With its fast-growing economy, landlocked Laos is turning a once disadvantageous position into an important land transport link for Asean regional connectivity with southern China's Yunnan province.
The 114-kilometre Hongsa-Chiang Man Road, which will be a shortcut to Laos' northern Luang Prabang province, will link Thailand, Laos and Vietnam with southern China and boost trade among these countries.
The border crossing at Huai Kon in Thailand's Nan province now has a trade value of around 7 billion baht.
The road, funded by the Thai government, will help shorten the travel time from Huai Kon to Luang Prabang by half from the current five to six hours, chairman of the board of directors at the Neighbouring Countries Economic Development Cooperation Agency (Neda) Warakorn Samkoset said.
Neda is extending a 1.58 billion baht loan with a low interest rate of 1.5% over a 30-year term and offered another 390 million baht to finance the road's construction.
The road, which began construction five months ago and is due to be completed in 2018, will connect three major tourist spots -- Nan, Luang Prabang and Vietnam's Dien Bien Phu.
"It marks the first time in history that major provinces that have an interesting culture and history will be linked by road," he said.
An estimated 1,500 cars use the road each day, according to Neda.
The number of tourists who visit Luang Prabang could double to 1 million after the road is completed and this will be a boon to the local economy, Mr Warakorn said.
However, it will be a challenge to preserve the unique flavour of Luang Prabang, a Unesco world heritage site, from the fast-changing environment, he said.
Khamkhan Chanthavisouk, secretary of the Provincial Party Committee and governor of Luang Prabang province, said the local administration is studying Chiang Mai's approach to the rising number of tourists.
Luang Prabang has positioned itself as a quality tourism destination and the government will push the local community to develop souvenir production and plant organic vegetables to serve the expected increase in tourists.
There are 76 hotels (including two four-star and five three-star hotels), 317 guesthouses, 286 food shops and restaurants, and 76 tour agencies in the province. It also has 108 natural attractions, 86 cultural tourism spots and another 34 historic destinations.
The road will help improve Luang Prabang's tourism industry and facilitate trade as it is the shortest route connecting the province with Thailand, he said.
Bounthieng Soulivanh, president of the Chamber of Commerce and Industry of Luang Prabang province, forecast tourist arrivals will reach 700,000 by 2020 from 500,000 at present.
Tourism accounts for 43% of Luang Prabang province's GDP. It has an annual per capita income of US$1,532.
Mr Bounthieng said 6,000-7,000 rooms are sufficient to serve tourists and another four to five hotels are under construction.
