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Chinas Railway for Laos:
Boring for Tunnels has started

Update 23.4.2017


Boken-Vientiane rail route auf einer größeren Karte anzeigen

China's mammoth project to construct a railway from southwest China's Yunnan Province through Laos to its capital Vientiane is advancing now. Hundreds of trucks carrying machinery and equipment for construction have entered Laos, Vientiane Times reported. Preparations are now underway to start the boring of tunnels.

The 417-km railway will have 75 tunnels with a combined length of 197.83 km and work is expected to begin before the upcoming rainy season, Deputy Minister of Public Works and Transport and Chairman of the Laos-China Railway Project Management Committee, Mr Lattanamany Khounnivong, told Vientiane Times. Officials in charge have negotiated with villagers whose land is needed for the railway and have handed over their land to Chinese contractors. Six Chinese contractors will carry out construction of the USD 5.8 billion railway, with completion slated for 2021.

China Railway No 2 Group Co Ltd is responsible for the construction of Muang Phonhong section, as we learn by chinadaily. According to this source construction of the project is scheduled for five years with investment of some 40 billion Chinese yuan (USD 5.8 billion), 70 percent of which comes from Chinese investment and the rest 30 percent from Lao side.

China Railway Group (CRG) has signed a RMB 8.1 billion (US$ 1.2 billion) agreement to build the first three sections of the Boten-Vientiane Railway Project according to khl.com.

"The Nation" shows a picture of the Boten End of one tunnel, where boring has begun. Also in the province of Luang Prabang preparations are underway by China Railway No.8 Engineering Group, see pictures showing a tunnel near Luang Prabang.

Construction has begun, but questions remain. Discussions concerning loans and interest rates are ongoing between Laos and China, says Agatha Kratz, an associate policy fellow with the European Council on Foreign Relations, according to asiasentinel.com. Another skeptic is Ruth Banomyong, the director of the Center for Logistics Research at Thailand’s Thammasat University. Asiasentinal quotes her: “The challenge will come when Laos will have to repay,” she warned. “Will they have sufficient revenue generated to repay? This is doubtful as the financial feasibility study done by the Chinese does not have realistic assumptions.” According to a paper by Lao government Laos gets a Chinese loan of 480 Million US Dollars at 2.3 percebt rate per year to pay for 50 Million US Dollars, while Laos has to borrow the rest at the rate of 3 percent. See the paper in Lao: ເອກະສານໂຄສະນາເຜີຍແຜ່ນຳພາແນວຄິດກ່ຽວກັບໂຄງການກໍ່ສ້າງທາງລົດໄຟລາວ-ຈີນ.


See map of the Boten-Vientiane-Railway-Line and read more technical details.



Update 10.3.2015:

China's mammoth project to construct a high-speed railway from southwest China’s Yunnan Province through Laos to its capital Vientiane is more and more in delay: The government of Laos tries to get a better loan interest rate from China, as Bangkok Post reports. Beijing has offered a US$500-million loan with a 3% interest rate for 20 years according to Vientiane Times. The estimated costs now: US$6.8 billion. The Lao and Chinese governments should be responsible for 40 percent of the total cost, while state enterprises of the two countries should jointly be responsible for sourcing the remaining 60 percent.

Delays are not new for this project. "Beijing is believed to be waiting for the Thai parliament to approve a planned £41 billion infrastructure upgrade, which will include a high-speed rail line from the Laos border to Bangkok, before signing off on the loan", reported telegraph.co.uk in January 2014.

The railway risks to create a financial desaster for Laos: Laos plans to borrow £4.5 billion from Beijing to pay for its section of the railway. This is almost 90 per cent of Laos’s annual GDP of £5.2 billion. The loan will make Laos the world’s fourth most-indebted nation after Japan, Zimbabwe and Greece - "trouble for a poor country", wrote The Economist. Read also: China's commercial 'takeover' of Laos by Nikkei Asian Review.

But right now the political crisis in Thailand hinders the Thai government to move on with the project for the highspeed-rail-link between Bangkok and Vientiane. On March 12 Thailands Constitution Court ruled, that the government's legislative bill to empower the Finance Ministry to seek two trillion baht in loans for infrastructure development projects is unconstitutional, as Bangkok Post reports. This means delay for high-speed train lines to Chiang Mai, Rayong, Nong Khai (border to Vientiane in Laos) and Padang Besar, on the Malaysian border.

See a presentation of the railway project from Boten to Vientiane on youtube.com. The planned railway will have a standard-gauge track, and a maximum speed of 160km/h, less than the 200km/h initially planned, as The Nation reported. See also this video showing the planned railwa line.
The line will require 76 tunnels and 154 bridges, including two across the Mekong River, and 31 stations. These stations have been named until now: Boten, Ban Na Thong, Ban Hua Nam, Muang Xai, Ban Na Khok Tay, Huoi Phou Lai, Luang Prabang, Muong Xieng Ngeun, Ban Sen, Kasi, Ban Bua Pheouk, Ban Pha Tang, Vang Vieng, Ban Vang Mon, Ban Mang Khi, Ban Hin Heup, Phonh Hong, Ban Sakha, Ban Phonh Sung, Vientiane Neua and Vientiane Tay.
Villages will have to be relocated, if the railway is constructed, as South China Moring Post writes.

The railway project ist expected to draw an estimated 20000 Chinese construction workers into Laos. In the northern province of Oudomxay Chinese residents already make up around 15 per cent of the population of 30,000. "Chinese-owned hotels, shops and restaurants line the roads and street signs are in both Laotian and Mandarin", reports todayonline.com. Chinese companies are already investing across Laos in everything from rubber and banana plantations to construction, hydroelectric and mining projects. The railway project increases fears. "I think if the Chinese are willing to provide the money, then they're doing it for a number of reasons," says Tristan Knowles, a director at Economists at Large, a Melbourne, Australia-based think tank. "You can flood the market in Laos with Chinese goods, especially agricultural products. The meat and livestock industries in Laos may not be able to compete unless they modernise in the time it takes to build the railway." Chinese companies own an increasing number of the rubber plantations that are the mainstay of northwest Laos’ economy, reports South China Morning Post. And even in Vientiane there are more and more shops run by Chinese people. Read more in the book Vientiane: Transformations of a Lao Landscape by Marc Askew,Colin Long adn William Logan.

A Chinese-invested cement factory was inaugurated in December 2015 in Khammouane Province, expected to serve the construction of China-Laos railway project. The Jixiang cement factory, with an investment of 120 million U.S. dollars, is a BOT (Build, Operate and Transfer) project signed between China's Yunnan Provincial Energy Investment Group and Lao Ministry of Planning and Investment in March 2012. A representative of China's Yunnan Provincial Energy Investment Group told Xinhua that the designed capacity of the factory is 1 million ton a year, accounting for 20 percent of Laos' total cement production capacity.

China has announced that it will invest US$31.4 billion in the Mengla economic zone in Yunnan province, which shares a border with Luang Namtha and Phongsaly provinces in northern Laos. In September 2015 the governments of Laos and China signed a cooperation agreement to establish an economic cooperation zone in the Boten-Mohan border area, aiming to boost trade, investment and tourism in the region as inquirer.net writes. Construction started on a railway linking Yuxi to Mohan in August and preparations for Mengla airport are underway. On the Lao territory, Boten is currently designated as a specific economic zone. The zone is being developed by two Chinese companies – Yunnan Hai Cheng Industrial Group Stock Co., Ltd and Hong Kong Fuk Hing Travel Entertainment Group Ltd with a concession period of 99 years. The Chinese developers have announced that they will focus on four mega projects in the zone including a duty free center, bus station complex, warehousing and a resort that shall feature a large natural marsh, hotel, meeting hall and other relaxing places.

Chinese influence is also very apparent in Muang Xay, the capital of Oudomxay Province. Hotel Sheng Chang was established in early 2014 with a big supermarket, a casino and a restaurant. Chinese shops and advertisements fully span both sides of the road in Muang Xay. "One can find small and middle-sized Chinese auto repair shops, grocery stores, hardware stores, computer shops, guest houses, and, of course, restaurants", notes eastasiaforum.org.


Read earlier story:
Chinese money brings big change: A railway from the North of Laos to Vientiane and Thailand


Real also:
China in Laos: Is There Cause For Worry?



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