Lao policy-makers are drafting a law that provides guidelines for the efficient development of a railway network and its commercial operation, to maximize the benefits of rail transport and drive socio-economic development.

The newly-drafted law, which is being canvassed to sound out public opinion, also seeks to offer early and reasonable compensation for people who will have to relocate when railways are built, local daily Vientiane Times reported on Thursday.

The draft, which is posted on the government's official gazette website, is expected to be submitted to the National Assembly for debate and approval at the end of this year, according to a senior government official involved in the drafting process.

Officials drafting the law said it defines principles, regulations and measures to effectively and efficiently manage, follow up and inspect railway affairs, including the development and construction process, maintenance, commercial operation, and transport services.

The Lao government, which currently owns just 3.5 km of rail track linking capital Vientiane with Thailand's Nong Khai province, has an ambitious plan to develop a rail network, as part of efforts to convert from being landlocked to a land link within the region.

Construction of a 417 km railway connecting Vientiane to the Chinese border is on track with completion slated for 2021.

Plans for other railways are also in the pipeline, which would run through many parts of Laos and connect to neighboring countries.

The Lao government believes that a railway network is crucial to attract foreign investment and promote production-based industry and services to drive the country's economy, which at present is too dependent on natural resources.

Local businesses and manufacturers say cheap rail transport would make them more competitive. At present their competitive edge is undermined by the high cost of road transport.

Once promulgated, the new law will be an important reference to boost investment in the development of the planned rail network, the report said.

According to the report, under Article 4 of the draft law, the state encourages local and foreign companies to invest in railway development and commercial operation in various forms, including public-private partnerships and concessions.

The draft law outlines the steps that railway developers must undergo, including surveys, feasibility studies, design and other procedures to ensure the proper development, management and commercial operation of the rail network.