[Tlc] L-economics

Wed Jan 9 08:30:11 PST 2008

FYI. 
Thanks,
justin

2008-0109 - Asia Times - Laggard Laos turns the economic corner

http://www.atimes.com/atimes/Southeast_Asia/JA10Ae01.html

Asia Time Online - Daily News

Southeast Asia
Jan 10, 2008

Laggard Laos turns the economic corner
By Bertil Lintner

VIENTIANE - Somphone carries a mobile phone in his back pocket
and checks his e-mail every day. He likes to drink beer in one
of the city's many bars, pubs and restaurants, and goes to
discos on weekends. Somphone, not his real name, is
unconsciously part of a new Lao revolution: the market-led
rise of an economically empowered middle class.

It is still small and largely confined to the capital
Vientiane and a few other urban centers, but a middle class is
slowly but surely emerging in this land-locked communist-run
country of nearly 6

million people. Previously confined to ruling Communist Party
cadres and their children, the wealth created from the
country's gathering economic boom is now clearly trickling
down to a wider cross-section of the population.

The Lao economy has grown by more than 7% for the past two
years, driven by foreign investment in the development of the
hydroelectric power industry, fast expanding gold and copper
mining activity, and a rapidly growing tourism industry. Since
2001, the Lao economy has grown at an average annual rate of
6.5%. Official development assistance and aid still contribute
largely to the national budget, but merchandise trade is
increasing as a driver of growth, up from 45.8% of GDP in 2005
to nearly 61% in 2006, according to World Bank statistics.

Growing garment, horticultural and timber sectors have
improved Laos' economic performance and helped to narrow
external debt. The signs of increased economic activity are
visibly apparent in Vientiane, where formerly pot-holed, dusty
streets are now clean, paved and full of traffic. New shops
sell imported consumer wares, new motorcycles and cars zoom
through once sleepy streets, and the city boasts a bevy of
Internet cafes frequented not only by foreign tourists and aid
workers but locals as well.

Another measure of rising prosperity: the number of mobile
phones in the country grew to 638,200 in 2006 from a mere
29,500 in 2001, one of the fastest expansions in the region
over the same period. The percentage of the population in Laos
with mobile phones, still lower than in neighboring Vietnam,
is notably higher than in nearby Cambodia, which likewise is
experiencing an unprecedented economic boom, and considerably
higher than in impoverished Myanmar and East Timor.

The Lao government has in fits and starts promoted the
transition from subsistence agriculture towards a more trade-
and investment-driven economy. Although the communist
government maintains socialist rhetoric and vestiges of the
old central planning regime, for all practical sakes and
purposes Laos is now in the main a market economy.

That represents a significant turn for Laos, which in recent
years has undertaken significant structural reforms in trade,
private sector development and public financial management.
Economic analysts say the country has taken lessons from China
and Vietnam's capitalist transformations, albeit at a slower,
more cautious pace.

First launched in 1990, the reform transformation from a
centrally planned to market economy has allowed Laos to
diversify from its traditional reliance on China and Vietnam
for its economic sustenance and assert more economic
sovereignty over the country's vast bounty of natural resources.

According to the government's poverty reduction plans, Laos,
which now has a per capital gross national income (GNI) of
about US$500, should at present economic growth rates graduate
by 2020 from so-called Least Developed Country status -
reserved for states with a per capita income over a three-year
average of less than $750 - and join the ranks of the world's
middle-income nations. GNI per capita is up from $290 in 1992,
when the economy was still largely closed to the outside world.

As late as in 1999, statistics from the Lao state planning
committee showed that "remittances from abroad" were the
single most important source of income in the Vientiane
valley, then representing 28% of all household earnings,
compared with 25% from agriculture, 22% from wages and 18%
from businesses.

Wealth gaps
After the communist takeover in 1975, nearly 10% of the
population fled the country and settled primarily in
Australia, the United States and France. For years, these Lao
expatriates supported their poorer relatives in the country,
but in more recent years, remittances have almost ceased as
the local economy picks up steam.

At the same time, urban living standards have improved
substantially, attracting people from the much poorer
countryside and imposing new population-related stresses on
the country's once sleepy cities. Laos is now experiencing an
urbanization rate of 4%-5% per annum, which has caused growing
pains in Vientiane and in smaller provincial centers.

According to UN-Habitat, "The high percentage increase in
secondary towns is creating an additional burden on the local
authorities for providing basic infrastructure. Nearly
two-thirds of a total of 145 district towns do not have access
to safe water. Water supply and sanitation coverage in
secondary and district towns remain a major concern for the
government."

Laos is also experiencing a widening gap between rural and the
newly rich urban areas and it remains to be seen how, if at
all, the government tackles the new and multiplying
socio-economic problems associated with fast economic
development. About 30% of the population lives under the
poverty line and although Marxism-Leninism is no longer the
government's guiding light in economic policy-making, Laos is
still at least officially a communist-run country.

Nowadays, communism is little more than a tool to discipline
civil servants and keep state officials and other potentially
unruly elements in check. Ideological training courses,
usually lasting for five months, are still regularly held. In
the past, these were held almost exclusively in the Vietnam
capital of Hanoi, but now seminars for civil servants
regularly take place in the Chinese city of Kunming in Yunnan
province, bordering Laos to the north, reflecting a subtle
shift in Laos' allegiances between its two larger, nominally
communist, neighbors.

At the same time, cultural influences from Thailand, to the
country's south, remain strong as the Lao and Thai languages
are closely related. Most Lao who reside in the Mekong River
valley regularly watch Thai television and read Thai popular
magazines, which convey an entirely different capitalist
message than the ideological seminars held in Kunming.
Increasingly, the fledgling Lao middle class has its own
magazines, which more resemble Thai weeklies and monthlies
than the old periodicals published by the ruling Lao People's
Revolutionary Party.

For instance, the bilingual English and Lao monthly Sayo calls
itself a "business travel and lifestyle magazine" and carries
headlines such as "Look younger without plastic surgery" and
"How to create a home spa" - along with photos of fashion
models and advertisements for beer and new brands of coffee.
Target, also a monthly, focuses more on business with
headlines like "How should the entrepreneurs adjust themselves
in the globalization era?"

So will economic progress and an ascendant middle class over
the medium term call for more political freedoms? Laos' rulers
still maintain a monolithic hold on political power. To date
there is no overt political opposition, but occasionally
critical voices are raised - albeit in convoluted manners. In
a carefully, but skillfully, worded article in the
English-language Vientiane Times on April 11, 2007, a local
journalist wrote:

In the era of a free flow of information, it seems that the
party and the government have no choice but to allow reporters
to do their jobs with a greater measure of freedom. Otherwise,
the quality of Lao publications will suffer and the content
will be uninteresting, resulting in apathy among readers.
Without public regard for the media there will be no
widespread awareness of party and government policies.

Apart from such carefully crafted messages, so far there are
few if any signs of political dissent. Modern Laos actually
got its first lesson in dissent as early as October 1999, when
a group of students bid, but failed, to stage a peaceful
pro-democracy demonstration in Vientiane where they attempted
to unfurl a pre-revolutionary Lao flag.

Some of the protesters managed to escape to Thailand and were
later granted asylum in the United States, from where they
have continued to speak out against the government and in
favor of political reform. But their movement was premature:
at that time, Laos was still utterly impoverished and did not
have anything resembling an up-and-coming middle class.

Meanwhile, large parts of the country still survive at basic
subsistence levels and village life in places like the remote
northeastern provinces of Houa Phan and Phong Saly is still a
primitive world apart from Vientiane and even the old sleepy
royal capital of Luang Prabang, where a foreign tourism-driven
boom is underway.

Still, economic and social change has definitely arrived in
Laos and no amount of ideological training for civil servants
is going to turn back the capitalist tide as long as market
forces are allowed to take deeper root across the country.
Laos' communist leaders can either adjust to the new economic
reality or fade further into ideological irrelevance.

Bertil Lintner is a former correspondent with the Far Eastern
Economic Review, where he wrote frequently on Lao politics and
economics. He is currently a writer with Asia-Pacific Media
Services.

© Copyright 1999 - 2008 Asia Times Online (Holdings), Ltd.
Head Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen
Street East, Central, Hong Kong
Thailand Bureau: 11/13 Petchkasem Road, Hua Hin, Prachuab
Kirikhan, Thailand 77110
__._,_.___

______________
Dr. Justin McDaniel
Dept. of Religious Studies
2617 Humanities Building
University of California, Riverside
Riverside, CA 92521
951-827-4530
justinm at ucr.edu