Laos Update: November 14, 2019

Laos Update | November 14, 2019
Authors: Riley Smith, Ella Duangkaew, Jacob Corfman

 
THE COUNCIL'S TAKE
 
 

Recent Progress Made on Various High-Priority Infrastructure Projects 

The past several weeks have seen significant developments in a number of the ambitious energy and transport infrastructure projects in Laos. Such energy, transport and general infrastructure can serve as major catalysts for Laos’ economic growth. However, it will be important for Laos to prioritize sustainability, as well as growth, as it forges ahead with these projects.  

Dam Construction Along the Lower Mekong 

In terms of energy, the Xayaburi dam in northern Laos, the first hydropower dam on the lower Mekong River, commenced operations on October 29, while the Don Sahong dam in southern Laos’ Champassak province entered its final testing phase earlier this month. Both highlight the Lao Government’s continued interest in exploiting the country’s significant hydropower potential for export. Nearly all of the electricity generated by the almost 1,300 MW Xayaburi dam will be exported to Thailand, and three-quarters of the electricity generated by the Don Sahong will be exported to Cambodia. Both dams are part of a series of planned hydropower projects underpinning Laos’ “Battery of Asia” initiative. Overall, the Lao Government plans to construct nine dams along various points of the Mekong River. When construction on the 1,460 MW Luang Prabang dam begins next July, it will be the fifth out of these nine dams to move forward.  

Laos’ “Battery of Asia” plan has met significant resistance from environmental groups and advocacy groups concerned about how the dams will impact downstream communities in neighboring countries. Approximately 60 million people live in the Lower Mekong region, and out of these an estimated 80 percent depend on the river for their livelihood. Worrying communities and advocacy groups even more is the prolonged drought that has gripped the Lower Mekong region over much of 2019, a drought that has brought water levels down to levels not seen in a century. While the Mekong River experiences drought periodically, this year has been particularly bad. Some analysts have blamed dam construction along the Upper Mekong in China, as well as testing of the Xayaburi dam, for exacerbating this year’s drought conditions.  The concern, which has led to protests by affected villagers in Thailand, is that this year’s drought is part of a developing new normal, especially if the construction of dams upstream continues.  

China-Laos and Laos-Vietnam Railways 

Recent developments in the construction of the China-Laos Railway and the Laos-Vietnam Railway underscore the Lao Government’s ambition to turn the landlocked country into a “land-linked” country through railway infrastructure. Out of the two, the China-Laos Railway is more than half finished and is expected to open by 2021. Stretching from the capital of Yunnan province in China, Kunming, to Vientiane, the 414-km rail link is projected to cost US$7 billion by the time it is completed. November 8 saw an important milestone reached for the railway – the boring of the Ban Ka No. 1 tunnel, which is located roughly 220 km north of Vientiane. At over 4.5 km long, the tunnel is the second longest in the region and represented a high-risk and difficult project that was vital for the railway’s eventual completion.  

Running roughly perpendicular to the north-south China-Laos Railway will be the Laos-Vietnam Railway, which is expected to start construction in 2021 with an estimated completion date of 2024. Spearheaded by the Indonesia Railway Development Consortium, the 400 km-long railway, which is estimated to cost US$1.9 billion, will stretch from Thakhaek district in Khammuan province to with Vung Ang seaport in Vietnam’s central Ha Tinh province. Laos and Vietnam, with the support of the Korea International Cooperation Agency, are also conducting a feasibility study on a 555-km rail link between Vientiane and Vung Ang that was announced in March. All three of these railways are among a half-dozen such rail projects that the Lao Government hopes will improve the country’s physical connectivity with its neighbors. 

 
IN THIS UPDATE
 
 
Regional Affairs
Li Keqiang Meets with Prime Minister Thongloun Sisoulith of Laos, November 3
Indonesia and Laos to Work Together in Fighting Transnational Organized Crimes
Annual Meeting Highlights Vietnam-Laos Border Management Cooperation
China, Laos sign poverty alleviation aid document

National Affairs
NA Session Begins To Debate Important Issues

Customs
Lao PDR Developing Customs Capacities To Implement Authorized Economic Operators Programme

Economics
Who is Laos’ first special economic zone benefitting?
LSX Launches LALCO’S Shares Trading
EU Provides EUR 5 Million For Export Competitiveness, Job Creation In Laos
Laos to clamp down on imports in bid to curb rising exchange rate

Energy
PowerChina Invests Over US$ 2 Billion In Laos
Laos Urged to Cancel Latest Dam for Mainstream Mekong
MRC forum tackles hydropower dam proposed by Laos
Laos hydro project switched on along dried-out Mekong
Sold down the river: hydropower on the Mekong

Financial Services
Laos bank, Wallyt to facilitate WeChat Pay and Alipay payments

Food & Agriculture
Rice prices in Laos likely to rise next year
Chinese-owned banana plantations expand in Laos despite lingering environmental and health concerns
Laos lays down rules for import, export of agricultural products

Health & Life Sciences
Cannabis to be grown for medical use in Laos

Infrastructure
Ground Broken For That Luang Lake Specific Economic Zone Office
China-Laos railway tunnel construction making breakthroughs
Indonesia announces start date for $1.9bn Vietnam–Laos rail link - News - GCR
Laos’s Belt and Road project sparks questions over China ambitions
Tunnel along China-Laos railway completed
Laos' special economic zone bordering China to lure 10 bln USD investment
Dam Development Is ‘Silencing’ the Mekong River
EU provides € 200,000 to assist storm victims in Laos
Laos plans to begin work on Laos-Vietnam railway in 2021

Travel & Tourism
A Visit to the Chinese Casino City in Laos Built by Myanmar Workers
Nine Border Checkpoints to Discontinue Visa On Arrival Services
 
ARTICLE CLIPS
 
 
Regional Affairs

Li Keqiang Meets with Prime Minister Thongloun Sisoulith of Laos, November 3 Ministry of Foreign Affairs of the People's Republic of China 8th Nov 2019
On November 3, 2019 local time, Li Keqiang met with Prime Minister Thongloun Sisoulith of Laos in Bangkok. Li Keqiang said, China and Laos are friendly neighbors linked by mountains and rivers. China is willing to maintain the momentum of high-level exchanges with the Lao side, jointly implement the action plan on building the China-Laos community with a shared future, strengthen macro-economic policy exchanges, share development experience, and well build major projects such as the China-Laos railway.

Indonesia and Laos to Work Together in Fighting Transnational Organized Crimes Jakarta Globe 8th Nov 2019
Jakarta. Indonesia and Laos agreed on Monday to join hands in the fight against transnational organized crimes, including drug smuggling and human trafficking. The agreement was signed by Justice and Human Rights Minister Yasonna Laoly and his Laotian counterpart Saysi Santivong in Jakarta. 

Annual Meeting Highlights Vietnam-Laos Border Management Cooperation The Diplomat 8th Nov 2019
Late last month, Vietnam and Laos held another iteration of a border management meeting between them. Though the interaction was part of a regular series of meetings both neighboring Southeast Asian countries hold on this front, it nonetheless illustrated the importance of border issues within the broader bilateral relationship.

China, Laos sign poverty alleviation aid document Xinhua 23rd Oct 2019
Chinese and Lao officials signed a document for carrying out China aid projects for poverty alleviation in Laos on Wednesday in Lao capital Vientiane. Wang Qihui, economic and commercial counsellor of the Chinese Embassy in Laos and Saysana Sithiphone, chief cabinet of Laos-China Cooperation Commission signed the implementation summary for the Chinese government's assistance to Lao rural poverty alleviation facilities construction.

National Affairs

NA Session Begins To Debate Important Issues KPL 8th Nov 2019
The opening day of the 8th ordinary session of the National Assembly (NA) was attended by President Bounnhang Vorachit, Prime Minister Thongloun Sisoulith, cabinet members and members of parliament, including retired state leaders, and invited guests.

Customs

Lao PDR Developing Customs Capacities To Implement Authorized Economic Operators Programme KPL 8th Nov 2019
The Customs Department, Ministry of Finance together with the World Customs Organization (WCO) on Aug 26 organized a training session on Authorized Economic Operators (AEO) Validation to develop the Lao PDR’s Custom Administrations’ capacities to effectively examine, validate and authorize the application for AEO status from private sectors. Sound understanding and knowledge of AEO programme implementation will be able to help improve trading environment in the Lao PDR to be more conductive and harmonized.

Economics

Who is Laos’ first special economic zone benefitting? China Dialogue 8th Nov 2019
When Savan-Seno special economic zone (SEZ) was set up by the Laos government in 2003 it was expected to boost the economy and become a model for future schemes. But years later, the country’s first SEZ is still incomplete, and people who have long lived in the area are in conflict with developers and the government over compensation.

LSX Launches LALCO’S Shares Trading KPL 8th Nov 2019
The Lao Securities Exchange launched on Thursday the trading of the shares of Lao Asean Leashing Public Company (LALCO), the 11th company to have been registered on the Lao stock market. The trading day witnessed the share traded at 3,000 kip per share, rising by 300 kip from 2,700 kip per share when it was announced for public booking early this month.

EU Provides EUR 5 Million For Export Competitiveness, Job Creation In Laos KPL 8th Nov 2019
The European Union (EU) has supported EUR 5 million for export competitiveness and job creation in the Lao PDR by launching the ASEAN Regional Integration Support-Lao PDR Trade-Related Assistance(ARISE Plus-Lao PDR) in Vientiane on Sept 9. This four-year action will be implemented in partnership with the Ministry of Industry and Commerce, Ministry of Agriculture and Forestry and the International Trade Centre and aims at stimulating inclusive economic growth, job creation and strengthening climate-change resilience.

Laos to clamp down on imports in bid to curb rising exchange rate Phnom Penh Post 8th Nov 2019
The Lao government will introduce strict measures to regulate the import of consumer goods and bolster domestic production, in an attempt to reduce imports and cut capital flow to other countries. A surge in both legally and illegal imported goods from neighbouring countries means Lao producers are struggling to compete in terms of price and production, Deputy Minister of Industry and Commerce Somchith Inthamith told media during an interview last week.

Energy

PowerChina Invests Over US$ 2 Billion In Laos KPL 8th Nov 2019
Laos, a landlocked country with abundant natural rivers, has an ambitious vision of becoming the Battery of Asia. Meanwhile, energy development is considered a key for poverty reduction in Laos. Despite being among small countries in ASEAN, Laos has been able to secure stable economic growth rate over the past several years.

Laos Urged to Cancel Latest Dam for Mainstream Mekong Voice of America 8th Nov 2019
Environmental rights groups are calling on Laos to cancel the latest hydro-electric dam it has approved for construction across the Mekong River, warning of dire consequences for the millions of people who rely on the waterway for a living.

MRC forum tackles hydropower dam proposed by Laos Khmer Times 6th Nov 2019
The Mekong River Commission, member countries and relevant partners yesterday discussed procedures for a technical review of Laos’ planned Luang Prabang hydropower project. About 200 people comprising representatives of member countries Cambodia, Thailand, Laos and Vietnam, civil society, academics, private sector and development partners were in Vientiane for the 8th MRC Regional Stakeholder Forum which began on Tuesday.

Laos hydro project switched on along dried-out Mekong phys.org 29th Oct 2019
A multi-billion dollar hydro-electric power plant on the Mekong river in Laos was officially switched on Tuesday, as drone images of dried-up downstream areas stirred fresh outcry on one of the world's great rivers. The Thai-owned Xayaburi dam has been a lightning rod for criticism even before construction began in 2012, with environmentalists warning of its devastating impact on the river's fish species, sediment and water levels.

Sold down the river: hydropower on the Mekong Economist Espresso 27th Oct 2019
Power generation is set to start this week at the Xayaburi dam in northern Laos. Since construction began in 2010, some 5m cubic meters of concrete have been poured into raising a 38-metre wall and structures on the greatest of all South-East Asian waterways. The Mekong is the world’s largest inland fishery, and the most biodiverse river after the Amazon. Critics warn of devastating consequences for the flow of fish, sediments and nutrients of a river that feeds tens of millions of people. The World Bank and the Asian Development Bank refused to back the project. Xayaburi is only the first of a planned 11 dams on the Lower Mekong (nine are in Laos; two in Cambodia). The hydroelectric power plant has a capacity of 1,285 megawatts. Thailand, whose banks financed it, will buy 95% of the energy. The power and the profits will remain in Thailand and Laos; the environmental and social consequences will largely be borne by the lower riparian countries, Cambodia and Vietnam.

Financial Services

Laos bank, Wallyt to facilitate WeChat Pay and Alipay payments The Paypers 8th Nov 2019
Banque Pour Le Commerce Exterieur Lao Public (BCEL) has partnered with Hong Kong mobile payments services provider Wallyt to allow Lao merchants to accept mobile payments through WeChat Pay and Alipay. Through the partnership, business customers of BCEL will be able to accept mobile payments through Chinese mobile wallets WeChat Pay and Alipay. Meanwhile, Chinese tourists will be able to pay using one of these two popular mobile payments platforms at over 10,000 merchants in Laos, including supermarkets, shopping malls, hotels and tourist attractions.

Food & Agriculture

Rice prices in Laos likely to rise next year Xinhua 14th Nov 2019
Rice markets in Laos may experience greater fluctuation in 2020 as harvests are unlikely to meet targets in 2019. The total yield is expected to be about 3.5 million tons -- a downward slide from the original target of 4.4 million tons. Rising prices, shortages and storage issues, including difficulties in procuring rice, are worrisome for both the people and the state.

Chinese-owned banana plantations expand in Laos despite lingering environmental and health concerns ASEAN Today 8th Nov 2019
In 2017,the Lao government ordered the closure of the country’s Chinese-owned banana farms following reports of pollution and workers falling ill after being exposed to dangerous chemicals. Firms already operating in the country were allowed to stay open until their contracts expired. The ban prohibited the signing of new contracts with Chinese banana firms.

Laos lays down rules for import, export of agricultural products The Phnom Penh Post 31st Oct 2019
Loa's government has listed the types of goods and the quantity of agricultural and plant products that may be imported and exported through the country’s customs checkpoints. Under the new guidelines, every household should own some tools and machinery such as a tractor. There should be at least one tractor per household, one motor pump per household and one food grinder per household. This apart, there should be one spinning motor and one rice mill per household, according to fresh directives from the Ministry of Finance.

Health & Life Sciences

Cannabis to be grown for medical use in Laos NST Online 31st Oct 2019
HEMP or cannabis will be planted and processed for medicinal purposes in Laos following an agreement signed here recently. Australian company Cann Global Asia (CGA) signed the deal with Sun Agriculture Promotion Industry and Commercial (SUN) to cultivate, purchase, process and retail hemp products. The agreement will also see SUN, as the licence holder for the next 10 years in Laos, exporting hemp for CGA if need be, according to the Laotian Times. Following the agreement which will take into effect by November, CGA, a subsidiary of Cann Global, will be sharing 10 percent of the gross profit from local sales or export of cannabidiol hemp with the SUN. Hemp is a term used to classify varieties of cannabis that contain 0.3 percent or less tetrahydrocannabinol (THC) content. Cannabis plants with more than 0.3 percent THC are called marijuana. THC is the chemical responsible for most of marijuana’s psychological effects.

Infrastructure

Ground Broken For That Luang Lake Specific Economic Zone Office KPL 8th Nov 2019
Shanghai Wanfeng Group held on Nov 5 a groundbreaking ceremony for the administration office of the That Luang Lake Specific Economic Zone, a US$1.7-billion project with a concessional period of 99 years.

China-Laos railway tunnel construction making breakthroughs Xinhua 8th Nov 2019
China-Laos railway tunnels' construction has been continuing to make lots of breakthroughs as one more major tunnel was drilled through on Friday in the tropical mountains of northern Laos. A Chinese railway engineering company, namely China Railway No. 8 Engineering Group (CREC-8), on Friday bored Ban Ka No. 1 Tunnel near the ancient Lao capital of Luang Prabang, some 220 km north of capital Vientiane.

Indonesia announces start date for $1.9bn Vietnam–Laos rail link - News - GCR Global Construction Review 5th Nov 2019
The Indonesia Railway Development Consortium has announced plans to begin work in 2021 on a 400km rail line between Vietnam and Laos for a price of $1.9bn The consortium is made up of INKA, Indonesia’s state-owned train maker, and Indonesian Railways Company, its main operating company. It also includes electronics company Len Industri and contractor Waskita Karya. in

Laos’s Belt and Road project sparks questions over China ambitions Financial Times 30th Oct 2019
Near Bom Or, a village of dirt streets and shacks in northern Laos, Chinese construction crews have cut a tunnel through a mountainside to carry high-speed trains on a 400km rail line across the country, a section of a planned route from Kunming in south-west China to Singapore. Beijing has used the programme to build roads, ports and power stations in some of the world’s poorest countries. But critics have raised concerns about the social and environmental impact of the projects, saying that many of them are white elephants that have left states heavily indebted to Beijing.

Tunnel along China-Laos railway completed Xinhua 21st Oct 2019
A tunnel along the railway connecting China and Laos was completed Monday, said China Railway's Kunming bureau. The Manzhang Tunnel, located in Mengla County, Xishuangbanna Dai Autonomous Prefecture, southwest China's Yunnan Province, is 1,730 meters long.

Laos' special economic zone bordering China to lure 10 bln USD investment Xinhua 28th Oct 2019
Boten Special Economic Zone (SEZ) in northern Laos bordering China is anticipating investment of at least 10 billion U.S. dollars to fully develop the site, according to a zone representative. The zone, some 390 km north of Lao capital Vientiane, borders on Mohan in Yunnan province, China, and is part of the rapidly-growing economic cooperation between Laos and China.

Dam Development Is ‘Silencing’ the Mekong River ENS -- Newswire 24th Oct 2019
In five days, the Xayaburi Hydropower Project on the Mekong River in northern Laos will formally begin operations. As the first dam on the lower Mekong mainstream, this marks a turning point for the Mekong River.

EU provides € 200,000 to assist storm victims in Laos ReliefWeb 22nd Oct 2019
The European Union is allocating € 200,000 (LAK 1.95 Billion) to provide essential humanitarian assistance to families affected by the recent tropical storm Podul and tropical depression Kajiki, which wreaked havoc across large parts of Lao People’s Democratic Republic in early September. The funding will address the most pressing needs of thousands of vulnerable people in some of the hardest-hit areas.

Laos plans to begin work on Laos-Vietnam railway in 2021 VietnamPlus 17th Oct 2019
The Lao Government has entrusted the Petroleum Trading Lao Public Company (PetroTrade) to conduct a feasibility study on a Laos-Vietnam railway project, the Vientiane Times reported. On behalf of the Lao Government, the Ministry of Planning and Investment and PetroTrade signed a memorandum of understanding on October 15 to study and complete a detailed design of the railway.

Travel & Tourism

A Visit to the Chinese Casino City in Laos Built by Myanmar Workers The Irrawaddy 21st Oct 2019
I had had a strong desire to visit the Kings Romans Hotel, a Chinese-owned project in the Laotian section of the Golden Triangle, where Myanmar, Thailand and Laos meet, for a long time. The purpose of the visit was not to gamble in a casino but to witness the living conditions of about 40,000 illegal Myanmar migrant workers, who, unlike those in Thailand, had never received official visas to work there.

Nine Border Checkpoints to Discontinue Visa On Arrival Services The Laotian Times 18th Oct 2019
According to a notice issued by the Prime Minister’s Office on Wednesday, nine of Laos’s border checkpoints will discontinue providing visa on arrival services to tourists.