interconnected grid will allow the three countries to share resources more effectively, stabilize supply, and reduce the risks associated with energy shortages.

Digital infrastructure is another critical area of focus, with both countries recognizing the importance of improving telecommunications and digital connectivity as part of their overall development strategy. Enhanced digital infrastructure will facilitate better communication, improve business operations, and enable both nations to participate more fully in the global digital economy.

The infrastructure investments underway between Vietnam and Laos, particularly the Hanoi-Vientiane expressway and the Vung Ang-Vientiane railway, are pivotal for both nations' economic futures. By embracing public-private partnerships, the two countries are taking bold steps to modernize their transportation networks, enhance regional connectivity, and unlock new economic opportunities. These projects will not only improve Laos' access to global markets but also solidify Vietnam's role as a gateway for trade between Southeast Asia and the wider world. The strategic importance of these infrastructure investments will be felt for decades to come, driving sustained growth and deeper cooperation between the two nations.