Laos opens 'game changer' Chinese-built railway line

BANGKOK • Laos opened a US$6 billion (S$8.2 billion) Chinese-built railway yesterday, with debt concerns balanced against hopes that it could boost the reclusive nation's struggling economy.

The first train of the China-Laos Railway left Vientiane yesterday afternoon, with potash products manufactured by a China-Laos joint venture the main cargo loaded on the train.

Chinese President Xi Jinping and his Laos counterpart Thongloun Sisoulith, witnessed the opening of the railway via video.

The 414km route took five years to construct under China's trillion-dollar Belt and Road Initiative.

Analysts have acknowledged the potential economic boost, but have queried how infrastructure-poor Laos will pay its US$1.06 billion debt - and whether it is ready to exploit the state-of-the-art transport system.

But Chinese Foreign Ministry spokesman Wang Wenbin said on Wednesday that the "flagship project" would give a "boost to Laos' strategy to convert itself from a landlocked country to a land-linked hub".

The route connects the Chinese city of Kunming to Laotian capital Vientiane, with grand plans for the high-speed rail to ultimately snake down through Thailand and Malaysia to Singapore.

The communist-run country of 7.2 million people previously had only four kilometres of railway tracks. But now sleek red, blue and white bullet trains will speed along the new line at up to 160kmh, passing through 75 tunnels and across 167 bridges, and stopping at 10 passenger stations.

Passenger services are expected to begin today, state media reported, although only for those fully vaccinated against Covid-19.

A Buddhist ceremony was held on Thursday to bless the new railway, with Prime Minister Phankham Viphavanh banging a gong nine times to bring good luck, the Laotian Times reported.

Laos took a battering in the pandemic with economic growth declining to 0.4 per cent last year, the lowest level in three decades, according to the World Bank.

Hopes for a rebound were dashed by a virus outbreak, with more than 76,000 infections registered in the past eight months.

But the project could be an economic "game changer", Bangkok Bank chief economist Burin Adulwattana said. "I don't look at it as China trying to bankrupt Laos... it's not a Trojan Horse strategy. I think it's going to be a win-win situation."

But there is little transparency around how Laos will fund its debt. A World Bank report said "funding of the existing public infrastructure programme looks increasingly unsustainable".

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A version of this article appeared in the print edition of The Straits Times on December 04, 2021, with the headline Laos opens 'game changer' Chinese-built railway line. Subscribe