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Mekong Memo Laos Weekly: Business, politics, finance, trade & legal news.
We monitor and filter the very best and most insightful stories from Southeast Asia directly to your inbox every week.
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Here is your Mekong Memo Laos for the week of November 1, 2023:
Green Light for $6.3 Billion Laos-Vietnam Railway
Vietnam's Ministry of Transport has greenlit a $6.3 billion, 554.7km railway project connecting Vientiane, Laos, to Vung Ang seaport in Vietnam. Spearheaded by a joint venture between Deo Ca Group JSC and Petroleum Trading Lao Public Company, the project is part of a larger Lao Logistics Link initiative. Construction is expected to begin next year and aims for completion in eight years. The deal also boosts Laos' stake in Vung Ang port from 20% to 60%, making it the majority shareholder and expanding its trade capabilities.
Read more: Nation Thailand
Canada and Laos: Indo-Pacific Strategy and FTA
Canadian and Laotian officials co-chaired a workshop focusing on the Canada-ASEAN Free Trade Agreement and Canada's Indo-Pacific Strategy. Trade between the two countries, which was $43 million in 2022, is expected to rise by at least $5 million with the FTA. The workshop also emphasized Canada's commitment to expanding its regional engagement in ASEAN, especially as Laos will lose some trade advantages upon graduating from Least Developed Country status in 2026. The Canadian Chamber of Commerce in Laos was also established this year to support both Canadian businesses interested in the region and to share Canadian opportunities with Lao investors and businesspeople.
Read more: Laotian Times
Thailand's $11 Billion Trade Vision for Laos
Thai Prime Minister Srettha Thavisin, during a recent official visit to Laos, pledged to help the country transition from being land-locked to land-linked, in particular by turning Thailan’s Northeast “Isaan” region into a growth area. Other key commitments include a soft loan for a railway bridge over the Mekong River and a bilateral trade target of $11 billion by 2025. The leaders also signed MoUs for cultural exchange and technical assistance in developing the Lao railway system. Additionally, plans for improving transport and logistics, as well as initiatives for clean energy and transborder haze control were discussed.
South Korea Grants $10.5M for Public Health and Environment
South Korea has granted Laos $10.5 million to enhance waste and wastewater management, with a goal of improving public health and environmental safety. The funding supports the project's second phase from 2023-2027, focusing on developing green cities and waste management in Vientiane and other provinces. The grant also aims to support Laos’ development into a circular economy, adhering to the principles of recycling, reusing, and reducing waste. The project has also been touted as being aligned with global goals like zero carbon emissions by 2050.
Read more: The Star
Migration Wave Eases Economic Strain and Political Tension
⭐️ In the first of two articles this week from journalist David Hutt (Twitter), he writes that Laos is facing a grim economic situation, marked by high inflation and a collapsing currency. Amidst this backdrop, a significant number of Laotians are migrating abroad, primarily to Thailand, South Korea, and Japan, in search of better opportunities. This mass migration is inadvertently providing a lifeline to the country's communist government by reducing internal pressures. While the exodus is driven by a lack of job prospects and rising living costs in Laos, it also serves to defuse potential social unrest that could otherwise threaten the status quo.
Read more: Benar News
Communist Party Grapples with Economy and Trust Issues
⭐️ Hutt’s second article from The Diplomat illuminates how The Lao People’s Revolutionary Party faces a crisis of confidence as it struggles with economic mismanagement. Once buoyed by "economic legitimacy," the party is now contending with skyrocketing inflation, a depreciating currency, and mass emigration. Younger citizens are particularly disenchanted, with many leaving for better opportunities abroad. While the party blames the COVID-19 pandemic for its woes, critics point to its failure to diversify the economy and unchecked corruption as root causes. The LPRP's reputation as a competent economic custodian has been severely tarnished, with no clear political alternative in sight.
Read more: The Diplomat
New RMB Clearing Bank for Sino-Lao Trade
A new Renminbi (RMB) clearing bank has been inaugurated in Laos, a notable development in financial cooperation between China and Laos. The bank aims to streamline cross-border transactions and facilitate bilateral trade and investment. It is expected to provide a fast, secure, and economical settlement channel, reducing exchange rate costs and improving financial stability in Laos. The move aligns with China's Belt and Road Initiative and is seen as an important step in elevating the economic-commercial relations between the two countries.
Laos and South Korea Simplify Cross-Border Payments
Laos and South Korea have initiated a pilot project aimed at simplifying cross-border money transfers for Lao workers abroad and foreign workers in Laos. The move addresses challenges such as high transfer costs and complex documentation, which have led workers to use unauthorized (and therefore risky) channels. The new system, developed by the Lao Foreign Commercial Bank and South Korea's Global Loyalty Network Company, is expected to ease the transfer process and also to enable better financial management and policy formulation by the government.
Read more: Laotian Times
Laos and Japan Fortify Ties Ahead of ASEAN Leadership
Laos and Japan are enhancing their collaboration in tourism and cultural activities. The move aims to strengthen the now 50 year old relationship between the ASEAN community and Japan. During a special dialogue, the Lao Minister of Information, Culture and Tourism, Suanesavanh Vignaket, expressed the need for economic integration and skill development. The meeting also served as a precursor to "Visit Laos Year 2024," on which the government is pinning high hopes for tourism over the coming year.
Read more: The Star
Chinese Firm Supports Education with New Fund
The Lao government has teamed up with China's Asia-Potash International Investment to enhance education in Laos. An initial $700,000 has been disbursed from Laos' first Education Fund to benefit teachers and students. The fund aims to support education in impoverished regions and cultivate skilled professionals. During the initial phase, 1,436 individuals across six provinces have received financial aid.
Read more: Xinhua
National Assembly Sets Stage for Development Talks
The Lao National Assembly is gearing up for an extensive session to address a range of pressing issues, from economic challenges to drug trade suppression. Slated for October 31 to November 21, the session will feature reports on Laos' National Socio-economic Development Plan, budget plans, and various national agendas. Key government bodies, including the State Audit Organization and the People's Supreme Court, will also present their work plans and achievements. The assembly will debate new laws on special economic zones and public health, among other topics.
Read more: Xinhua
And now for something completely different.
While the focus of The Memo is on news for business, here’s a touching story about love, loss and the refugee experience:
Breaking Refugee Stereotypes: A LIVE Literary Event in Bangkok (Saturday)
Award-winning Lao-Canadian author Souvankham Thammavongsa opens up about her immigrant experience, challenging the notion that refugees are quiet and sad. Born in a Lao refugee camp, Thammavongsa has not visited her homeland since moving to Canada as a child. Her writing, which won Canada's prestigious Scotiabank Giller Prize, explores the lives of ordinary immigrants with dignity and depth. She emphasizes the importance of multiple narratives in understanding the refugee experience and aims to break stereotypes through her work. She also wrote an incredibly moving story about her experiences growing up through the lens of her relationship with her brother which is a highly recommended read.
Souvankham is scheduled to speak at The British Club Bangkok this Saturday from 15:00-15:50. The event is free, but reserved seating is available for a fee. See ticketing info and schedule below.
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