China may fund Cambodia-Vietnam rail

A tuk-tuk crosses railway tracks on the outskirts of Phnom Penh last year. Photograph: Heng Chivoan/Phnom Penh Post


Cambodia was in discussions with the Chinese government on funding for a 250-kilometre stretch of rail line between Phnom Penh and Vietnam, in what Cambodian officials yesterday called a move away from a “complicated” Asian Development Bank loan.

Va Sim Sorya, director general at the Ministry of Public Works and Transportation, said the government could do without the requirements tagged to ADB loans, and fund the project with up to US$600 million in Chinese backing.

 “China doesn’t have so many conditions, but Chinese technicians are still well-studied,” he said yesterday at a workshop on infrastructure, although he did not specify which conditions were undesirable.

Interest rates on ADB concessional loans averaged an annual 1.32 per cent after grace periods, according to data compiled by NGO Forum for Cambodia last year.

China’s concessional lending held the highest rates from any institution or country at an average 1.83 per cent per year.

 ADB’s social safeguard policy from 2009 listed several requirements for compensating and restoring income to those affected by its rail project, although some NGOs have claimed that the bank has not followed some of the specifications.

Loans from China did not appear to have any such conditions.

 “ADB stands by its very comprehensive and well-developed safeguards. That’s something that comes along with the loans,” Peter Brimble, deputy country head at ADB Cambodia, said yesterday. Projects implemented by China happened more quickly than those by “other parties”, Tram Iv Teuk, Minister of Public Works and Transportation, added yesterday.

The railway rehabilitation project on the country’s northern and southern lines – of which the majority was funded by ADB – saw substantial setbacks earlier this year when concessional holder Toll Royal quietly suspended its operation, reportedly because the project was taking too long.

 Now, a 300-kilometre section of track on the northern line lacks the funding to be completed, ADB said last month.

Finding new sources of funding was the responsibility of the government, the bank noted. Yesterday’s announcement from the government met with strong opposition from Sam Rainsy Party lawmaker Son Chhay, saying Chinese companies have built low-quality roads and other infrastructure at higher interest rates.

 “We don’t oppose the need to get funding to serve the national economy, but it must be done transparently,” he said, adding that no bidding process existed for such projects.