The third phase of World Bank funding seeks to address rural poverty in Lao PDR by improving roads, water systems and agricultural livelihoods.
(The World Bank and IMF lurk behind most of the "development" stories and are worthy of blog space in a later post.)
Foreign Policy Trends
Currently, Laos' foreign policy concentrates on its immediate neighbors. Laos generally maintains a low profile in the larger international arena, although it has been playing an increasing role in activities of the Non-Aligned Movement and hosted the First States Party of the Cluster Munitions Convention in 2010. In 2011, Laos accepted the statutes of the International Atomic Energy Agency (IAEA)
Land-locked Laos is one of the poorest countries in the world, but it has one thing in abundance: access to the massive Mekong River. The country’s hydropower potential has earned it the nickname “the Battery of Asia” and made it a magnet for investment from its neighbors: Thailand, southeast Asia’s second-biggest economy; Vietnam, a strategic Communist ally since the 1970s; and China, which is writing checks that put the rest to shame.
Guan Huabing, Beijing’s ambassador to Laos, announced today (Jan. 30) that China’s cumulative investment in Laos now stands at $5.1 billion, edging out Thailand and Vietnam. China is also building a controversial railroad linking its Yunnan province to the Lao capital Vientiane, at a cost of $7.2 billion that it is loaning to Lao government—equivalent to 75% of the Lao GDP.
China’s increasing influence has long been a worry for Vietnam. It “feels threatened” by its increasingly marginalized role in Laos, according to a letter last year from the Vietnamese Communist Party to its Laotian counterpart that was obtained by Radio Free Asia. And there is more to be lost than just political influence: Laos is upstream of Vietnam, Thailand, and Cambodia on the Mekong, so any dams that it builds there with Chinese assistance could have dire consequences for its neighbors.
Dams built on the Laotian Mekong could affect Laos’s downstream neighbors. (Mekong Tourism Coordinating Office)
Of the nine dams being planned in the Laotian Mekong, Chinese developers and investors have interest in at least four, according to East Asia Forum, along with at least half of the 63 dams being planned on the Mekong’s many tributaries (the government lists its planned projects here). Environmental groups and Western governments have warned that poorly planned dams could cause untold damage to the region’s economy.
Experts worry about Laos Mekong dam May 15, 2017 10:54 AM
Several experts have raised concerns over the Pak Beng Hydropower Project in Laos and other 10 hydro dams that will be built on the Mekong River which could badly affect Vietnam.
"The concerns were raised at the conference about the impact of Pak Beng on the Mekong River held by the Ministry of Natural Resources and Environment and the Vietnam National Mekong Committee in Can Tho City on May 12.
"Chinese investor Datang Overseas Investment signed a memorandum with Lao government to construct the Pak Beng project in 2007. Pak Beng is the third of 11 mainstream dams planned on the Mekong River in Laos.
Erosion in the Mekong Delta
"Nguyen Van Trong, former head of the Research Institute for Aquaculture 2, said the designed route and flow rate for fish was too low, only 14.4 cubic metres per second. In addition, the entrance is too far to attract the fish. "Fish mostly won't go downstream as the reservoir is 97km long," he said.
"Nguyen Anh Duc, director of Mekong Development Assistance Centre, warned that saltwater intrusion in Tien and Hau rivers will increase by 2.8 to 3.8km. If Pak Beng, Xayabury and Don Sahong hydropower plants all work at the same time then the impact on the towns of Tan Chau and Chau Doc in An Giang Province is huge during the dry season.
"90% amount of mud and alluvial soil will be trapped upstream and Tan Chau and Chau Doc towns will lose more than 65% of mud and sand. As the alluvial soil will be kept in the upstream, the threats of erosion downstream will also increase."
Vietnam farming relies on the silts of the delta. The loss of the rice crops would devastate
While "unaligned"Chinese businessmen have heavy investment in less than savory businesses in Laos:
With its massive cupolas, one shaped like a green crown and the other painted bright gold, Kings Romans Casino does not blend in with the forests of rural Southeast Asia, but the establishment is the heart of the Golden Triangle Special Economic Zone (GT-SEZ), a controversial gambling hub in northern Laos.
The area has mostly attracted criticism for being a wildlife trafficking hotbed as well as its status as an effectively self-administered foreign enclave, though it has also brought investments to remote Bokeo province.
Not much is known about Zhao Wei, the casino’s owner, except that he comes from northeastern China. In 2007, his Hong Kong-registered Golden Kapok company was granted a 99-year lease from the authorities in Vientiane for 10,000 hectares of land. Of these, 3,000 hectares were set aside as a duty-free area and have since evolved into a small town with hotels, restaurants, brothels and the glitzy Kings Romans Casino.
Inside the gambling house, visitors are greeted by an imposing golden statue of a Greco-Roman god and tables shimmering with precious stones. A card game called long fu and slot machines are the main attractions in the casino, which operates 24 hours a day, seven days a week, to the delight of hundreds of mostly Chinese customers, who are obviously the main targets of the project.
Upon entering the GT-SEZ, they might be forgiven for thinking they are back home, for the town’s shopping district is a replica of a classical Chinese town where shops are operated by Mainland business people and the Laotian kip is by and large not accepted. Even the police are foreign: one officer told Asia Sentinel he came from Myanmar and, while speaking Mandarin, he understood not a word of Laotian.
The area resembles a small-scale Mong La, Myanmar’s “vice city,” where Zhao Wei used to own another casino. Under the National Democratic Alliance Army (NDAA), a rebel outfit that long ago signed a ceasefire with the Burmese government, Mong La has transitioned from a small village to a wealthy town in the span of two decades, mostly thanks to gambling and trafficking.
“My own sense is that there were likely some legitimate internal sovereignty concerns,’ said Keith Barney, a lecturer at the Australian National University and an expert on Laos. “Even if some within the government of Laos would presumably have been formally in control of these project areas, in practice they appeared to be more like independent illegal fiefdoms.”
Prostitution is openly on offer in the GT-SEZ, as is a vast array of illegal wildlife. A 2015 report by the Environmental Investigation Agency (EIA) highlighted that traders were allowed to buy and sell products made of tigers, leopards, rhinos, pangolins and bears, among others. Many such species are protected under the Convention on International Trade in Endangered Species (CITES) In spite of ratifying the convention, Laos has emerged as an important center for wildlife smugglers, with SEZs explicitly mentioned in CITES documents as areas of concern.
“Chinese companies, consumers and nationals can freely engage in illegal wildlife trade and consumption,’ said Debbie Banks, the EIA’s campaign leader for tigers and wildlife crime. ‘Illegal wildlife trade may not be as open as in Mong La, but the GT-SEZ has the façade of being a more accessible, resort-style operation than Mong La that may appeal more to tour groups.’
"Following the exposé, the business has been conveniently swept under the carpet, but hardly eliminated. Shops still display ivory and exotic meat is available on demand. The owner of one restaurant on the Mekong said he could provide both bear and pangolin – a serving of the latter would cost about US$100, but it would be enough for a table.
All Southeast Asia has been drawn more into the Chinese sphere of influence:
By David Roman
December 5, 2016, 4:00 PM EST December 6, 2016, 1:03 AM EST
Rising Chinese labor costs send companies to Cambodia and Laos
Countries becoming more incorporated with China’s supply chain
"China’s investment is transforming its smaller Southeast Asian neighbors like never before while helping turn Cambodia, Laos and Myanmar into bigger destinations for its exports.
"That’s driving some of the world’s fastest economic growth rates and providing Chinese companies with low-cost alternatives as they seek to move capacity out of the country. It’s also helping Asia’s largest economy and nations in its orbit adapt to what looks more and more like a new era of waning U.S. commitment to the region from a more inward-looking administration of President-elect Donald Trump.
"China’s definitely looking at these countries in general as an area where it can sell products and get good return for its investments," said Edward Lee, an economist with Standard Chartered Plc in Singapore. "China itself is getting more expensive for its companies, and that’s reinforcing this trend."
"China is investing in everything from railroads to real estate in Cambodia, Laos and Myanmar -- the frontier-market economies of the Association of Southeast Asian Nations."
I now include some of this article to show that the Chinese HAVE begun thinking of building the economies of their buyers as well so they may become comsumers:
"China’s investment is transforming its smaller Southeast Asian neighbors like never before while helping turn Cambodia, Laos and Myanmar into bigger destinations for its exports.
"That’s driving some of the world’s fastest economic growth rates and providing Chinese companies with low-cost alternatives as they seek to move capacity out of the country. It’s also helping Asia’s largest economy and nations in its orbit adapt to what looks more and more like a new era of waning U.S. commitment to the region from a more inward-looking administration of President-elect Donald Trump.
"China’s definitely looking at these countries in general as an area where it can sell products and get good return for its investments," said Edward Lee, an economist with Standard Chartered Plc in Singapore. "China itself is getting more expensive for its companies, and that’s reinforcing this trend."
"China is investing in everything from railroads to real estate in Cambodia, Laos and Myanmar -- the frontier-market economies of the Association of Southeast Asian Nations.
"The biggest risk for frontier Asean economies is that Chinese inflows create "extractive" elites who entrench themselves in power, said Song Seng Wun, an economist at CIMB Private Banking in Singapore.
"These economies are getting a lot of money and opportunity from China," he said. "If wealth is concentrated in the hands of a few, that may lead to problems and instability. The key here is developing a middle income group that Chinese companies will be targeting as a consumer."
And then there is that other little country in southern Asia: India. We never viewed them as an enemy, what with English being one of their national languages. But population pressures have made the growth difficult but not impossible.
India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO) and International Monetary Fund (IMF). The Government of India has forecasted that the Indian economy will grow by 7.1 per cent in FY 2016-17. As per the Economic Survey 2016-17, the Indian economy should grow between 6.75 and 7.5 per cent in FY 2017-18. The improvement in India’s economic fundamentals has accelerated in the year 2015 with the combined impact of strong government reforms, Reserve Bank of India's (RBI) inflation focus supported by benign global commodity prices.
India's consumer confidence index stood at 136 in the fourth quarter of 2016, topping the global list of countries on the same parameter, as a result of strong consumer sentiment, according to market research agency, Nielsen.
Moody's has affirmed the Government of India's Baa3 rating with a positive outlook stating that the reforms by the government will enable the country perform better compared to its peers over the medium term.
With the improvement in the economic scenario, there have been various investments leading to increased M&A activity. Some of them are as follows:
M&A activity in India more than doubled year-on-year to reach US$ 61.26 billion in 2016-17. Early-stage start-ups in India are expected to raise US$ 800 million in 2017, due to greater focus on profitability and sustainable growth, as per a report by InnoVen Capital.
NITI Aayog, Department of Industrial Policy & Promotion (DIPP) and Confederation of Indian Industry (CII) launched an “India Innovation Index” in line with the Global Innovation Index (GII) to rank states based on innovation by capturing innovation data from all Indian states and updating them regularly.
The Union Cabinet, Government of India, has approved the Central Goods and Services Tax (CGST), Integrated GST (IGST), Union Territory GST (UTGST), and Compensation Bill.
The Union Cabinet has approved a memorandum of understanding (MoU) between India and United Arab Emirates (UAE), aimed at enhancing cooperation in the field of small and medium enterprises (SMEs) between the two countries, and thereby providing an opportunity for the Indian SMEs to improve and innovate further.
The Union Cabinet has approved a MoU between India and the African Asian Rural Development Organisation (AARDO), to implement capacity building programmes for rural development.
The Union Cabinet has approved a MoU between India and Hungary, aimed at improving bilateral cooperation in the field of water management, which is expected to develop relations between public and private organizations concerning water resources of both the countries.
The Government of India and the Government of the United States of America have signed a MoU to enhance cooperation on energy security, clean energy and climate change through increased bilateral engagement and further joint initiatives for promoting sustainable growth. (NOTE UPDATED BY THEM Last updated: Apr, 2017)
The Government of India plans to auction 280 mines with an estimated mineral value of over Rs 10 lakh crore (US$ 153.64 billion) in the fiscal year 2017-18, and also use drone technology to prepare topography maps and inspect mines.
Indian merchandise exports registered a growth of 17.48 per cent year-on-year in February 2017 at US$ 24.49 billion, according to the data from Ministry of Commerce & Industry
Retail price inflation for February 2017 was reported at 3.65 per cent, compared to 5.26 per cent a year ago, as per CSO.
India's industry output grew 2.74 per cent year-on-year in January 2017, led by a good performance in the capital goods sector which registered a 10.7 per cent year-on-year growth.
India's unemployment rate has declined to 4.8 per cent in February 2017 compared to 9.5 per cent in August 2016, as a result of the Government's increased focus towards rural jobs and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme.
The Government of Maharashtra has set a target to double farm income by 2022 through measures like large scale micro irrigation, water conservation, expansion of formal cash credit coverage, crop insurance and agriculture diversification, as per Mr Vidyasagar Rao, Governor of Maharashtra. (Farming here and in Japan is a vastly more important investment than in some of the countries where farms are valued but not overly so. India's soil has suffered from the loss of nutrients from years of people living on the land and not rotating crops while Japan simply has too little territory to support their growing populous. Will.)
Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors. The Government of India, under the Make in India initiative, is trying to give boost to the contribution made by the manufacturing sector and aims to take it up to 25 per cent of the GDP from the current 17 per cent. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.
Note particularly that the Indian government has been allying with Eastern Europe, Middle East oil and the developing countries in Africa. All of these would seem to create the perfect inducement for joining a march into Israel to protect THEIR economic interest. Or to seize the food producing area and available fresh water there. From what we see we need to recall that China and India share a religion heritage in Buddhism and that could despite the power of Hinduism and atheist communism, forge an alliance if they needed to defend their Western frontiers from a foreign power with a different religious outlook.
Understand that India and China have for the last few years been running in competition for the cheapest labor forces in the world because of their huge populations. India is taking steps to allow more business and to increase the earning power of their people as a purchasing force, having been one the countries to have seen the benefit of "micro loans" to start up small businesses. China meanwhile is developing the "usual" colonial attitude that powered the "imperial" states Communism supposedly threw out in the 20th Century. Animal Farm made a vicious attack on the Soviet failure in that area and the corruption of the "people's government. Both these Asian giants however, seem content to have the heads of the government and businesses reap the vast majority of benefits of capitalism. Which leads to a song by the Who: https://www.youtube.com/watch?v=zYMD_W_r3Fg All this holds meaning in a sense of the end times because of the idea of a 200 million person army. China now has alliances to support such an army to the south and east. We will discuss the logistics such an army further on in this blog, but you can see there would be support for it right up to Pakistan or Afghanistan as entries to the Middle East. That blockade of Muslim nations stands out as a threat to accomplishing any invasion.
So, what about the north and east? . Seems God has already thought of that. Next time.
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