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Dr Nick Enfield
The Seventh Congress of the Lao People’s Revolutionary Party was held in March, resulting in the replacement of former prime minister Sisavat Keobounphanh by Boungnang Vorachit, and surprising many who had predicted that Deputy Prime Minister and Foreign Minister Somsavat Lengsavad was in line for the job. Also contrary to observers’ predictions, Khamtay Siphandone remained in his post as President. It is not unusual for predictions about Lao politics to be wrong, given the extreme secrecy surrounding the government’s internal workings.
Some observers have associated President Khamtay, on the one hand, with a ‘pro-Vietnamese’ faction in the Party, and Foreign Minister Somsavat with a ‘pro-Chinese’ faction, and expectations of Somsavat’s rise were due to the recent shift towards closer relations between Laos and China. Indeed, as the nation’s leaders adjust for another five years in government until the next Party Congress, a strong turn toward China is in evidence, as revealed by Chinese President Jiang Zemin’s visit to Vientiane late last year, as well as the nine-day official visit to China this month by Foreign Minister Somsavat, celebrating 40 years of official diplomatic relations between the two countries.
The economy is of course one of the government’s primary concerns, and Boungnang’s appointment as new Prime Minister is thanks to his ‘pragmatic economic know-how’. The government has announced its objective to triple the nation’s annual per capita GDP (from US$300 to $900) within the next two decades. This is a major challenge, given that the country relies heavily on foreign assistance (of which more and more has come from China recently), and exports remain few. A recent minor boom is in the ‘export’ of casino gambling, mostly to citizens of Thailand, whose government is cracking down more than ever on gambling within its own borders. There are now some five casinos on the Lao side of the Thai-Lao border.
More tangible potential for export is in mineral resources, but prospecting and extraction depend on foreign investment. Anyone considering getting involved is no doubt thinking twice, since the detention of Kerry Danes, an Australian employed to operate security at a gem mining operation in the province of Bo Keo, along with his wife Kay Danes. Mrs Danes was arrested trying to leave Laos with some US$52,000 in cash, the couple subsequently being accused of theft from the mining company. They have been detained in difficult conditions in Vientiane for the last four months without charge, nor have accusations been formally made. The issue has become a diplomatic incident, with Australia’s Prime Minister and Governor-General both appealing to the Lao government to act.
WATCHPOINT: An unofficial national export is opium and its derivatives, Laos being a major world supplier. While ‘drug tourism’ is on the rise, the government has just announced the death penalty for possession of 500 grams of heroin. Will the government be willing and able to control the drug trade?
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.
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