[Tlc] L-Chinatown satellite city

Fri Jul 25 09:28:24 PDT 2008

FYI. Be very afraid...
Thanks,
justin

2008-0725 - Asia Times - New-age Chinatown has Laotians on edge

http://www.atimes.com/atimes/Southeast_Asia/JG26Ae02.html

Southeast Asia
Jul 26, 2008

New-age Chinatown has Laotians on edge
By Brian McCartan

VIENTIANE, Laos - This former French colonial city is fast yielding to a new outside influence as Chinese investors bid to build a new satellite city in the mold of the many industrial towns popping up across their homeland. A controversial joint-venture project to build a Chinatown on the northeastern outskirts of Vientiane has upset residents and prompted new concerns about China's fast-growing influence over its smaller neighbor.

The Lao government recently signed off on a plan to allow Chinese developers to build shops, factories, hotels and housing in the city's underdeveloped and some say environmentally significant That Luang marsh area. Under the development plan, the project will cover 1,640 hectares, with buildings taking up less than 1,000 ha and the remaining two-thirds of the area reserved for water resources and leisure areas. Construction and land clearing has yet to begin.

The "New City Development Project", as the government refers to it, involves a joint venture between three Chinese companies managed by the Suzhou Industrial Park Overseas Investment Co and a Lao partner. The terms of the agreement, first announced in September 2007, give the Chinese company a 50-year concession, with a possible extension for another 25 years, while the Lao partner retains a mere 5% share in the project. The project will revert to Laos once the concession period has ended.

The project has sparked public dissatisfaction among the country's repressed populace and prompted the government to make a rare public explanation of its policies. Standing Deputy Prime Minister Somsavat Lengsavad defended the government's actions in February and denied accusations made by the media and fueled by widespread rumors that an agreement had been made to bring in 50,000 Chinese to populate the new satellite city and claimed no special concessions would be made for Chinese citizens.

He said the deal had been negotiated during a meeting with the governor of the China Development Bank (CDB) to seek a US$100 million loan to build a 20,000-seat stadium and related sports complexes for use during next year's Southeast Asian (SEA) Games, to be hosted in Vientiane. The government hopes the event will showcase the country as a destination for investment and tourism.

The CDB governor made the loan contingent on Laos offering a suitable piece of land for a favored Chinese company to develop. According to Somsavat, the Chinese company, which has developed the Suzhou Industrial Park in China's Jiangsu province, will be allowed to benefit from the sale of buildings, industrial units and residences in the new satellite town. Laos will benefit from a new urban development without having to seek loans for its construction, he said.

During a follow-up press conference in March, held to again explain the project and deflect sustained criticism, Vientiane's mayor Sinlavong Khoutphaythoune told journalists that there were three main reasons for the new town's development. First, it was consistent with the government's declared policy of using domestic resources, including land, as capital to develop the country. Second, it was a form of repayment for China's funding and building of a stadium for the SEA Games. The final reason he gave, ironically, was to preserve the marsh area.

Groups such as the World Wildlife Fund estimate the 20-square kilometer marsh area provides aquatic resources for about 3,000 households and 17 villages and provides flood protection for the city by acting as a reservoir for flood waters during the rainy season. The protection provided by the marsh is valued at $2 million and the avoidance of damage caused by floods estimated at over $18 million.

The marsh area lies at the bottom of a low hill topped by Laos' most famous Buddhist monastery and national symbol, That Luang, as well as its National Assembly. According to government spokesman Yong, as recently as 30 years ago nobody lived in the area, some of which the government drained to fight mosquitoes and reclaim land for agriculture.

The area around the marsh is now a mix of residential buildings and bustling commercial properties, including several markets selling fresh produce, dry foodstuffs and other commercial goods. People living along the marsh maintain rice and vegetable fields and gather edible plants from the area, as well as fish, crabs and snails. Fishing platforms dot the length of a canal running through the area. Few residents in the area have proper land title documents and compensation for their removal is expected to be contentious.

Manhattan of Laos
An artist's rendition of the proposed new satellite town which appeared in the Lao press made the area look like a modern Manhattan.

The Lao government seems keen to develop the area along the lines of new Chinese industrial towns, of which Suzhou, where the Suzhou Industrial Park Overseas Investment Company is based, is one. Established in 1992, the Suzhou Hi-Tech Industrial Development Zone, according to the Suzhou government's website, has attracted foreign investments worth more than $6 billion. Most of the businesses established in the zone are in the IT industry, with others involved in software, precision machinery and chemicals.

Whether Laos could or should attempt to duplicate such commercial feats is debatable. While the new town scheduled for construction in the That Laung marsh is not likely to reach soon that level of development, it gives an indication of what the Lao government and its Chinese investors are aiming at. While development on this scale may bring in much-needed investment and employment, the question detractors continue to ask is where will all these workers come from?

To build the SEA Games stadium, the China Yunnan Construction Engineering Company Group Corporation has imported thousands of Chinese workers due to the severe shortage of skilled Lao labor. Although the Lao government has vehemently denied that tens of thousands of Chinese will be moving into Vientiane to populate the planned new satellite city, Laos itself does not have the skills or manpower to construct the city on its own. At current education levels, it also does not have the ability to operate a high-tech city once it is completed.

This will almost surely necessitate the immigration of thousands of workers and specialists, most probably from China. Lao government figures estimate 30,000 Chinese already live in Laos, but most analysts believe the real figure to be perhaps 10 times higher. Stores owned and operated by Chinese people have sprung up across northern Laos, while other Chinese have settled into remote villages as foremen and workers on commercial agriculture projects.

Vientiane, like every city in Southeast Asia, has a Chinese population, which has been accepted as part of the community as much as Vietnamese immigrants have. Now the fear among many people in Vientiane is that the Chinese will no longer be simply neighborhood businessmen and shopkeepers, but actually own a large slice of the city itself and encourage thousands of their countrymen to immigrate and dominate the capital's business, social and cultural life.

Lao government spokesman Yong Chanthalangsy downplays such concerns. Citing Lao investment laws, he told Asia Times Online that 85% of a business must be Lao-owned and that priority must be given to the recruitment of Lao workers. "Some professions are reserved for our population," he said, without elaborating. He noted however that the government acknowledges that some skills are lacking in the Lao labor force and that the government has agreed to allow foreign companies in certain cases to import skilled labor. "We need foreigners for jobs for which we cannot satisfy the demand. We will continue to recruit for these."

He did concede that there is a problem of Chinese workers remaining in Laos after the completion of projects, which is clearly the case in the country's northern regions, where Chinese companies have overseen new road projects.

"We must strengthen enforcement of the law to prevent people from staying. The government will take a closer look, monitor and strengthen the law on foreign laborers in our country," he said. He noted that 1,800 Chinese laborers authorized by the government to build the Don Chan hotel in Vientiane for the 10th Association of Southeast Asian Nations summit in 2004 all returned home after the project was completed.

China began taking a more active role in Laos in the late 1990s, seizing the opportunity presented by bailing out the Lao economy in the wake of the 1997-98 Asian financial crisis. Chinese investment and aid to Laos has since rocketed, facilitated through a series of bilateral agreements covering economic and technical cooperation, investment, banking and infrastructure development. These agreements have been complemented by Chinese export subsidies and interest-free loans.

In November 2000, Jiang Zemin made the first visit by a Chinese head of state to Laos, symbolically underscoring the two sides' strengthening ties. In pursuit of new trade routes and energy and commodity sources for its growing industrial and population base in its southern provinces, China is looking to resource-rich Laos to meet that surging demand. The Lao Committee for Planning and Investment approved $1.1 billion in direct Chinese investment by August 2007, making China the second-largest investor in the country after Thailand. Last year, China actually invested US$876 million, compared with $3 million in outlays in 1996.

China has also recently approved almost $500 million in grants and interest free loans, mostly to help stabilize the Lao currency in the wake of the 1997-98 financial crisis. Chinese Premier Wen Jiabao said during an official visit in March this year that his government was willing to support even more investment by Chinese enterprises in Laos. Bilateral trade between Laos and China reached $249 million in 2007. Most analysts believe the real figure is much higher once informal trade and smuggling are taken into account.

Patronage shift
Laos' growing economic ties with China mark a shift from its previous reliance on Vietnam. Although pronouncements of continuing strong fraternal relations are made by Hanoi and Vientiane, many younger Lao leaders now moving into the middle and higher ranks of the Lao People's Revolutionary Party (LPRP) are believed not to share the same feelings of allegiance to Vietnam held by older cadres. They grew up after the end of the Indochina War and do not feel as indebted to Vietnam for its assistance during the revolutionary period that culminated in the 1975 communist takeover in Laos.

Laos is a case study of China's soft power strategy in the region. In Vientiane, China built the $7 million National Cultural Hall, completely financed the 13 kilometer Central Avenue leading to the central Patouxay, or Victory Arch, monument in 2003 and renovated the park around the same monument in 2004. Now projects have become more commercially oriented and provide indication of what is in store for the That Luang marsh area.

On August 1, 2007, the country's first modern shopping mall was opened in Vientiane's western Sikhottabong district. At the opening ceremony, Ding Guo Jiang, president of the San Jiang Company, the $6 million project's main investor, was quoted by the Vientiane Times saying, "The new Chinese market is now the largest market for Chinese products in Southeast Asia and a gathering point for the city's Chinese merchants."

The project is overtly aimed at a Chinese market and investment by Chinese businesses. Of the 300-plus spaces in the shopping mall, Ding Guo Jiang noted that 200 had already been filled by Chinese businesses while 100 were operated by local Laos. An estimated 80% of the goods in the market are imported from China.

The shopping mall is part of a larger project known as the Lao-Chinese Friendship Center by the Lao Ministry of Industry and Commerce, which it says is "part of the cooperation framework on trade and investment between Lao and Chinese governments". The 174,000 square meter project was granted a 50-year operating concession and is expected to cost around $18 million to complete. According to Ding Guo Jiang, who is also the managing director of the entire project, the new trade center will encompass a hotel, guesthouse, public park, restaurants and a market.

The Lao-Chinese Friendship Center is the third trade center established between the Lao and Chinese governments. The other two, the Boten Border Trade Center and the Nong Duang Chinese market in Vientiane, have also been controversial. For instance, the trade center at Boten in Laos' northern Luang Nam Tha province consists mainly of Chinese businesses selling Chinese goods to an almost entirely Chinese clientele. The business owners, shopkeepers and hotel staff are all ethnic Chinese.

Meanwhile, the original Lao residents of Boten have all been moved out to a shanty town farther down the Chinese funded and built road from the border. Residents of Luang Nam Tha and non-governmental organization (NGO) workers in the country quietly accuse the government of selling off Boten to the Chinese, with some local Laos bitterly contending that it is already part of China.

There is a similar undercurrent of dissatisfaction about the New City Development Project among Vientiane's population, including among the new, growing and increasingly assertive middle classes. While they were seemingly only mildly concerned about Chinese inroads made into northern Laos, this new project has brought the specter of Chinese domination to their doorstep. Rumors of official corruption and a behind-the-scenes deal to allow 50,000 Chinese to move into the capital are fueling resentment at growing Chinese influence and a government which appears to be abetting the process.

Beijing agreed to cancel much of Laos' $1.7 billion debt owed in 2003, according to Chinese media reports. That has led to speculation that the satellite city development project could be repayment in kind for Beijing's generous bailout. Since the Asian financial crisis, China has provided millions of dollars in loans and financed the building, of among other things, the newly opened route from Boten on the Chinese border to Huay Xai on the Thai border. Chinese loans were also provided to help start up the Lao Telecom Company and Lao Asia Telecom, establish e-government projects and purchase two MA 60 turboprop airliners for Lao Aviation.

Some analysts contend that not everyone inside the ruling communist party is happy about the deal either. The government's highly secretive nature makes this almost impossible to verify, but it seems likely that those in the leadership who did not share in the spoils of China's largesse could be unhappy with the deal. According to one source close to the government, the deal upset many party cadres because they were out of the loop of the decision-making process and only found out about the new satellite city after it was publicly announced.

The average Lao, of course, has almost no outlet for protest. But the simmering discontent was large enough for the government to make its rare public explanation for its actions in both February and March. The issue remains sensitive, however, and many in Vientiane, both Lao and foreign workers, were reluctant to discuss the controversial development.

NGO workers have been told by officials not to refer to the project as "the Chinese city". Government spokesman Yong is more open about the development. "It is a real estate and industrial development project given to a Chinese concessionaire, nothing more." For Yong the issue is one of recognizing the reality of China's growing economic might. "It is basic. Some people are not ready to live with the new situation. We now have new players."

Brian McCartan is a Chiang Mai-based freelance journalist. He may be reached at brianpm at comcast.net

______________
Dr. Justin McDaniel
Dept. of Religious Studies
3046 INTN
University of California, Riverside
Riverside, CA 92521
951-827-4530
justinm at ucr.edu