• Society

Cambodia Seeks Partner for $4 billion High-Speed Rail

• By Torn Chanritheara
• February 15, 2023 7:09 PM

PHNOM PENH – Cambodia is seeking a partnership with a private company to build a high-speed railway connecting Phnom Penh to Poipet on the Thai border.

However, Transport Minister Sun Chanthol said on Feb. 15 that Cambodia won’t follow Laos and borrow money to fund the project.

A preliminary study shows that the construction cost is over $4 billion with a length of 382km. The speed would be between 160kmph and 200kmph.

Sun Chanthol, who is also a Senior Minister, said the ministry has been looking for a partnership with a private firm through Build-Operate-Transfer (BOT) or Public-Private Partnership (PPP).

Speaking at a meeting on the ministry’s 2022 achievements, he said the railway will connect Cambodia to Thailand and then to Laos’ high-speed railway.

Cambodia will not borrow billions of dollars to construct this railway like Laos has done. According to China’s state media, the Laos high-speed railway cost $5.9 billion and covers about 400 kilometers between the capital Vientiane and Boten, a northern city bordering China and built as part of China’s Belt and Road Initiative. China covers most of the cost.

“Prime Minister Hun Sen had already told Transport Ministry and Finance Ministry that he wants either BOT or PPP,” Chanthol said, adding that Hun Sen told Chinese leaders during his recent visit that Cambodia doesn’t want to borrow money for the project.

Chanthol, however, acknowledged that through BOT, the Financial Internal Rate of Return (FIRR) will not be enough for a company to invest since the transport volume and number of passengers would be low.

Goods transported would be 6 million tonnes in 2035 and reach 9 million tonnes in 2045 along with two million travelers. But there are ways to increase FIRR.

“We can put it into a package. For instance, I don’t know whether or not it is possible. In Poipet, the company can have land to open special economic zone or duty-free shops,” he said.

“On the other land, they can construct a commercial building so that it can generate income to support the income from goods and passenger transportation.”

According to the Senior Minister, the new high-speed railway will be a game changer for Cambodia because logistics will be improved, benefiting the economy.

He added that Cambodia is in the middle of the Greater Mekong Sub-region which include Cambodia, Laos, Myanmar, Thailand, and Vietnam. Particularly, it lies between Thailand and Vietnam.

If Cambodia prepared its logistics properly, has efficient transportation with economical costs, Cambodia could become a production and storage center and transit hub for goods.

He said that a Chinese company will conduct another study for potential investment.

Regarding the impacts on people’s livelihoods arising from this project, he said that China has provided $44 million in aid to solve such issues and Cambodia can use the money for any further study as well. 

During his visit to Laos, PM Hun Sen also discussed with Laotian PM Sonexay Siphandone about the high-speed rail link to promote tourism and connectivity.