China-Laos railway project set to be completed in 2021, despite challenges
- November 15, 2017
- Posted by: Yolandy
- Category: Business
Construction of the China-Laos railway is underway and the line will go into operation by the end of December 2021, a leader of the project told the Global Times.
The 414-kilometer railway will link Kunming, capital of Southwest China’s Yunnan Province, and Vientiane, capital of Laos. It is also part of the Trans-Asian Railway, a project designed as an integrated freight railway network across Europe and Asia.
Since a groundbreaking ceremony for the railway was held in December 2015, concrete progress has been made in Laos in the past two years, Huang Hong, head of China-Laos railway commanding department under China Railway Group Ltd, told the Global Times.
China Railway Group, along with its subsidiaries and other affiliates such as China Railway No.5 Group and China Railway International Group, are working on different parts of the railway.
“The total length of our construction tender is 244.5 kilometers, including 45 tunnels and 99 bridges. As of mid-October, we’ve completed 14,925 meters in the channel excavation work,” Huang said.
Under a franchise agreement signed between China and Laos, the Laotian government provides policy support for the project while Chinese companies are responsible for 90 percent of the total construction work, Huang noted. “And the remaining 10 percent will be carried out by Laotian workers, in order to create more local jobs,” he said.
The investment in the project is about 40 billion yuan ($5.8 billion), 70 percent of which comes from Chinese investment and the rest from Laos, the Xinhua News Agency reported in August.
Laos has been stepping up efforts to improve its infrastructure, as it is the only inland country in Southeast Asia and it still has limited transport options, noted a Chinese business representative in Laos.
“The China-Laos railway will fix this problem and help lower logistics costs,” said Chen Cuiying, general manager of a Laos-based subsidiary of Yunnan State Farms Group Co.
For example, it costs about 900 yuan to transport 1,000 tons of rubber from Vientiane to Yunnan during the peak season for rubber production, which runs from July to December, Chen noted.
“Though it remains unclear how the operator of the China-Laos railway will price cargo, it will cost 50 to 60 percent less to transport cargo by rail than by road,” she told the Global Times on Monday.
The Belt and Road Forum for International Cooperation held in Beijing in May provided new impetus for the China-Laos rail project, as a slew of concrete construction plans were advanced, Xu Liping, an expert with the National Institute of International Strategy at the Chinese Academy of Social Sciences, told the Global Times on Monday.
“However, it remains a project between two nations, and has not been considered as an intercontinental project extended to Thailand,” he said.
Huang, the chief commander, also noted that there is no timeline for the overall Trans-Asian Railway project.
The integration of the China-Laos railway into the Trans-Asian Railway will certainly play a role in generating profits for countries along the route, but the countries involved have not yet started any talks on the matter, he said.
Despite the progress, the China-Laos rail project still faces some difficulties. For example, funds are not always allocated on time, and Laos lacks some of the needed construction materials like cement, Huang noted.
“The poor transport conditions in the country also increase risks for the on-site work,” he said.
Given these challenges, the Laotian government should adopt some temporary policies to facilitate imports of related products, Xu noted.
In addition, as Chinese workers are usually more efficient, it’s necessary to provide some training programs for their Laotian co-workers to make sure both sides complete the project at the same time, he said.
“Still, the project will play an exemplary role in the Belt and Road initiative and will showcase the enhanced connectivity among Southeast Asian countries, as well as bringing business benefits for local communities,” he remarked.