Business

FRANKFURT — TUI, one of the largest tourism operators, said on Wednesday it expects to see a return to pre-pandemic booking levels in the summer of 2022, after running up a heavy loss in its last financial year.

TUI, which runs its business year from October to September, said it booked net loss of 2.48 billion euros ($2.8 billion) for the year just ended, following a record loss of 3.1 billion euros the year before, as the coronavirus pandemic virtually shut down the tourism industry.

Nevertheless, Chief Executive Friedrich Joussen said the group's operating business was "back" and he expected "booking levels similar to pre-corona 2019" in the peak travel season of the European summer next year.

In the period from July to September, traditionally the strongest period for the industry, the Hanover-based group said its revenues nearly tripled to 3.5 billion euros. 

At an operating, or underlying level, it booked a loss of 97 million euros for the three-month period compared with a loss of 570 million euros previously.

Hotels, crusies and chartered flights — the core of TUI's business — have been severely impacted by the crisis.

In 2020, the German group responded by announcing plans to cut costs by 400 million euros each year by 2023.

The first quarter of its current business year, the three months to December was "almost fully booked", said Joussen and the group was now operating at "69 per cent of the pre-crisis level capacities". 

The spread of the new Omicron variant of the coronavirus is among the factors that could affect the group's plans for the year ahead, as governments reintroduce measures to rein in infections.

In October, TUI raised 1.1 billion euros in capital to refinance and begin repaying massive government loans it received towards the beginning of the pandemic.

RIYADH — Saudi Aramco said it has signed a $15.5 billion lease and leaseback agreement for its gas pipeline network with a consortium led by BlackRock Real Assets and Hassana Investment Company in its second major infrastructure deal this year.

The deal signed on Monday underscores how Aramco is seeking to monetise its once-untouchable assets to generate revenue for the Saudi government as it accelerates efforts to diversify the oil-reliant economy.

In June, Aramco sold a 49 per cent stake in its oil pipeline business to a consortium led by US-based EIG Global Energy Partners for $12.4 billion.

Under the new deal, a newly formed subsidiary, Aramco Gas Pipelines Company, will lease usage rights in Aramco's gas pipeline network and lease them back to Aramco for a 20-year period, the Saudi oil firm said in a statement.

In return, Aramco Gas Pipelines Company will receive a tariff payable by Aramco for the gas products that flow through the network, backed by minimum commitments on throughput.

Aramco will hold a 51 per cent stake in Aramco Gas Pipeline Company and sell a 49 per cent stake to investors led by BlackRock and Hassana, a Saudi state-backed investment management firm. 

"With gas expected to play a key role in the global transition to a more sustainable energy future, our partners will benefit from a deal tied to a world-class gas infrastructure asset," Aramco President and CEO Amin Nasser said in a statement.

"BlackRock is pleased to work with Saudi Aramco and Hassana on this landmark transaction for Saudi Arabia's infrastructure," BlackRock Chairman and CEO Larry Fink said.

"Aramco and Saudi Arabia are taking meaningful, forward-looking steps to transition the Saudi economy toward renewables, clean hydrogen and a net zero future."

Aramco, the world's biggest oil producer, has pledged to achieve net zero carbon emissions in its operations by 2050. 

Saudi Arabia has also pledged to achieve net zero carbon emissions by 2060.

"Saudi Arabia is restructuring Aramco by exiting sectors and focusing on and investing in others, such as hydrogen production," Cairo-based independent analyst Mahmoud Negm said.

"The shift is happening in a non-abrupt manner, with Aramco maintaining 51 per cent stake and clear agreements that no restrictions can be placed on it." 

According to Ibrahim Al Ghitani, from the Abu Dhabi-based Future for Advanced Research and Studies, the kingdom is restructuring to generate liquidity and attract foreign investments. 

"Saudi Arabia is not completely abandoning these assets... but continues to maintain the status quo of control," Ghitani said.

"It is trying to change the local economy's image... with messages and signs that it continues to open the economy for the private sector and foreign investors." 

Long seen as the kingdom's "crown jewel", Aramco and its assets were once under tight government control and considered off-limits to outside investment.

But as Crown Prince Mohammed Bin Salman, is pushing to implement his "Vision 2030" reform programme, the kingdom has shown readiness to cede some control.

Aramco sold a sliver of its shares on the Saudi bourse in December 2019, generating $29.4 billion in the world's biggest initial public offering.

KUNMING, China — Boxes of roses, lilies and carnations pile up as influencer Caicai speaks into her smartphone from a small studio at Asia's "biggest" flower market — with thousands of customers eagerly awaiting her view on the best deals.

E-commerce is big business in China and influencers and livestreamers have made their fortunes showcasing products for luxury brands and cosmetics firms.

Now the country’s horticulture industry, worth an estimated 160 billion yuan ($25.1 billion), is getting in on the action. While people used to visit markets and florists themselves, they are now increasingly shopping for blooms via their smartphones. 

Online retail now represents more than half the sector's turnover.

"Five bouquets, only 39.8 yuan [$6.25] for those that order right away," the 23-year-old says — a sales pitch she hones for eight hours a day delivered at lightning speed.

"When you sell something for a long time, the words come naturally," she said.

Earnings can be unreliable, however.

"Flower sales vary in busy and slack seasons, so a livestreamers' daily income is very variable. All I can say is that the more you work, the luckier you will be," she explains, as colleagues next to her put the bouquets in cardboard boxes ready to be shipped.

Demand for cut flowers has soared in China as standards of living have risen, with the southern province of Yunnan at the epicenter of that boom thanks to its all-year mild climate.

Provincial capital Kunming boasts the biggest flower market in Asia — the second biggest in the world after Aalsmeer in The Netherlands. 

'Flowers are vital' 

Everyday at 3:00pm, a rose auction starts in a huge room where over 600 buyers share the day's supply behind their screens.

"Yunnan represents around 80 per cent of flower production in China and 70-80 per cent of the flowers on sale pass through our auction room," says Zhang Tao, responsible for the market's logistics — a crucial role when the goods are so perishable.

"That represents on average more than four million flowers sold every day. For Chinese Valentine's day, we sold 9.3 million in a day."

They are shipped across China within 48 hours.

On the retail side of the market, another influencer, Bi Xixi, showcases flowers and bouquets from stalls to sell on to her own online subscribers. 

Wearing a traditional Chinese dress known as a hanfu, passing from one stand to another with her phone at the end of a cane, the 32-year-old has racked up around 60,000 subscribers.

She picks up flowers, shows them on her screen while followers hurry to place their orders.

Bi Xixi started livestreaming early last year, when China was paralysed by the COVID pandemic. That's when she realised people were eager to see online the flowers they could no longer buy outside.

Now, on a good day, she says she manages to sell 150,000 yuan ($23,500) worth of flowers in three hours of livestreaming.

She takes around ten per cent commission and is optimistic about the future of the trade.

"People appreciate rituals more and more. Flowers give them a feeling of being happy and young people are beginning to like buying flowers," she says. 

The market is still very far from saturation, says Qian Chongjun, head of the Dounan Flower Corporation, one of the largest entities on the market.

"Buying flowers every week has become a habit in many families," says Qian. "I think that one day they will become a vital need, like air and water."

NEW YORK — The Chinese ride-hailing giant Didi Chuxing's announcement that it will delist its shares from the New York Stock Exchange (NYSE) marks the end of a cushy relationship between Wall Street and Chinese tech giants, who are under siege from authorities in Beijing and regulators in America.

Only five months transpired between Didi's going public in New York in June and word Friday that it will prepare a Hong Kong listing. During that time, its market value has fallen by 63 per cent.

Didi's move comes in the wake of a sweeping Chinese regulatory crackdown in the past year that has clipped the wings of major Internet firms wielding huge influence on consumers' lives — including Alibaba and Tencent.

After Friday's announcement, heavyweight Chinese online retailers whose stocks are sold on the New York exchange, such as Alibaba, JD.com and Pinduoduo, dropped sharply.

Shares in Alibaba — whose arrival on Wall Street in 2014 to a loud fanfare kicked off the parade of Chinese firms listing in the Big Apple — fell to their lowest level in nearly five years as rumours circulated that, after Didi leaves, Alibaba might be next.

Technically, even as Didi Chuxing moves its listing to Hong Kong, holders of its shares in New York retain those stakes. Their investment does not simply vanish.

But "people are very fearful about regulations and the Chinese government", said Kevin Carter, portfolio manager at EMQQ. "And that has really, really affected sentiment. People are scared."

Coincidentally, on Thursday US market regulators announced the adoption of a rule allowing them to delist foreign companies if they fail to provide information to auditors.

The move is aimed primarily at Chinese firms, and requires them to disclose whether they are "owned or controlled" by a government.

"While more than 50 jurisdictions have worked... to allow the required inspections, two historically have not: China and Hong Kong," Securities and Exchange Commission Chairman Gary Gensler said.

'Sensitive data'

The Global Times, a newspaper close to the Chinese Communist Party, criticised the new US regulation in an opinion piece on Friday.

"If the US sets unequal conditions on national security for competition between the two countries by demanding Chinese listed companies hand over audits for inspection so as to spy on China's internal situation and store huge amounts of sensitive data acquired by Chinese companies, China won't accept that," the unsigned piece said.

Many of these New York-listed shares are held not by private citizens but rather by institutional investors.

"Some funds can only have shares that are traded on US markets," said Gregori Volokhine, president of Meeschaert Financial Services. "This is what is putting pressure on shares."

For many market watchers, Didi, described as China's answer to Uber, will not be the last Chinese tech giant to delist from New York.

"It is not specific to Didi because for months we have seen the communist party's grip on companies tighten," said Volokhine.

Shortly after Didi went public in New York, the reservation platform Full Truck Alliance and the job-search site Kanzhun were investigated by China's cybersecurity watchdog.

The Chinese government has also tightened regulations on companies that offer families private tutoring. This has hurt companies listed in New York.

According to figures in May from a US government agency, a total of 248 Chinese companies are listed in the United States, with a combined market capitalization of 2.1 trillion dollars.

"After an active start to the year, Chinese companies have largely stopped tapping the US IPO market since June, due to regulatory and policy roadblocks in both countries," said Matthew Kennedy, a strategist with Renaissance Capital.

This week Spark Education, a big Chinese online small-class teaching firm, withdrew its planned initial public offering (IPO) in the US.

"The way things are, one can say there will be no more new Chinese IPOs and the ones in the pipeline will be withdrawn one by one," Volokhine said. Renaissance Capital says there are 35 companies in that pipeline.

In leaving the US market, Chinese companies are giving up an investor base like no other in the world — with $52.5 trillion in assets under management, compared to $7.1 trillion in China, according to a study last year by McKinsey and Company, a management consulting firm.

Carter said this political pressure on Chinese companies creates an odd situation in which the stars of the Chinese tech world are plummeting on the stock market, but not because of their earnings reports.

"And these companies are still making profits. And then those profits are still growing," he said.

"The revenue growth for the year is over 30 per cent. Not for every company, but a bit collectively. No matter where the stock is, no matter where the stocks trade, that's still the case," he said.

NEW YORK — Global stocks finished a volatile week on a downcast note on Friday, sunk by festering worries over the Omicron variant and disappointment at the most recent US job growth figures.

The latest COVID-19 variant has been detected in 38 countries but no deaths have yet been reported, the WHO said, as authorities worldwide rushed to stem the spread of the heavily mutated COVID-19 strain.

"Investors are clearly still anxious about the Omicron variant, despite anecdotal evidence suggesting symptoms are less severe" than first thought, said Craig Erlam, analyst at Oanda trading group.

"Heading into the weekend, when we could get more information on the new strain, it's natural that we're seeing more caution."

IMF chief Kristalina Georgieva warned the latest virus strain could slow the global recovery, noting that "a new variant that may spread very rapidly can dent confidence".

Bourses in Paris, Frankfurt and London all declined. 

Wall Street stocks also had a difficult day, with the tech-rich Nasdaq leading major indices lower.

All three US indices finished with weekly losses in a period that also saw the Federal Reserve signal a plan to accelerate the withdrawal of its monetary stimulus and potentially hike rates sooner.

Wall Street investors shunned highly valued tech shares after DocuSign offered a disappointing outlook and signalled that demand for its e-signature business was ebbing after a strong run during the worst of the COVID-19 pandemic.

Shares of the company plunged more than 40 per cent, while other tech names like Adobe and several chipmakers were also hammered.

"The growth stocks are driving the declines," said Briefing.com analyst Patrick O'Hare, who also cited lingering unease over the Omicron variant of COVID-19 and disappointment that Thursday's rally in equities was not extended.

Friday's much-anticipated jobs report showed the US economy added just 210,000 jobs last month, less than half the increase forecasters expected.

But analysts characterised the report as better than the headline figure, noting the unemployment rate dropped to 4.2 per cent, a decline of four-tenths of a point from the prior month. 

The labour force participation rate also rose to its highest level since the pandemic.

"Looking past the disappointing headline print, the details of the November jobs report painted a more optimistic jobs picture," Oxford Economics said in a note.

HONG KONG — Asian markets were mixed on Thursday and oil edged up with traders trying to claw back Omicron-induced losses but still full of uncertainty after Wall Street suffered a late plunge in response to the United States reporting its first case.

News that a patient had come down with the new variant sent shivers through US investors who fear authorities will be forced to reintroduce strict containment measures or even lockdowns, derailing the recovery in the world's top economy.

That comes on top of a widespread belief the Federal Reserve will end its vast bond-buying financial support programme faster than expected and start hiking interest rates next year to prevent inflation -- now at a three-decade high -- from running out of control.

Traders were already feeling uneasy in recent weeks on concerns about the sharp rise in prices around the world caused by supply chain snarls, a spike in energy costs and a labour shortage.

The announcement of Omicron -- and warnings that vaccines may not be as effective against it -- sent them over the edge on Friday.

Experts say it will take weeks to fully understand the true danger of Omicron, though the World Health Organisation said vaccines would probably fend off the worst of the variant while Australia's chief medical officer suggested it might not be as deadly as others. 

Still, markets are highly sensitive to any negative headlines on the crisis, with the VIX gauge of volatility at its highest level since the start of February.

"Equity markets continue to play Omicron tennis, and traders looking for short-term direction should just wait for the next virus headline and then act accordingly," said OANDA's Jeffrey Halley. "Volatility, and not market direction, will be the winner this week."

Meanwhile, the OECD grouping of major industrialised nations warned the mutated strain threatens the global recovery and cut its growth outlook for this year.

The disquiet on trading floors was evident in New York on Wednesday when the announcement of the strain in the United States sent all three main indexes into the red, having spent most of the day in positive territory.

"The Omicron variant is the number one uncertainty facing the US economic outlook," Kim Mundy of the Commonwealth Bank of Australia said.

Tokyo, Shanghai, Sydney, Singapore, Wellington and Bangkok all fell but Hong Kong, Seoul, Taipei, Mumbai, Jakarta and Manila rose.

London, Paris and Frankfurt dropped at the open.

OPEC and other major oil suppliers were expected to discuss their output plan on Thursday to help quell prices, with the likely impact of Omicron on demand likely to be a major talking point.

The grouping has already raised the possibility it will pause the increases, having been upset by a decision by the United States and other major consumers including China to release some of their own reserves.

Both main crude contracts rose on Thursday, though they remain well below their levels from a week ago before they tanked more than 10 per cent in reaction to the Omicron announcement.

"The arrival of the Omicron variant and the ensuing sell-off obviously increases the odds that OPEC+ will opt to hit the pause button," Helima Croft of RBC Capital Markets said.

Investors are also awaiting the release of US jobs data on Friday, which will provide the latest snapshot of the state of the world's top economy.

PARIS — The Organisation for Economic Co-operation and Development (OECD) warned on Wednesday that the Omicron coronavirus variant threatens the global economic recovery.

The OECD lowered the growth outlook for 2021 and appealed for a swifter rollout of COVID vaccines.

The global economy is now expected to expand by 5.6 per cent this year, down from an earlier forecast of 5.7 per cent, the OECD said in its updated economic outlook which warns that low vaccination areas could create "breeding grounds" for deadlier virus mutations.

Its forecast for 2022 remains unchanged at 4.5 per cent, but the report was released only days after Omicron was detected.

"We are concerned that the new variant of the virus, the Omicron strain, is further adding to the already high levels of uncertainty and risks, and that could be a threat to the recovery," OECD Chief Economist Laurence Boone said at a press conference.

The report by the Paris-based Organisation for Economic Co-operation and Development said the global recovery is continuing to progress.

But it warned that it "has lost momentum and is becoming increasingly imbalanced".

While the OECD said it was "cautiously optimistic" about the recovery, it warned that health, high inflation, supply chain bottlenecks, and potential policy missteps are "all key concerns".

"The top policy priority remains the need to ensure that vaccines are produced and deployed as quickly as possible throughout the world, including booster doses," the OECD said.

"The recovery will remain precarious and uncertain in all countries until this is achieved," it said.

Fears of 'deadlier strains' 

In the "more benign scenarios", outbreaks could continue to prompt restrictions on people's movements, which could have long-lasting consequences on labour markets, production capacity and prices.

"The harshest scenario is that pockets of low vaccination end up as breeding grounds for deadlier strains of the virus, which go on to damage lives and livelihoods," Boone warned in an editorial in the report.

The report does not take into account the possible impact of the Omicron variant.

Analysts at Oxford Economics say the new strain could shave 0.25 percentage points off global growth next year if it causes mild effects, but it would cost 2 percentage points if it is more dangerous and a large part of the global population was forced into lockdowns.

The strain has been spotted around the world since South African experts discovered its existence, prompting new travel restrictions.

The World Health Organisation believes the variant's high number of mutations might make it more transmissible or resistant to vaccines.

Left behind 

Addressing other key concerns for the world economy, the OECD said it expected inflation to peak at the turn of the year before receding gradually in the 38-nation OECD, which includes leading developed and emerging countries.

Soaring inflation has caused commotion in the markets as investors fear that central banks will raise interest rates sooner than expected to tame runaway prices.

The OECD urged monetary policymakers to "communicate clearly" about how far they will tolerate inflation exceeding their targets.

Supply-side constraints and shortages, meanwhile, "should wane gradually through 2022-23" as demand normalises, production capacity grows and more people return to the labour force.

The OECD also highlighted "marked differences" in the recovery of countries around the world.

"Parts of the global economy are rebounding quickly, but others are at risk of being left behind, particularly lower-income countries where vaccination rates are low, and firms and employees in contact-intensive sectors where demand has yet to recover fully," it said.

In its forecast among individual regions, the OECD said the US economy should grow by 5.6 per cent this year, lower than its previous outlook which had already been cut for the world's biggest economy.

The eurozone's growth outlook was slightly lowered to 5.2 per cent.

For China, the world's second-biggest economy, the outlook was lowered to 8.1 per cent this year and 5.1 per cent in 2022.

The debt crisis at property giant Evergrande has raised concerns about its potential impact on the Chinese economy.

LONDON — World stocks slid on Tuesday after Moderna warned current vaccines might be less effective at fending off the Omicron variant and after eurozone inflation spiked to a record high.

Frankfurt, London and Paris followed Asia sharply lower before limiting losses to around half of 1 per cent, with sentiment dogged by fears of fresh economic fallout from the long-running COVID crisis.

Wall Street followed the lead as the Dow was off almost 1 per cent after the opening bell while the tech-heavy Nasdaq was down 0.4 per cent. 

Oil prices took a tumble following the Moderna remarks, which have reignited stubborn concerns over how the Omicron variant spread could hit energy demand.

Moreover, the markets selloff accelerated as data showed eurozone inflation rocketed on runaway energy prices to a record 4.9 per cent.

'Markets hate uncertainty' 

"It only took one comment from the boss of drugs firm Moderna to derail markets once again," noted AJ Bell investment director Russ Mould.

"Markets hate uncertainty, and this is precisely what we have now. No-one knows how much trouble the new variant is going to cause."

Moderna Chief Executive Stephane Bancel's comments, in an interview with The Financial Times, sent traders running for cover.

"There is no world, I think, where [the effectiveness] is the same level... we had with Delta," Bancel told the newspaper.

The high amount of mutations on Omicron and its swift spread in South Africa indicated the present jabs would need to be tweaked, he indicated.

In foreign exchange, the euro rose on Tuesday as data showed inflation in the 19-nation single-currency area soared in November to more than double the European Central Bank (ECB) 2  per cent target.

Sky-high inflation has placed intense pressure on the ECB and the US Federal Reserve to rein in vast stimulus programmes — with traders also fearing premature interest rate hikes to tame prices.

However, the emergence this week of the Omicron mutant coronavirus strain has complicated the picture.

In Britain, meanwhile, traders are also reassessing hopes of a pre-Christmas interest rate hike.

Prior to Omicron, the Bank of England had been forecast to lift rates to dampen near decade-high UK inflation.

"Hopes are fading that the Bank of England will raise interest rates later this month," noted Hargreaves Lansdown analyst Susannah Streeter, citing the uncertain impact of the new variant.

MADRID — The coronavirus pandemic will cost the global tourism sector $2 trillion in lost revenue in 2021, the UN's tourism body said on Monday, calling the sector's recovery "fragile" and "slow".

The forecast from the Madrid-based World Tourism Organisation (WTO) comes as Europe is grappling with a surge in infections and as a new heavily mutated COVID-19 variant, dubbed Omicron, spreads across the globe.

International tourist arrivals will this year remain 70-75 per cent below the 1.5 billion arrivals recorded in 2019 before the pandemic hit, a similar decline as in 2020, according to the body.

The global tourism sector already lost $2 trillion (1.78 trillion euros) in revenues last year due to the pandemic, according to the UNWTO, making it one of sectors hit hardest by the health crisis.

While the UN body charged with promoting tourism does not have an estimate for how the sector will perform next year, its medium-term outlook is not encouraging.

"Despite the recent improvements, uneven vaccination rates around the world and new COVID-19 strains" such as the Delta variant and Omicron "could impact the already slow and fragile recovery", it said in a statement.

The introduction of fresh virus restrictions and lockdowns in several nations in recent weeks shows how "it's a very unpredictable situation," UNWTO head Zurab Pololikashvili said.

"It's a historical crisis in the tourism industry but again tourism has the power to recover quite fast," he added ahead of the start of the WTO's annual general assembly in Madrid on Tuesday.

"I really hope that 2022 will be much better than 2021."

 'Confused' 

While international tourism has taken a hit from the outbreak of disease in the past, the coronavirus is unprecedented in its geographical spread.

In addition to virus-related travel restrictions, the sector is also grappling with the economic strain caused by the pandemic, the spike in oils prices and the disruption of supply chains, the UNWTO said.

Pololikashvili urged countries to harmonise their virus protocols and restrictions because tourists "are confused and they don't know how to travel".

International tourist arrivals "rebounded" during the summer season in the Northern Hemisphere thanks to increased travel confidence, rapid vaccination and the easing of entry restrictions in many nations, the UNWTO said.

"Despite the improvement in the third quarter, the pace of recovery remains uneven across world regions due to varying degrees of mobility restrictions, vaccination rates and traveller confidence," it added.

Arrivals in some islands in the Caribbean and South Asia, and well as some destinations in southern Europe, came close to, or sometimes exceeded pre-pandemic levels in the third quarter.

However, other countries hardly saw any tourists, at all, particularly in Asia and the Pacific, where arrivals were down 95 per cent compared to 2019 as many destinations remained closed to non-essential travel.

Closed borders 

A total of 46 destinations — 21 per cent of all destinations worldwide — currently have their borders completely closed to tourists, according to the UNWTO.

A further 55 have their borders partially closed to foreign visitors, while just four nations have lifted all virus-related restrictions — Colombia, Costa Rica, Dominican Republic and Mexico.

The future of the travel sector will be in focus at the WTO annual general assembly, which will run until Friday.

The event — which brings together representatives from 159 members states of the UN body — was original scheduled to be held in Marrakesh.

But Morocco in late October decided not to host the event due to the rise in COVID-19 cases in many countries.

Before the pandemic, the tourism sector accounted for about 10 per cent of the world's gross domestic product and jobs.

BANGKOK — A new $6 billion Chinese-built railway line opens in Laos this week, bringing hopes of an economic boost to the reclusive country, but experts are questioning the benefits of a project that has seen thousands of farmers evicted from their land.

The 414 kilometre route, due to open on December 3, took five years to construct under China's trillion-dollar Belt and Road Initiative which funds infrastructure projects.

Struggling strawberry farmer Anouphon Phomhacsar is hoping the new railway will get his business back on track.

His farm usually produces up to two tonnes of the red heart-shaped fruits a year, but the pandemic has hit the 2021 harvest hard.

It currently takes Phomhacsar three to four hours to send his strawberries to Vientiane by road, but he hopes the new railway will cut this delivery time in half.

He says it will also be easier for tourists to travel to camp under the stars and pick berries.

"In the future, foreign tourists coming to the farm could be in the tens of thousands," he said.

The train route will connect the Chinese city of Kunming to the Laos capital, with grand plans for high-speed rail to ultimately snake down through Thailand and Malaysia to Singapore.

Infrastructure-poor Laos, a country whose population stands at 7.2 million, previously had only 4 kilometres of railway tracks.

But now sleek red, blue and white bullet trains will speed along the new line at up to 160kmh, passing through 75 tunnels and across 167 bridges, stopping at 10 passenger stations.

Economic boost 

Despite registering only dozens of COVID cases until April, Laos' economy took a pandemic battering — economic growth declined to 0.4 per cent in 2020, the lowest level in three decades, according to the World Bank.

Hopes for a 2021 rebound were dashed — Laos locked down as it clocked up roughly 70,000 infections in the past eight months.

While the railway could boost tourism, freight and agriculture, according to a World Bank report, the government needs to undertake substantial reforms, including improving border clearance processes.

"The new railway is a major investment that has the potential to stimulate the Lao economy and allow the country to take advantage of its geographical position at the heart of mainland southeast Asia," Sombath Southivong, a senior World Bank infrastructure specialist, said.

The tourism industry is desperate for a pick-me-up after the pandemic caused an 80 per cent downturn in international traveller numbers in 2020 — 4.7 million foreign tourists visited the previous year.

Pre-pandemic young nomads crammed on to buses at Vientiane for the four-hour ride to adventure capital Vang Vieng — a journey that will now take about an hour by train.

The town, which has a former CIA airstrip, was notorious for backpackers behaving badly at jungle parties before it rebranded as a eco-tourism destination.

But the kayaks, river rafts, ziplines and hot air balloons have been empty of late.

Inthira — a boutique hotel nestled on the banks of the Nam Song River — shifted from a full occupancy rate to only a trickle of domestic travellers on weekends, says general manager Oscar Tality.

Tality hopes the railway and reduced travel times will give the industry a shot in the arm.

"Along the way people will see magnificent views of the mountains and will cross over bridges and tunnels. It will be a wonderful trip for those on the train," Tality said.

White elephant? 

Despite local optimism, some Laos watchers are concerned about the long-term viability of the project.

"The issue for Laos though is whether their economy... their private sector is positioned to take advantage of this transport system," Australian National University lecturer Greg Raymond said.

Two-thirds of Laotians live in rural villages toiling on the land, and the minimum wage is around $116 a month — a reported $13.30 train fare from Vientiane to the border town of Boten has attracted some social media criticism for being too expensive.

"When you look at the juxtaposition of this super modern railway and the countryside it is passing through - it's very stark. One does wonder whether the Laos people will be the beneficiaries?" Raymond said.

The project has already left some 4,400 farmers and villagers reeling after they were forced to surrender land.

Many have faced long delays receiving compensation or have been paid inadequate amounts, the Lao Movement for Human Rights said in a report.

"The compensation rate is very low. If you are asking villagers to move, how can they afford new land?" Laotian MP Vilay Phommixay told parliament in June last year.

But for others it is all aboard.

"There's great anticipation... there's a source of pride for the Laos people," Tality said.