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Budget constraints slow construction of Vientiane provincial capital

The government’s decision to ban the construction of public offices until 2020 has affected the development of the new capital city planned for Vientiane province, some 100 km north of the Lao capital.
Director of the province’s Department of Planning and Investment, Mr Soukkanh Vilaylak, told Vientiane Times on Thursday that less funding than expected had been allocated to the relocation of offices and new developments in the provincial capital.

“No new construction projects will take place this year. Instead, we will concentrate on the development of existing projects that were approved in previous years,” Mr Soukkanh said.
“We won’t rush to build the new provincial capital, but will develop it based on our financial capacity. It means that sectors which have sufficient funding can build their offices first while others that have funding shortages will have to postpone their plans.”  
The construction of new buildings had been making good progress after authorities gave permission for private companies to pay the cost of construction upfront, with the government to repay the money at a later date. But since the government banned unauthorised projects two years ago, the construction of the new provincial capital has not progressed as anticipated.     
In May last year, Prime Minister Thongloun Sisoulith issued an order prohibiting the construction of public offices from now until 2020.
In light of the country’s revenue shortfall, the order aims to ensure effective use of the state budget as part of a national austerity policy, as this is considered to be in the country’s best interests.
The government says that building new public offices will not necessarily result in positive or sustainable economic returns.
Last year, about 15 billion kip was allotted to relocation projects, dropping to just 11 billion kip this year. This sum will be used to continue the construction of new buildings and infrastructure in Viengkham district. The offices of the provincial Prosecutor, the provincial National Assembly office and provincial Department of Planning and Investment have been built but the provincial Administration Office is still under construction.
In addition, some concrete roads and the Nam Ngum bridge connecting Pakkhayoung and Meuangkao villages have been completed, facilitating the transport of goods and generating development in the province. Authorities are now inviting bids to re-pave the 6km road running from the Phonmee T-junction to the Thalat area in Keo-Oudom district. It was originally planned to surface the road with concrete but budget constraints mean it will now be paved with a double layer of asphalt. Construction of the new provincial capital began in 2010 but work has been delayed because of budget cuts. A master plan for the new provincial capital has been drawn up but it could take another decade to complete construction of all the buildings and infrastructure as it will require a huge financial outlay.

By Somsack Pongkhao
(Latest Update
March 2,

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