The Thai government has approved a soft loan to Laos for a 33-kilometre road from the Phudu checkpoint in Uttaradit province to Paklai in the Lao province of Xayaburi.
The project is being implemented to boost two-way trade, especially the import of commodities.
The total cost of construction is estimated at 718 million baht. A grant of 143.6 million baht or 20% of the cost has been approved by the cabinet, as has a 574.4-million-baht, 30-year soft loan at 1.5% interest and with a 10-year grace period.
Parkdehans Himathongkorn, deputy government spokesman, said Thai businesses will benefit from the road, as Xayaburi is a major maize-growing province and the Lao economy is expanding by 7-8% a year.
Thai trade with Laos via Uttaradit was 231.18 million baht last year with a surplus in Thailand’s favour of 139.29 million baht.
Currently, traffic via the Phudu temporary checkpoint is 800 cars a day when it is open. It is projected that the traffic will increase to 1,500 to 1,700 cars per day next year when Phudu is upgraded to a permanent checkpoint. Daily traffic could reach 2,500 to 3,000 cars a day over the next 20 years.
The Thai government approved Phudu as a permanent checkpoint in 2009. However, Laos lacks the necessary infrastructure on its side of the border.
Currently, Xayaburi’s population is 360,000 while Paklai’s is 66,000.
Mr Parkdehans said the Foreign Affairs Ministry also supported the road as it will eventually connect to Vientiane Road No. 11, thereby increasing the efficiency of transport along the East-West Economic Corridor connecting Myanmar, Thailand, Laos and Vietnam. It will also improve transport between northern Thailand and southern China.
Taveesak Pungvongsanuraks, chairman of Thai Chamber of Commerce in Uttaradit, expects Phudu to be upgraded to an international checkpoint before the completion of the Phudu-Paklai road.
The chamber said that the government should prepare in advance for the upgrade, a process that normally takes 1-2 years, by making budget allocations for the hiring of officials and equipment purchases.
Infrastructure at the border should also be improved and proper town planning should be undertaken in the area.
Mr Taveesak added that the actual bilateral trade between Phudu and Paklai may be higher than official estimates of 200 million baht a year because some trade is credited to Nan province.
At present, the temporary checkpoint at Phudu opens only two days a week, on Friday and Saturday. The province’s joint public-private committee is recommending that it also open Sunday to boost trade.
Mr Taveesak said two-day-a-week operation at the temporary checkpoint was an obstacle to investment.
As well, trade at the temporary checkpoint is limited to 50,000 baht per day per person, a restriction considered a barrier to trade and investment expansion.
Mr Taveesak expects two-way trade will rapidly grow to 5 billion baht in the short term following the upgrading of the checkpoint to permanent.