China Gives New Pledge on Lao Rail Project

2014-10-06
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Laos plans railway links with China, Vietnam and Thailand to help drive socio-economic development in the impoverished country.
Laos plans railway links with China, Vietnam and Thailand to help drive socio-economic development in the impoverished country.
RFA

China has given a new pledge to cash-starved Laos for the launch of a controversial railway project linking the two countries, although Lao officials say “many problems” must be ironed out, including financing.

Guan Huabing, China’s ambassador to Laos, said recently that the governments of the two communist countries “are working on some concrete issues and China is willing to work with Laos to begin the construction as early as possible,” according to a report by Xinhua News Agency.

Noting the huge capital required for the high-speed rail project, he said both countries had to conduct “in-depth studies into a number of major issues to ensure the project will be carried out in a sustainable manner.”

Guan, speaking at a Sept. 25 press conference in Vientiane ahead of China’s National Day last week, called it a “strategic” and “historic” project” to boost bilateral ties.

A Chinese state-owned company had initially wanted to construct the project but it pulled out of it.

Beijing then said it would provide Laos a loan to implement the U.S. $7.2-billion venture.

Many issues

Lao officials said the two sides had many project issues to iron out.

One Lao railway official told RFA’s Lao Service the two sides were still holding talks on the project, saying he was could not give any additional details.

Another official said, “Even though they are negotiating, Laos and China may not agree easily because there are many problems that must be discussed, especially the loan issue.”

The project’s original plan called for China to finance 70 percent of the 420-kilometer (260-mile) rail line linking Vientiane to southwestern China, with work to begin in 2011 and end in 2015, according to the state-owned Vientiane Times.

In July, Somsavat Lengsavad, Lao’s deputy prime minister in charge of economic affairs, told the National Assembly (parliament) that both sides had reached an absolute agreement on the project, according to the newspaper.

A month later, during a meeting between Lao and Chinese officials on the sidelines of a regional meeting in Myanmar, Beijing said it would speed up studies on the financial implications of the project.

China indicated then that it still wanted to finance railway project planned despite criticism over its viability.

Unaffordable

The Manila-based Asian Development Bank believes the project is unaffordable and could plunge Laos into debt.

The project has not taken off since the Lao parliament first gave it the go-ahead in October 2012.

The railway would form part of a longer ASEAN-China rail link beginning in China’s southern Yunnan province and running through Laos, Thailand and Malaysia to Singapore.

Last December, Laos broke ground on another high-speed railway project to connect the country’s western border with Thailand to Vietnam.

The other railway being pursued by Laos is a 3.5-kilometer (2-mile) link spanning the Mekong River between the capital Vientiane and Nongkhai, Thailand.

As a landlocked country, Laos expects the new railway projects to lower the cost of exports and consumer goods while boosting investment in the poverty-stricken nation.

Reported by RFA’s Lao Service. Translated by Bounchanh Mouangkham. Written in English by Roseanne Gerin.

Comments (2)
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K.homsombat

from Binghamton

It is good for future tourist to Lao and we should not worry about debt now.

Jan 26, 2015 12:39 AM

Anonymous Reader

I think the railway project has been long overdue and it should be canceled.

Oct 07, 2014 03:23 AM

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