Laos to Receive Technical Training From Chinese on Proposed High-speed Railway

lao-rail-map-thailand-600.jpg Laos hopes a railway between Vietnam and Thailand and another connecting Thailand and China will help drive socio-economic development in the impoverished country.

Chinese railway experts are providing technical training this month for Lao officials in charge of a U.S. $7 billion high-speed railway project that will link the two neighboring countries and extend to Thailand, although the Chinese government has yet to sign a contract to begin construction, a Lao government official said.

“Thirty officials are being generally trained on railway issues in Vientiane this month, but they are not focusing on the Lao-Chinese railway project itself yet,” an official at the Ministry of Public Works and Transport, who declined to be named, told RFA, adding that the instruction would last for 20 days.

The training comes the same month as the Ministry of Public Works and Transport issued a notice to foreign and Lao companies with operations in the capital Vientiane and the provinces to submit bids for building the Lao-Chinese Railway project. Vientiane and the provinces had immediate funds and vehicles necessary to start the project.

The Sept. 7 notice said eligible companies must be a member of the Lao National Construction Association, although firms that are not members can apply to join if they meet the organization’s criteria. Afterwards, they will be able to submit a bid.

The Public Works and Transport Department of northern Laos’ Luang Namtha province, through which the planned railway will pass, issued a notice on Tuesday, informing local companies about submitting bids for the project.

Laos is setting up a joint company with China to oversee the construction and financing of the project, which will run 420-kilometers (261 miles) through Laos. The joint venture company also will be in charge of project management, land concessions and fare collections.

But the financing of the joint stock company remains up in the air.

The Lao government can contribute U.S. $250 million of its own funds towards the total U.S. $840 million it needs to set up the firm, the ministry official said.

The Chinese government is considered issuing Laos a U.S. $500 million loan, but Vientiane would have to provide the remaining U.S. $90 million, he said.

Once established, the joint venture company will apply for the rest of loan for the railway project, using Laos’ natural mines as a bank guarantee, he said.

Attempts to delay

Lao President Choummaly Sayasone and his delegates visited China on Aug. 31 in hopes of convincing the government to sign the contract so they could begin building the railway project, but the Chinese government declined at the time, the ministry official said.

According to the minutes of a meeting between Choummaly and the governor southwest China’s Yunnan province in Vientiane last May, which were recorded by the Lao-Chinese Cooperation Commission, the Lao president proposed that the governor help push for the signing of the contract before Dec. 2., Lao National Day, to make the event meaningful in the historical cooperation between two countries.

But another high-ranking official who closely follows Lao-Chinese cooperation told RFA that China has tried to delay the signing of the railway project contract because of uncertainty about the future as to who will replace Choummaly and Deputy Prime Minister Somsavat Lengsavad when they complete their terms of office in early 2016.

The second reason, he said, was because the Lao government has a limited ability to repay its debt to the Chinese, even though it is offering its mines and mineral resources as collateral.

“That’s why the Chinese government assigned its experts to train Lao officials and to take the time to make clear and thorough feasibility studies before making a decision [about signing the contract],” he said.

Prospects of obtaining financing for the project faced a setback in March 2014 when the Export-Import Bank of China, the official export credit agency of the Chinese government, suspended loans for infrastructure and construction projects in Laos, saying it would prefer to only finance mining and hydropower ventures.

The move was seen by some as an indication of China’s concern about its neighboring communist ally's ability to repay loans for such projects without immediate guarantees.

Lao officials anticipate that the rail project will lower the cost of exports and consumer goods while boosting investment in the poverty-stricken nation.

Reported by RFA’s Lao Service. Translated by Ounkeo Souksavanh. Written in English by Roseanne Gerin.

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