The Giant Group Limited on Monday signed a memorandum of understanding (MOU) with the Ministry of Public Works and Transport. The agreement allows the Malaysian company to survey and design a railway from the Savannakhet provincial capital, Kaysone Phomvihane, to the Vietnamese border at Lao Bao.

Giant Group Limited vice President, Muhammad Falanh Bin Mohammad Fadzwi, and the ministry's Planning and Cooperation Department deputy director general, Phetsamone Viraphanth, signed the MOU.

Public Works and Transport deputy minister, Sithong Thongkeo, senior government officials and staff from the Malaysian company witnessed the signing ceremony in Vientiane.

The MOU spells out the first steps the company must take to gain government approval for the construction of the 220-kilometres railway and associated facilities. If the project goes ahead, the company will build and operate the railway as a land link with Thailand and Vietnam.

The company will carry out a two-year technical survey before seeking investment approval from the government, and hopes the railway will be operational within eight-years.

Giant Group Limited senior manager, Noor Mohamed Ahmad, said the company would seek government approval for investment, operation and eventual transfer of the railway to government ownership.

According to Lao law, the company can hold a monopoly in the venture for up to 25 years and has the option to extend the agreement for at least another 12 years.

Noor Mohamed Ahmad said he thought the company would earn a good profit from the railway. The rail link will carry passengers and freight between Laos, Thailand and Vietnam and will be part of the Greater Mekong Sub-region East-West Economic Corridor.

"We have not collected statistics on the number of passengers and amount of freight that would use this route but we believe the demand for this form of transport will grow rapidly in the future," he told Vientiane Times during the signing ceremony.

He said the company's decision to invest in the project was due to the economic development potential of Savannakhet province. The government has set up a special economic zone in the province, which is attracting investors from around the world due to its strategic location between Thailand and Vietnam.

Lao Railway Authority deputy director, Sonesack N. Nhansana, said it was good news to learn that a private company wanted to build and operate a railway in Laos.

He said the government would allow other companies to invest in similar projects if this railway was a success.

Sonesack said the government wanted to turn Laos from a landlocked country into a land-linked country to overcome barriers to development. He said the government hoped not only to earn a profit from freight transport charges but also to attract investment along the route.

AsiaNewsNet - November 14, 2008