Laos Breaks Ground On Railway Project Linking Thailand to Vietnam

2014-01-03
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lao-railway-groundbreaking-dec-2013.jpg
Giant holds a groundbreaking ceremony for the Savannakhet-Lao Bao railway project in Savannakhet, Dec. 18, 2013.
Photo courtesy of a source in Savannakhet

Laos has broken ground on an ambitious high-speed railway project linking the country’s western border with Thailand to Vietnam and is likely to begin full construction this month, according to sources.

Giant Consolidated, a Malaysian company that will construct and operate the 220-kilometer (140-mile) railway, held a groundbreaking ceremony to mark the laying of the “foundation” for the project last month in Savannakhet, multiple sources in the province confirmed to RFA’s Lao Service.

The Dec. 18 event was held in Outhumphone district’s Ban Naxai, the sources said, speaking on condition of anonymity.

An official from the Lao Ministry of Planning and Investment, citing sources at Giant, told RFA that full construction on the railway was likely to begin this month.

“According to Giant Consolidated, work is expected to begin in January,” said the official, who also asked not to reveal his name.

The official did not provide further details on construction plans for the project.

Malaysia’s Giant was in November 2012 awarded a contract to construct and operate the railway from Savannakhet, on Laos’s southwestern border with Thailand, to the Lao Bao border gate with Vietnam in the east.

RFA was unable to contact the company to confirm that it plans to proceed with construction in January, or whether it had obtained a loan it had sought in connection with the project.

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Officials use shovels to ceremoniously break ground on the Savannakhet-Lao Bao railway project, Dec. 18, 2013. Credit: Source in Savannakhet
Moving forward

Giant appears to be steaming ahead with the project after what may have been a minor derailment last year.

In June, an official from the Lao Ministry of Public Works and Transportation in Vientiane told RFA that a groundbreaking ceremony for the railway was originally scheduled for “sometime in August” following Giant’s completion of a mandatory environmental impact assessment needed for construction to begin.

It is unclear whether the study has since been submitted to authorities, or whether Giant has delivered findings to provincial officials from a survey of the construction site it conducted early last year.

In April, a Lao railways official told RFA that before launching construction, Giant also needed to carry out a project design study, which it expected to complete by August.

Construction of the railway, which also links Savannakhet city to Vietnam’s Danang port city, is expected to take four years.

A financial institution reportedly had agreed in April last year to provide a U.S. $5 billion loan to Giant to fund the construction, but it is unclear whether the arrangement was confirmed.

lao-rail-map-400.jpgSecond rail line

Laos was also in negotiations to borrow U.S. $7.2 billion from China to fund a second planned rail line—a 420-kilometer (260-mile) project linking the capital Vientiane to southwestern China.

In July, a senior official at the Chinese Embassy in Bangkok told RFA that Beijing was waiting for Thailand to confirm that it will proceed with the project before finalizing the loan.

Laos assumed sole ownership of the project after a Chinese construction company pulled out of a joint partnership because it decided the project would not be profitable enough.

Legislators and the Asian Development Bank have cautioned that the project is “unaffordable” and could sink the country into debt.

Laos has no coastline or seaports, and the rail links are expected to lower the cost of exports and consumer goods and help drive the impoverished country’s socioeconomic development.

The country’s current rail system consists of a 3.5-kilometer (2-mile) link over the Mekong River between Vientiane and Thailand’s Nongkhai.

Reported by RFA’s Lao Service. Written in English by Joshua Lipes.