New PM Faces Chinese Influence

China's investments in Laos may eclipse those from traditional ally Vietnam.

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New Lao Prime Minister Thongsing Thammavong (right) being congratulated in Vientiane, Dec. 23, 2010.

Laos' newly appointed prime minister is more pro-Vietnam than his predecessor but may have to contend with giant neighbor China's rapidly rising influence on his country, analysts say.

Thongsing Thammavong, the former president of the Lao parliament, was named successor to incumbent Bouasone Bouphavanh in a surprise announcement last week amid speculations of a leadership split between pro-China and pro-Vietnam camps within the dominant communist party.

The 56-year-old Bouasone quit about six months before the end of his term and after more than four years of steering the Southeast Asian state.

Thongsing is perceived by many as more pro-Vietnam than Bouasone, Lao observers said.

To reinforce the point, one observer pointed out that Thongsing was first nominated to the Lao People's Revolutionary Party’s central committee while he was undergoing political training in Hanoi.

Some see the leadership change as a trigger for more "adjustments" ahead of the party's congress early next year to be followed by general elections.
"The growing influence of China over Vietnem is causing a rift within the party leadership. Therefore, the resignation of Buasone and the nomination of Thongsing could be construed as heralding changes to come," said a senior official of the now defunct Royal Lao Government.

The Royal Lao Government was the ruling authority in the Kingdom of Laos from 1947 until the communist seizure of power in December 1975.

China's economic clout

Ties with communist Vietnam have been the cornerstone of Lao foreign policy, but China's influence has been rising on the back of its growing economic clout.

As with Vietnam, Laotian ties with Beijing underscore links among the dominant communist parties.

In 2009, Vietnamese companies invested U.S. $1.4 billion in Laos while Chinese investments totaled U.S. $932 million.

But it now appears that Beijing—which is financing a costly high-speed railway linking China and Laos—has emerged the country's top investor.

A day after being named premier, Thongsing pledged to bring about greater transparency and improve the business climate in Laos, a large but rural, underpopulated, landlocked state bordering Vietnam, China, and Thailand.

"I will improve the way the government works to ensure state activities are timely, transparent, united, and harmonious and create favourable conditions for the business sector and for the Lao people to earn a living based on the law," Thongsing was quoted as saying by the state-linked Vientiane Times.

Aside from being head of the National Assembly, the country's parliament, Thongsing's former posts included minister of information and culture, and mayor of the Laotian capital, Vientiane.

"Family problems"

Bouasone told deputies on the final day of the latest National Assembly session on Dec. 23 that he could no longer perform his duties because of "family problems," but some Lao observers said politics may have driven him out of power.

They specifically noted that he had been criticized at the assembly for spending outside the limits of stipulated programs.

Under Bouasone’s leadership for more than four years, the Laotian economy had been growing steadily with an annual growth averaging 7.5 percent, meeting the party's target.

But many people had complained that they did not benefit from the country’s economic expansion, analysts note.

Some pointed to rising inflation. October's 7.78 percent inflation rate was the country's highest in recent years.

The State Audit body also found that the government had overspent its budget for the 2008-2009 financial year, leading to rising debt, faulty bank loans, and what some analysts regard as "illegal" practices and "waste of taxpayers’ money."

The analysts believe Bouasone might have made a "serious" political or socio-economic mistake for him to be sidelined before his five-year term was up.

But, there are some who do not rule out his comeback, as he still ranks seventh in the 11-member party politburo.

The upcoming ninth party congress is likely to shed some light on the leadership change.

Reported by Phairot Vongvirath. Translated by Viengsay Luangkhot. Written in English by Parameswaran Ponnudurai.


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