||Asean Affairs 10 June 2013
Laos is set to formally launch construction of an ambitious high-speed railway linking the country’s western border with Thailand to Vietnam in August, an official said Thursday, following the completion of a feasibility study by a Malaysian company that will construct and operate the project.
A groundbreaking ceremony for the railway will be held in Savannakhet city’s Kaysone Phomvihane district “sometime in August,” an official from the Lao Ministry of Public Works and Transportation in Vientiane told RFA’s Lao Service, speaking on condition of anonymity.
The ceremony will mark the laying of the “foundation” for the project. but a precise date for construction to proceed full steam ahead has yet to be set.
Malaysian company Giant Consolidated Ltd. has not established a project office in Savannakhet to date.
“About the office, nothing has been said yet,” the official said.
“It’s obvious that when the project kicks off, an office will be needed here in [Savannakhet] province.”
Giant was in early November awarded a contract to construct and operate the 220-kilometer (140-mile) railway from Savannakhet, on Laos’s southwestern border with Thailand, to the Lao Bao border gate with Vietnam in the east.
The company recently completed a mandatory environmental impact assessment needed for construction to begin, but has not yet submitted the study to authorities, the Lao official said, nor had it delivered findings to provincial officials from a survey of the construction site conducted earlier this year.
In April, a Lao railways official told RFA that before launching construction Giant also needs to carry out a project design study, which it expects to complete by August.
Despite the lack of progress, the public works and transportation official expressed confidence that work on the railway would proceed, citing “regular discussions” about project details between a Giant representative and his ministry, “which cannot be revealed yet.”
Construction of the railway, which runs from Savannakhet city in the east to the border town of Lao Bao in the west with an onward link to Vietnam’s Danang port city, is expected to take four years.
New Zealand financial institution Rich Banco Berhad agreed in April to provide a U.S. $5 billion loan to Giant to fund the construction.
Laos is 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.
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. Translated by Viengsay Luangkhot. Written in English by Joshua Lipes.