Forty years of Lao PDR: what’s next?

From transforming urban landscapes to high-speed rail and Chinese investment, in Laos development can be a double-edged sword. Oliver Tappe surveys the chances of prosperity for the nation’s people in 2016.

In November 2015, the people of Vientiane and countless visitors celebrated the annual That Luang Festival, the largest religious festival in Laos.

On the third day, the traditional game of tikhi, a kind of hockey (see Simon Creak’s excellent historical analysis of the ‘national game’ in his book Embodied Nation), was held between teams of government officials and local people.

According to a Vientiane Times article, the result of the match indicated the city’s fate in the year to come. A victory by the local people’s team would foretell 12 months of happiness and well-being for the citizenry. A win by the officials “was seen as an indication that the townsfolk would be fairly governed for the coming year, thus ensuring contentment whatever the outcome.”

It was a series of matches, and I did not follow all the results. That left me wondering what 2016 will bring for Laos: good governance, and/or prosperity?

In his speech on the occasion of National Day, only a few days later on 2 December, President Choummaly Sayasone made it clear that both would be the case. Forty years of rule by the Lao People’s Revolutionary Party allegedly witnessed social and economic development – though with the goal of leaving the ranks of Least Developed Countries by 2020 yet to be achieved. “The people’s democratic political system has been improved and strengthened consistently,” said the president.

For Choummaly and the Party-State leadership, the last four decades appear a success story, a win-win situation for government and people, as represented by the auspicious tikhi game.

At present, ‘development’ manifests itself as a rapid transformation of Vientiane’s urban landscape and its rural outskirts. Construction sites for new roads and massive buildings dominate the municipality.

Chinese and Vietnamese investors have joined the current land run in Laos, one scandalous example being the grounds of the old National Museum, which will have to make way for a Chinese hotel complex (as will the National Library across Nam Phu Square). Thousands of Vietnamese labour migrants flock to the project sites, operating in a legal grey zone with the usual 30-day visa (and various additional “fees” for local authorities and police). They keep the border checkpoint at the Friendship Bridge busy with their frequent visa runs.

Visitors are struck by huge buildings suddenly appearing where there were rice fields before. The That Luang Marshes – traded with Chinese investors for a stadium on the occasion of the 2009 Southeast Asian Games – provide a surreal impression with their apparently over-scaled building projects.

Another “special achievement” (according to Choummaly) will be the new railroad crossing the country from Vientiane to the Chinese border as part of China’s ambitious Kunming-Singapore railway project.

The groundbreaking ceremony was held on National Day, of all days, with Somsavat Lengsavad – also responsible for the notorious Golden Triangle special economic zone in northwest Laos – acting as the real strongman of Lao PDR.

The scale of the project is stunning: 427 kilometres of rails, including 72 tunnels a totalling 183km; an estimated workforce of 100,000 (hardly to be recruited among the Lao population); and 150 hectares of land in Vientiane reserved for the new train station (for more detail see here and here).

All this will suffice to raise concerns among the Lao population, not least because of previous ‘development’ projects that often entailed land appropriation with only meagre and belated compensation.

Increasing state debt is another reason for scepticism. From the estimated costs of the railway project of US $6 billion, Laos will take a share of 480 million, which in 2013 would have made up more than 20 per cent of the country’s Gross Domestic Income!

China will provide an equivalent loan, to be covered by five potassium concessions. Potassium is in great demand as fertiliser for the Chinese agricultural sector. However, world market prices plummeted recently, so that Chinese companies will have to dig over quite a lot of soil to cover their costs.

Since large potassium reserves are located in the Vientiane Plain – densely populated and critical for wet-rice production – we can expect further dispossession and problems with wastewater and salinisation. The impending devastation of fertile soil in Laos for the export of Chinese fertiliser will be a sad irony.

Moreover, infrastructure and mining projects are important drivers of deforestation in Laos. It is no coincidence that the huge amount of illegal timber exported in recent years corresponded with an increase in Chinese and Vietnamese investments in mining, agriculture, forestry and hydropower in Laos.

In October 2015, a leaked, unofficial World Wildlife Fund report caused some commotion when calling attention to the rampant illegal logging going on in Laos – not uncommonly related to concessions where the respective companies extend their assigned logging areas far beyond the concession borders and into natural preservation areas.

In some cases, more than 90 per cent of the logging happened illegally. According to the WWF’s estimates, ten times more timber crossed the Lao-Vietnamese border than the official harvest in Laos.

Despite a logging ban issued in August 2015 by the Lao government, reports of trucks transporting timber across the border to Vietnam continue to raise concerns about ongoing deforestation. Logging in Laos – with 96 per cent of the total harvest exported to Vietnam and China – is largely uncontrolled, and includes protected species.

The Food and Agriculture Organization’s recent estimation of a 69.9 per cent forest cover – by taking a generous >10 per cent canopy density as vantage point – is certainly not very helpful for raising awareness of deforestation. Official data from Laos (>20 per cent canopy density) suggest a forest cover of about 40 per cent only.

All these data have to be taken with a pinch of salt, anyway, since they include tree plantations (like rubber) and regenerated (and even yet-to-be regenerated) woodland. Yet, it is evident that well-stocked forests with canopy closure of more than 70 per cent are rapidly disappearing, especially in southern Laos. Forest quality, in general, has also deteriorated in the last couple of decades, with dense forest having declined from 29 per cent in 1992 to 8.2 per cent in 2002.

It is hard to believe that illegal logging on such a scale could be possible without the collusion of Lao authorities. And it is very likely that the forest along the planned railroad track from Luang Namtha to Vientiane will disappear in a flash.

Who will benefit from these first results of the huge railway project? Probably not the local population in the Lao uplands. Some 3,058 hectares of land will be reserved for the project, with 50 meters on each side of the track fenced for security reasons – and deforested for sure. Somsavad’s statement that the railroad will yield economic growth of 32 per cent, and be used by 4 million Lao passengers sounds bizarre (remember: Laos’ population is around 7 million).

Rather, the railroad will serve Chinese economic and geopolitical interests, not least given the immense corresponding Chinese investment in Thailand for the connection from Nongkhai to Bangkok (and further south towards Kuala Lumpur and Singapore).

Land grabbing, deforestation, and pollution will continue to disquiet the population of Laos. However, open criticism of the Lao government is rare, the disappearance of Sombath Somphone three years ago remaining a constant warning for any civil society actor. Not surprisingly, the Lao government refused to include the ASEAN People’s Forum (APF) in the ASEAN summit to be held in November 2016.

Among the official justifications given for not organising a meeting of Southeast Asia civil society organisations were the lack of preparation time and insufficient funding. In addition, a Lao spokesperson asserted that “foreigners would like to use the ASEAN Peoples Forum to criticise ASEAN governments, and ASEAN governments do not agree”, and that Laos could not guarantee the safety of “extremist” activists. This is alarming news for any civil society actor within Laos and beyond.

The first thing in 2016, though, is the next Party Congress where – as usual – little shifts in the central committee will fuel speculations about rifts within the Lao political elite. Certainly tensions between influential families exist, mainly related to their respective business interests – everyday staple for gossip among citizens and expats in Vientiane.

Yet it can be expected that the ruling Party will maintain its disciplining function and be careful to negotiate individual economic claims to uphold the illusion of a strong, united leadership. Again emphasis will be put on the solidarity between Party-State and the and the “Lao multiethnic people” for the goal of future prosperity.

As President Choummaly puts it: “The trust of our people in the new regime and future of the nation has been lifted to new heights.”

Oliver Tappe is a senior researcher at the Global South Studies Center at the University of Cologne.