As part of China’s to develop infrastructure links across Asia, known as the “One Belt, One Road” project, a project railway worth $7 billion will be implemented to link China to Laos, and specifically the Chinese southwestern city of Kunming with the Lao capital of Vientiane.
Although Vientiane hosted an elaborate ground-breaking ceremony for the project in December, but nearly eight months later, construction has yet to begin in Laos. According to former deputy prime minister, Somsavat Lengsavad, work has been delayed because Laos had yet to complete an environmental and social impact study.
“The terms are all concluded, they are not changing,” he told Reuters in an interview at the prime minister’s office in Vientiane. “But the Chinese banks are very strict on us fully complying on the environment and social impact study.”
According to Lengsavad, there was also another issue; the land allocation around the line, with some land on the route having been snapped up by investors speculating ahead of government purchases.
The former minister also said that China will hold a stake of 70 percent in the joint venture project, and Laos the rest. Initial capital would be around $2.1 billion, with Beijing funding Laos’ contribution of $630 million with a loan at interest below 3 percent, he added.
Another reason for delays was that responsibility for the project had changed hands between ministries in China, he said. But Beijing has also struggled to make progress in Thailand, as negotiating teams have disagreed on financing, cost and land rights.
“We will continue to push forward the construction of this rail project,” China’s Foreign Minister Wang Yi told reporters on the sidelines of a meeting of Southeast Asian nations this week. “It will bring benefit to people from both countries.”
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