Laos expects $5b loan for rail project

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Laos-Thanaleng
Laos’ only railway station in Thanaleng near Vientiane.

A $5 billion dollar loan, worth more than half of Laos’ total GDP, for construction of a rail link across southern Laos between Thailand and Vietnam, has supposedly been approved, Radio Free Asia reported on April 17.

The lender is said to be a New Zealand-based financial institution called Rich Banco Berhad which so far has been unknown in Southeast Asian investment circles and is also not registered with the Reserve Bank of New Zealand, as research by Inside Investor shows, raising questions about the origin of the funds and the nature of the deal itself.

Apparently, the bank agreed to provide the huge loan to Malaysian builder Giant Consolidated Limited to fund the construction of the 220-kilometer rail running across southern Laos from the Thai to the Vietnamese borders between Savannakhet and Lao Bao, from where it would connect to a rail link to Vietnam’s seaport in Danang. Construction should start this year and be finished by 2017.

The project, along with other massive infrastructure projects planned by the Laos government, has caught attention from economists who doubt the country’s ability to repay such enormous debts.

Laos GDP at the official exchange rate was just $9.27 billion in 2012. Apart from the $5 billion loan for the above project, the country also plans to borrow $7.2 billion from China to build a second railway line of 420 kilometers length from Vientiane to southwestern China.

The Asian Development Bank has already mentioned that such projects are “unaffordable” for Laos and could sink the country deep into debt.

Currently, Laos’ railway systems consists of a 3.5-kilometer link over the Mekong River between the capital Vientiane and Thailand’s border town of Nongkhai.

 

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Reading Time: 2 minutes

Laos’ only railway station in Thanaleng near Vientiane.

A $5 billion dollar loan, worth more than half of Laos’ total GDP, for construction of a rail link across southern Laos between Thailand and Vietnam, has supposedly been approved, Radio Free Asia reported on April 17.

Reading Time: 2 minutes

Laos-Thanaleng
Laos’ only railway station in Thanaleng near Vientiane.

A $5 billion dollar loan, worth more than half of Laos’ total GDP, for construction of a rail link across southern Laos between Thailand and Vietnam, has supposedly been approved, Radio Free Asia reported on April 17.

The lender is said to be a New Zealand-based financial institution called Rich Banco Berhad which so far has been unknown in Southeast Asian investment circles and is also not registered with the Reserve Bank of New Zealand, as research by Inside Investor shows, raising questions about the origin of the funds and the nature of the deal itself.

Apparently, the bank agreed to provide the huge loan to Malaysian builder Giant Consolidated Limited to fund the construction of the 220-kilometer rail running across southern Laos from the Thai to the Vietnamese borders between Savannakhet and Lao Bao, from where it would connect to a rail link to Vietnam’s seaport in Danang. Construction should start this year and be finished by 2017.

The project, along with other massive infrastructure projects planned by the Laos government, has caught attention from economists who doubt the country’s ability to repay such enormous debts.

Laos GDP at the official exchange rate was just $9.27 billion in 2012. Apart from the $5 billion loan for the above project, the country also plans to borrow $7.2 billion from China to build a second railway line of 420 kilometers length from Vientiane to southwestern China.

The Asian Development Bank has already mentioned that such projects are “unaffordable” for Laos and could sink the country deep into debt.

Currently, Laos’ railway systems consists of a 3.5-kilometer link over the Mekong River between the capital Vientiane and Thailand’s border town of Nongkhai.

 

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