Laos is set to launch work on a key railway line to China that will help bolster the tiny Southeast Asian state's underdeveloped infrastructure, but mainly benefit its giant neighbor.
Beijing will not only bankroll the railroad but provide most of the labor for the project.
The 400 kilometer (216 mile) rail project will link the Lao cities of Luang Namtha, Luang Prabang, and Vang Vieng with the capital Vientiane and China's southwestern Yunnan province.
Construction of the line is scheduled to commence on Oct. 28 and thousands of workers, mostly from 20 Chinese construction firms, are expected to complete it in about four years, according to a recent Chinese survey.
The railroad is a joint investment between Chinese companies, which hold a 70 percent stake in the project, and the Lao government, which holds the remaining equity.
While many Laotians are excited about improving their country’s transportation infrastructure, others are concerned that China is likely to profit from the agreement.
“Greater benefits will go to China because, first of all, the goods exported from China to Laos will increase sharply due to convenient transport; and secondly, products from local natural resources, like mineral products, will be easily transported back to China,” one Vientiane resident said.
“Outgoing and incoming commodity transportation is all for Chinese products … They invest and produce here, and what they produce are their products—nothing is Lao. Then they [often] export those products back to China,” he said.
“The products produced in [China] they also bring here to sell in Laos.”
The Vientiane resident agreed that the influx of money from Chinese tourists would benefit the people of Laos, but added that not all of the Chinese would be coming simply to visit.
“For tourism, yes, in this aspect, Laos would greatly benefit from the railroad construction. [But] Chinese people will come to Laos, and if they come, they won’t want to leave. They will try to settle here, as is the situation now,” he said.
Laotians who say the project was designed partly to provide employment to the domestic population are also wary of the large number of Chinese laborers who will be required to relocate to Laos to build the railroad over the next four years.
A Lao official, who asked to remain anonymous, said that skilled labor and the clearance of unexploded ordnance along the railroad route will be conducted jointly by both Chinese and Lao workers, while environmental protection measures will be handled solely by Lao companies.
“However, Chinese workers will surely outnumber Lao workers because Laos has less labor,” the official added.
The official said he was unsure how many Chinese workers would be required to construct the railroad, but according to a senior official of Thailand’s railroad authority, the project will require around 64,000 laborers from China.
The Thai official added that the project would directly benefit the Laotian people who will be able to generate an income from selling their local products to the thousands of Chinese workers.
Thailand and Laos cooperated on Laos’ first railroad line—a 3.5 kilometer (2 mile) track running from Nongkhai to Vientiane’s Thanalaeng city which began operations in March last year.
Regional hub
The Lao government officially signed a memorandum of understanding (MoU) with China on April 7 this year to jointly develop the railroad and agreed to establish the Lao–Chinese Railroad Company to manage the venture.
The Vientiane Times, quoting a statement by a Lao Railroad Authority official, reported that China will provide Laos with a long-term and low-interest loan of about U.S. $4 billion to build the railroad in three phases.
On Oct. 5 this year, Chinese Railroad Minister Liu Zhijun visited Laos and held further talks with the Lao government on the railroad construction, culminating in the signing of a second MoU with Lao Minister of Civil Works and Public Transportation Sommarth Pholsena.
According to the agreements, the railroad will initially stretch from Xishuangbanna in China’s southern Yunnan province to the Thai border with Laos, after passing through the Lao cities of Luang Namtha, Luang Prabang, Vang Vieng, and Vientiane.
This section of the project will ultimately provide a rail link between Kunming, the capital of Yunnan province, and Singapore.
The second phase of the project will link Vientiane to the Lao border with Vietnam through Khammouane province. Chinese technicians completed a feasibility study for this phase in April 2008 and submitted it to the Lao government.
The third and final phase of the project, to be surveyed and constructed by Malaysia’s Giant Group Ltd., will link Savannakhet to the Laobao border checkpoint in Vietnam.
An official from the Lao National Railroad Authority, speaking on condition of anonymity, said he was unsure whether incomplete environmental impact studies would delay the project.
The government, he said, was eager to make landlocked Laos a premiere hub for a Southeast Asian transportation network.
The cost of shipping goods in Laos will be reduced by half with the completion of the railroad, the official added, offering manufacturers in other countries an attractive incentive to use it.
“This railroad construction project is vital for creating the necessary conditions that will pave the way for economic development in Laos,” the official said.
Originally reported by Somnet Inthapannha for RFA’s Lao service. Written in English by Joshua Lipes.