Source: Vientiane Times, June 5, 2017
Infrastructure development under the Build-Operate-Transfer (BOT) model is taking shape in Laos as the government requires huge capital investment to improve road networks and other facilities.
Lao economists have supported the initiative, saying that with the government’s limited funding, it’s critical to encourage the involvement of the private sector to develop infrastructure.
Independent and experienced economist Dr ManaSouthichak told Vientiane Times last week that “private investment in developing roads or expressways is a good way to reduce the government’s budget burden, but the government needs to ensure the integrity of the project as well.”
Dr Mana referred to a toll on Road No. 16 in Champassak province where the government allowed Duangdy Bridge-Road Construction Company to upgrade the road and collect fees from motorists for a period of 45 years.
The toll road generated large numbers of complaints from members of the public since the developer started to collect fees from motorists in August last year.
“This project is not fair for the public,” Dr Mana said, saying that private companies needed to be allowed to build new roads (not upgrade existing roads) and collect fees from motorists. Those who do not want to pay the fees can then use the existing roads.
A senior economist at the National Economic Research Institute, Dr Leeber Leebouapao agreed with this opinion, saying the government needed to create options for local people, not forcing them to pay the tolls.
Currently, Laos plans to build an expressway from Vientiane to northern and southern parts of the country to facilitate transport as well as boost economic growth.
A planned Vientiane-Vangvieng expressway over the distance of 113.7 km is under a feasibility study. The project, which is estimated to cost US$1.4 billion, is set to be developed in parallel with the existing Road 13 North and the Laos-China railway project.
Another planned expressway will be built from Vientiane’s city centre to Xaythany district over the distance of 14 km, passing through 13 villages in Xaysettha district and six villages in Xaythany district.
The government recently approved construction of the project which expected to cost between US$150 million and US$200 million.
Nevertheless, Dr Leeber is optimistic that the private-public partnerships will help the government attract capital from private investment to sustain economic growth.
In 2016, the overall investment across Laos increased above the set plan by 24.2 percent year-on-year, driven by private sector and bank credit, according to the government’s latest report.
The government planned to mobilise 34.5 trillion kip last year but more than 42.85 trillion kip has been pumped into the investment sector, representing 33.1 percent of Gross Domestic Product.
However, domestic and foreign private entrepreneurs represent more than half of the entire investment sector.
(Latest Update June 5, 2017)