Laos Touts 40 Years of Stability, but Critics Decry Debt, Corruption and Poverty

2015-12-02
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Lao soldiers march in a parade in the capital Vientiane to mark 40 years of communist rule, Dec. 2, 2015.
Lao soldiers march in a parade in the capital Vientiane to mark 40 years of communist rule, Dec. 2, 2015.
RFA

President Choummaly Sayasone marked 40 years of communist rule in Laos on Wednesday touting the stability and security of his landlocked Southeast Asian nation, but some Laotians lamented their country’s corruption, rising debt and dependence on China and Vietnam.

“The biggest thing we have achieved is national security and stability throughout the country, which showcases to other nations as well as neighboring countries that our country is peaceful,” the president said in a national meeting of senior officials in the capital Vientiane. The city also held a large parade of soldiers, students and ethnic minorities.

“When compared with many neighboring countries, our country has more security and stability. It is not easy to keep national security – it cannot be born naturally but it is jointly made by our [Lao] People’s Revolutionary Party and people,” said Sayasone.

Wednesday marked 40 years since the communist Pathet Lao took control of the country, a former French colony and six-century-old monarchy, and set up a socialist regime closely aligned to neighboring Vietnam.  Laos became a member of the Association of Southeast Asian Nation (ASEAN) in 1997 and joined the World Trade Organization in 2013.

The World Bank describes the nation of nearly 7 million people as a lower middle-income country with a GDP of $11.77 billion in current U.S. dollars.  The CIA World Factbook, using the purchasing power parity formula, puts estimated 2014 GDP at $34.53 billion, ranking Laos 118th in the world, between Mongolia and Georgia.

Sayasone said his government had “developed and built the nation by focusing on poverty eradication” but blamed the legacy of the Indochina wars for Laos continued economic shortcomings.

“We have done many things to address many issues, but our country is too poor because it has only been free from war for 40 years and it has not had any infrastructure,” he said.

“The old regime did not build any infrastructure when compared with southern Vietnam, where America had built all the infrastructure,” he said.

Mixed picture

Sources from civic groups, business and officials -- who spoke to RFA’s Lao Service on condition of anonymity because the regime brooks no dissent – painted a more mixed picture of the country’s performance dominated by concern about growing debt and loss of Lao resources to Vietnam and China.

“It seems the government has been successful in ruling the country, but in fact it fails because for 40 years Lao people are still poor,” an official who works in mine surveying told RFA.

An official from a civil society organization told RFA that “over 40 years, I have seen what the government gained and lost.

“ What the government gained is independence and power to rule the country, but the problem is that debts is more than the value of  GDP and Laos is at risk of financial crisis and bankruptcy because it borrows money from this country and that country,” the official said.

According to data compiled by the Lao central bank, government debt was 44.48 percent of the country's GDP in 2014, below the average debt-to-GDP ratio of 51.98 percent from the 1991-2014 period.

But the civic group official said he worried about debt still piling up

“In the near future, China will issue loans to construct the Lao-China railway for a large sum,” he said.

An operator of a private construction business told RFA that he, too, was concerned about borrowing to build the U.S. $7-billion, 420- kilometer (261-mile) railway from China’s border to Vientiane.

Under the proposed terms, the Lao government is responsible for providing a total of U.S. $840 million for the project, U.S. $500 million of which will come from the 20-year loan from China to be secured by revenue from bauxite and potash mines in Laos.

“The Lao-Chinese railway project will create huge debts for the Lao people from generation to generation and personally I do not really agree with it because it will leave our descendants in debts,” said the contractor.

“Why doesn’t the government use money to construct and upgrade the standard main roads from north to south, which will be in the public interest, rather than creating huge debts in railway project?”

Corruption complaints

The contractor, like many of his compatriots, also complained about corruption in Laos, which the watchdog group Transparency International ranks a lowly 145 out of 175 nations in its annual perception of corruption index.

“Party and government officials extort money from people by collecting cash in support of party meetings, visits and lectures by governmental officials, which is a kind of corruption,” he told RFA.

“I propose the government to take action and measures against corruption in all the governmental organizations from central to local levels, especially the tax and customs sectors because a huge sum of money leaks each year,” a resident of Luang Prabang province in northern Laos told RFA.

“Education and health have to be improved because of its poor quality, which cannot catch up with other ASEAN countries,” the citizen added.

Laotians also voiced strong suspicion of neighboring Vietnam, an ally of the regime and a dominant force in Laos’ resource- and agriculture-based economy.

“After 1975, the country lost its independence to Vietnam,” said the civil society official.

“Mines and natural resources were gone after 1986 when the Lao government declared an open policy to the world,” he added.

“At that time in my hometown, the Vietnamese came to cut logs and the land has been also given as concessions for commercial timber projects, and finally the Lao people do not trust the leadership of the party and government,” said the civic society official.

A retired official of the Phin district of Savannakhet Province, the country’s largest, said progress in some areas weighed against economic losses to Vietnam.

“The advantage after 40 years is that almost all villages and sub-districts have primary schools when compared to the old regime before 1975,” he said.

“But the loss is that since 1977, the Lao government has given Vietnamese the alabaster mine in Phin district,”

“In addition, Lao land along borders from the center to the south has been encroached upon by Vietnam by some 15-20 km (9-13 miles).”

Reported by RFA’s Laos Service. Translated by Ounkeo Souksavanh. Written in English by Paul Eckert.

CH. 1: MANDARIN | CANTONESE

CH. 2: VIETNAMESE | BURMESE | KOREAN

CH. 3: KHMER | LAO | UYGHUR

CH. 4: TIBETAN

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