Laos: Losing a Few More Places in the Queue


Ian Wilson

Laos had not the slightest involvement in the events of 11 September, but their economic impact, let alone the costs of a long and inconclusive conflict fought on Afghanistan territory, will impinge heavily on the already grim prospects for Lao economic recovery. Ten days after the bombing the Asian Development Bank (ADB) announced a brave plan to reduce poverty by half by 2005 and lift the economy out of its “least developed” status by 2020.

But Laos was already experiencing the effects of donor fatigue before the attacks and had been put on notice that significant political reform and transparency was required to meet tougher qualifying standards for economic aid. Australian goodwill was damaged by the way the trial of Mr and Mrs Dane was conducted and the extra-legal outcome of proceedings which left the couple in the custody of the Australian ambassador but neither cleared nor convicted of the embezzlement of gemstones valued at $US12 millions. The system was under scrutiny again.

The government’s control of the media was exposed to ridicule when a peaceful street protest demonstration was passed off as the act of some unruly drunkards and the police retreated behind official denial once more. The explanation for a small series of explosions in Vientiane and the north was similarly opaque. Charges of human rights abuse, single-party political domination and failure to meet international standards on labour conditions further undermined the support Laos had long enjoyed in the Scandinavian nations of the European Union.

The post-September climate has accentuated fear of wider economic recession and Laos has begun to shore up ties with its regional ally, Vietnam, and with China. These states have shown no past concern with labour conditions or democratic rights but there are upper limits to their capacity to help Laos. Vietnam has entered into a joint agreement to pursue banking reform, not a move likely to reassure the ADB. The Lao kip now stands at 9600 to the US dollar, a drastic drop in value since the mid-1990s when it was still under 1000. Economic collapse, near total dependence on aid and permanent mendicant status all threaten.

But suddenly, from the state-run media, we see a surprising change. The Vientiane Times, little more than a government news sheet, is now publishing on its website and in fractured English what are purported to be letters from the readers. These are said to be unedited and cover a range of issues hitherto forbidden, including a warning to the ADB to guard against misappropriation of its grant aid, an attack on the sources income enjoyed by Mr. Khamtai Siphandon (President of the ruling Lao People’s Revolutionary Party) and on his involvement in the DAFI Group, one of three military based and largely independent development corporations which share monopolies in timber extraction, oil distribution and gemstones. The Kaisone Museum, in honour of the founding President, is criticised as being useless, very expensive and built without popular consultation. The Vietnamisation of education in Laos, the safety record of the notorious Lao Aviation and the lack of democratic institutions all come under attack in the current issue.

How many Lao have access to this service in English is unknown, and Vientiane lacks the more open environment and street-corner internet cafes of Phnom Penh, but cogent critique of the state and party have begun to emerge from an unexpected quarter. The foreign observer should not be taken in, but the most rigid system of the region may be showing some cracks as it struggles to survive.

WATCHPOINT: How long will criticism be permitted and how long can Laos retain its independence and national integrity?


About our company:

AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.

Go to top