Laos to Go It Alone

The Laos-China rail project will go full steam ahead despite China's withdrawal from the venture.
2012-10-19
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laoschinarailroad305.jpg
The proposed railway will connect China's Yunnan province to the Lao capital Vientiane.
RFA

Parliament in Laos has given the go-ahead for the construction of a U.S. $7 billion Lao-China high-speed railway line project despite China's withdrawal from the venture, according to a report.

A Chinese construction company has pulled out of the original 420 kilometer (261 mile) joint venture, but China will provide a loan to implement the project, a report in the state-run Vientiane Times said Thursday.

Approval for the project was made at an extraordinary session of the National Assembly Thursday "after concluding that it is essential for national development at a time when economic integration is viewed as the future of the region," the report said.

"The railway is now set to go ahead without any other direct stakeholders, but will be financed by a loan from China," it said.

"Laos has now decided to assume sole ownership of the project, as it considers that transforming the country from being landlocked to a land link is central to the future of the nation's development."

'Not profitable enough'

The Chinese construction company pulled out of the project "because they felt it would not be profitable enough," the Vientiane Times said.  

Leaders from Laos and China are expected to perform a project ground-breaking ceremony during a summit of the Asia-Europe Meeting (ASEM) forum on November 5-6.

The rail project will connect the Lao capital Vientiane to the country's Luang Namtha province along the border with China, with the network linked further to a line from Kunming, the capital of China's Yunnan province  

Lao Deputy Prime Minister Somsavat Lengsavad reported on the project to the National Assembly, saying the project would attract more foreign investment and boost economic growth.

He said the EXIM Bank of China will provide a loan to cover the cost of construction.

It is not immediately clear how Laos will service its loans for the railway project.

In a report after annual consultations with the Lao government, the Washington-based IMF said on Thursday that the country's current account deficit has widened and gross international reserves declined, covering only about two months of projected imports, the lowest level in almost a decade.

The Fund said that while Lao macroeconomic policies have remained generally sound, "low reserve coverage and rapid credit growth amid high lending rates have emerged as sources of vulnerability."

IMF Executive Board Directors stressed to Laos "the importance of replenishing international reserves, to be supported by tightening macroeconomic policies," among other steps.

In the original rail project agreement signed about two years ago, there were plans for passenger trains to run at speeds of up to 200 kilometers (124 miles) per hour, but the Lao government has decided to reduce this to 160 kilometers (99 miles) per hour for safety reasons, partly due to the route's hilly terrain, Vientiane Times reported.

Goods trains meanwhile will travel at a maximum speed of 120 kilometers (75 miles) per hour, it said.

More than 100 bridges

Considering the mountainous nature of northern Laos, the railway will require 76 tunnels and 154 bridges, including two bridges across the Mekong River, according to the report.

Under a previous agreement signed between China and Laos two years ago, the Lao government was required to compensate villagers and urban dwellers who will need to be relocated from their land to make way for the rail project.

The compensation plan had represented the Lao government’s 30 percent stake in the project.

But residents have expressed doubts about whether they will receive a fair amount of compensation from authorities.

Reported by RFA's Lao service. Written in English by Parameswaran Ponnudurai.

Comments (4)
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Anonymous Reader

Laos has reached a good decision to start the long run profitable project of land link high-speed train. High-speed train is safer and more economic than airplane. Personally I appreciate the comfort of the ride of TGV and the Japanese high-speed train that I took during the good time.

Oct 27, 2012 04:44 PM

Laotians south of vientiane

from All states south of vientiane

Bravo!!!! Laos has the loan to build the high speed rail from china border to vientiane, why left the southern states nothing, even the High way 13 left with holes and damaged section unfixed...and why not build the railway down to the very last state connecting to Cambodia!!!!!Stupid plan! Why not building a four lanes free way from north to south so that every citizen can enjoy instead of that noisy bloodshed high speed rail! May God bless every citizen of laos and May God open the eyes and ears of southern lao states citizen. Thanks.

Oct 23, 2012 11:08 PM

Anonymous Reader

The communist regeim of Laos PDR have systematcally raped and stolen 99.9% of the funds donated by (1 Euro Union(2)ADB,
(3)World Bank,it isn't a wonder the country is low on foreign reserves,this is
a money laundering country, they are pleading poverty, these donors should take
time to question as to why there are over
20 different banks and luxury vehicles for
a population of aproximarely six million including wildlife. Where has the money gone ?? How many millionares in the Laos PDR?? Something to think about

Oct 20, 2012 11:40 PM

E K KADIDDLEHOPPER

from Seoul

This is excellent news! The rail line will provide both travel and transport, as well as great economic benefits. Multiplied thousands of new jobs will be created. However, the original higher speeds would have been preferable.

Oct 20, 2012 04:34 AM