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The Chinese government is providing a concessional loan for the building of a railway from Vientiane to the Laos-China border, the Ministry of Public Works and Transport has announced.

According to its latest report on railway development, the ministry has signed a memorandum of understanding with China's Ministry of Railways to build a rail link between Vientiane and Luang Prabang and on to Boten in Luang Namtha province in the north.

China will pay 70 percent of the cost and the rest will come from a joint Chinese-Lao venture responsible for investing in and operating the railway, according to the MOU.

The joint venture will generate income from railway service charges, which will be used to repay the Chinese loan.

The total construction cost will be unveiled following a survey, Lao National Railway Authority officials said, adding that a feasibility study was already under way.

Minister of Planning and Investment Sinlavong Khouthphaythoune said the Lao government would push for construction of the railway within the next five years.

He said the railway would enable Lao companies to transport goods more cheaply than by road, which was essential if they were to produce goods and deliver services at competitive prices.

“The main barrier to investment is the high cost of transportation,” he told Vientiane Times recently.

Minister of Public Works and Transport Sommath Pholsena told Lao National Assembly members the Vientiane-China railway would turn Laos from a landlocked country into a regional land link, adding that China wanted to use the railway to boost trade with Asean nations.

“China exports goods worth US$4,000 billion to Asean,” he told members at the mid-year session of the Lao National Assembly that ended last week. He said the railway would be economical if it could transport 10 percent of Chinese exports to the region.

Railway officials said the railway will connect to an existing railway running from Thailand, an important trading partner of China.

Thailand gave a loan and grant for the construction of the 3.5km railway from the Vientiane-Nong Khai Friendship Bridge to Thanalaeng train station about 25km outside Vientiane city centre.

Thailand will provide a similar package to help Laos build a 9km railway from Thanalaeng to Khamsavat village in central Vientiane.

The Chinese government will provide a loan to build a railway from Khamsavat village to the Vientiane Industrial Park at km 21, according to the ministry report.

 
Source: Vientianetimes newspaper
By Ekaphone Phouthonesy
(Latest Update July 05, 2010)