China-Laos Transnational Railway Opens Trans-Asian Railway Plan Hard Start-BBC News

Supalak Ganjanakhundee (Supalak Ganjanakhundee) is a special writer for the Thai Language Department of the BBC. He was a visiting scholar at the ISEAS-Yusof Ishak Institute, a think tank in Singapore. He analyzed how the opening of this railway will affect China, Laos, and even Southeast Asia as a whole.

Although the new crown epidemic has hindered the construction of the China-Laos railway project, Laos still announced that the railway business linking Vientiane and Luang Namtha province (Luang Namtha) Boten (Boten) will be launched in early December.

In 2016, construction of this $5.9 billion project began. This figure accounts for about one-third of the total economy of Laos. At the time, people suspected that this huge investment would make the country fall into a debt trap, because 60% of the project’s funding (approximately US$3.5 billion) came from loans from the Export-Import Bank of China. As a result, this small country is burdened with more than $1 billion in debt.

The remaining 40% is converted into project shares. Laos needs to invest 730 million U.S. dollars in equivalent cash, of which 250 million U.S. dollars comes from Laos’s national budget. The remaining 480 million U.S. dollars will also rely on loans from the same financing institution, the Export-Import Bank of China.

Laos will shoulder more than 1.4 billion U.S. dollars in debt. In view of the World Bank (World Bank) data in 2020, Laos’ gross domestic product (GDP) is 19.14 billion US dollars, this figure is quite staggering.

Somsavat Lengsavad (Somsavat Lengsavad), then Deputy Prime Minister and Minister of Foreign Affairs of Laos, was the central figure in the negotiations with China. He said: “I was very aware of this issue when signing the contract. Therefore, I suggest that the joint venture be responsible for all debts and use the project as collateral for the loan. In this way, the government will not be overburdened.”

Regarding rumors that Laos must allow joint ventures mainly controlled by China to exclusively commercialize land within 20 kilometers on both sides of the railway, Ling Xuguang denied the existence of this clause in the contract. He said that the Chinese partner stated that only 1,000 hectares of land are needed to build the planned station, and the land along the railway must meet safe operation standards.

The World Bank’s report “From Landlocked to Land-linked: Unlocking the Potential of Lao-China Rail Connectivity” in 2020 stated that this railway is China Among the six international economic corridors proposed under the “One Belt and One Road” initiative, the China-Indochina Peninsula Economic Corridor is a component.

The railway system will connect Kunming in southern China with Singapore through Laos, Thailand and Malaysia. The railway adopts a standard gauge electrified railway design with a gauge of 1435mm and can pass high-speed trains with a speed exceeding 250km per hour. In Laos, the speed of passenger trains is between 160 and 200 kilometers per hour, and the speed of freight trains is 120 kilometers per hour.

Dr. Trin Aiyara, a political scholar at Walailak University in Thailand, stated at an online seminar in July this year that China’s railway project is in line with the strategic development of China and Southeast Asian economies. Interests, because the former hopes to deepen its political and economic influence in the region, while expanding the sales channels of China’s industrial products, thereby promoting economic growth and prosperity in southern China. This network will eventually promote the ambitious China to become an emerging world economic center.

The scholar said that the advantage for Southeast Asia is that it will connect with the world through new large-scale infrastructure development, and land along the route will also get urbanization opportunities, especially in border areas with China or other countries, which will improve Vibrate the domestic economy.

Greg Raymond, a lecturer at the Center for Strategic and Defense Studies at the Australian National University (ANU), pointed out that if the infrastructure plan comes true, China will have a double benefit.

A study by the World Bank shows that the China-Laos Railway itself may not be able to solve all problems. It is estimated that by 2025, the total number of potential passengers on the Boding-Vientiane Railway is estimated to be only 480,000, which will increase to 1.1 million by 2030, which is not outstanding. Therefore, the railway service will have to basically rely on cargo transportation because of its lower transportation costs.

Once the Trans-Asian Railway network connecting China and Singapore is fully operational, the World Bank predicts that by 2030, cross-border, transit and inland freight traffic will increase by 2.4 million tons per year, while the China-Laos railway section is expected to transport 7 million tons. goods.

Laos is building new special economic zones to maximize economic activity in manufacturing and service industries along and nearby. The report pointed out that the Lao government should carefully establish special economic zones along the railway, such as places close to transportation or distribution hubs and sufficient labor, and there should be clear, transparent and uncomplicated supervision.

However, Raymond’s research points out that China is a key participant in the development of Laos’ special economic zones. According to a 99-year lease, China has been building, owning and managing the border town of Boding since 2003. For nearly 20 years, it has been China’s commercial center in northern Laos. The renminbi is commonly used in cities, and Chinese elements and symbols can be seen everywhere.

“In a field investigation in September 2019, there was almost no evidence that this town is in Laos. It looks like a typical Chinese town,” Raymond observed.

The construction of the railway project may bring relatively few direct benefits to the Lao people. During an inspection in mid-June this year, Lao Deputy Prime Minister Sonsai Siphandone called on railway joint ventures to hire more Laotians. Currently, the number of employees in Laos is approximately 700.

China’s Xinhua News Agency previously reported that China is training 636 young Laotian people to work on railway projects. According to reports, some people will be hired as train drivers or involved in the maintenance of equipment and facilities. A video broadcast by the official news agency showed that Chinese conductors were practicing conversations in Lao.

Raymond told the BBC that the cooperation between the two countries on the China-Laos railway seems to have caused some social controversy, because the wages of Lao workers are lower than those of Chinese workers, but they dare not complain.

Although China has promoted the construction of the Trans-Asian Railway, and many analysts believe that China will also be the biggest winner relative to its partners in the region, Raymond believes that the path China is taking is also not smooth.

So far, Laos is the only country that has difficulty resisting China’s proposal. Major ASEAN economies, including Thailand, have greater bargaining power and can make better use of the “Belt and Road” initiative.

Thailand foresaw the benefits of connecting the domestic high-speed rail system with the China-Laos railway, but it fully realized that it was included in China’s sphere of influence too quickly. The country turned to a deliberate move, first focusing on the development of a railway linking Bangkok and Nakhon Ratchasima, rather than a one-time link between Bangkok and the northeastern border province of Nong Khai. railway.

Thai Transport Minister Saksayam Chidchob told the media in May that the first phase of the Thai-Chinese high-speed rail project from Bangkok to Nakhon Ratchasima is 250 kilometers long and only one of the 14 construction contracts has just been completed. The remaining six are under construction, three are in the preparation stage, and four are still awaiting tenders. The Thai government’s goal is to start the first phase of railway operations in the next six years.

As for the feasibility study of the second phase of the Nakhon Ratchasima-Nong Khai railway line of about 356 kilometers, it has recently begun. The design of the project will have several rounds of consultations and negotiations with China before the start of construction. It is worth noting that the 30-kilometer railway from Nong Khai to Vientiane (including a railway that crosses the Mekong River) may be a little more complicated because it requires the participation of three parties and there is no clear timetable.

Raymond said that the Thai authorities regard investment in the Eastern Economic Corridor (EEC) and the high-speed rail project connecting the three international airports, namely Don Mueang, Suvarnabhumi and Utapao-Rayong-Pataya, as a higher priority because they are significantly more important to Thailand. favorable. Therefore, they are not eager to establish contact with Laos, because it is more beneficial to China.

Dr. Trin of Valérin University said that China faces many obstacles before the project turns from a dream into a reality. The main reasons include the precarious debt situation in Laos, the economic recession in Thailand, the complicated construction regulations in the legal system of partner countries, and the failure of the Malaysia-Singapore high-speed rail project launched in 2010 in January this year. This makes the Trans-Asian Railway project that connects Kunming, China and Singapore, challenged.

Singapore and Malaysia have come together and plan to jointly invest 25 billion U.S. dollars to build a 350-kilometer high-speed rail, reducing the travel time between the two capitals to 90 minutes. Once put into operation, it will be the last section of the Trans-Asian Railway proposed in 1995 to connect Kunming and ASEAN countries.

This ambitious project has been really promoted for the first time since China proposed the “Belt and Road” initiative, prompting the enthusiastic ASEAN countries, especially Laos, Thailand, Myanmar and Vietnam to take action and invest heavily in new railways in the past 10 years. Construction.

After the political turmoil in Malaysia in 2018, the Malaysia-Singapore high-speed rail project experienced a crisis for the first time. The Mahathir Mohamad government believed that this would put the country on a huge debt, so it shelved it and compensated Singapore with US$11 million in liquidated damages.

After Mahathir stepped down in March last year, politics became more turbulent, and the prospects of the project remained bleak. The Muhyiddin Yassin government decided to abandon the project altogether, and Malaysia paid another US$75 million in compensation to Singapore.

Before making this important decision, Malaysia requested an extension of the deadline for the project on the grounds that the new crown epidemic has caused unforeseen problems.

However, according to the “Financial Times” report, both parties are actually eager to start the project as soon as possible, because the two countries believe that the high-speed rail project will boost the sluggish economy, but the two countries have disputes over the process of starting the project. Singapore proposed to conduct international tendering on the grounds of ensuring transparency and equal benefit sharing, but Malaysia did not agree, saying it would take too much time. Therefore, the project was eventually cancelled.

In the 21st century, in the face of international development trends and China’s growing influence, some small countries find themselves unable to resist. In summary, Raymond stated that the powerful economies of the Southeast Asian continent, such as Thailand and Vietnam, may have greater flexibility than countries such as Laos to deal with challenges and pressures, and more ingeniously make the “Belt and Road” initiative “use me.” . For Laos, the remaining option is to maintain a balance by maintaining good relations with its former main ally, Vietnam.