🎅 Laos 20241225: Venerable, Gritty, Continuing
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Headlines:
Debt Crisis Deepens, Growth Slows
Capital Shows Strong Economic Performance
Budget Mismanagement Uncovered
Forests Fall to Fruit Farms
Fertilizer Exports to China Surge
UnionPay Expands QR Digital Payments
Infrastructure and Ag Get a Korean Revamp
Student Drug Crisis a Growing Issue
School Dropout Rates Rise
Luang Prabang Named Top Asian Destination
Defense Cooperation with Vietnam Strengthened
Public Services Transform
Heritage Route Launched
Debt Crisis Deepens, Growth Slows
Laos has seen inflation reaching 31% in 2023 and total debt of $13.8 billion (a worrying 108% of GDP). Half of the foreign debt due is owed to China, largely from the funding of mega-projects including Mekong dams and the $6 billion high-speed rail line. The IMF is expecting real GDP growth to drop from 4.1% to 2.5% by 2029, while debt servicing costs will rise from $1.1 billion to $1.8 billion by 2026. The country appears unlikely to seek an IMF bailout, continuing to rely on Chinese debt deferrals.
Read more: Eurasia Review (Debt Analysis), IP Defense Forum (Chinese Influence)
Capital Shows Strong Economic Performance
Vientiane's economy achieved 5.85% growth, handily beating the 0.30% target. Industrial production reached LAK 10 trillion with handicrafts being responsible for a stunning LAK 134 billion. The service sector grew nearly 4%, supported by 1.53 million visitors. Agriculture showed 4.3% growth, maintaining food security with a rice supply of 258kg per person annually. Total investments reached LAK 31 trillion, beating targets by more than half.
Read more: The Star
Budget Mismanagement Uncovered
State auditors have identified LAK 4.77 billion not transferred to the official state budget, with LAK 3.62 billion spent outside the system and LAK 1.15 billion in unauthorized deposits. A corruption investigation has uncovered losses of USD 2.2 million and LAK 1.7 billion across 31 cases involving abuse of office and land transactions.
Read more: Lao Times
Forests Fall to Fruit Farms
Chinese and Vietnamese-owned plantations near biodiversity conservation areas are unfortunately driving deforestation in southern Laos. Satellite imagery shows expanding banana and durian farms on cleared land near Dong Hua Sao and Xe Pian National Biodiversity Conservation Areas. Companies receive long-term land leases (50+ years) and then exploit low labor costs to pad their bottom lines at the expense of the environment.
Read more: Pulitzer Center
Fertilizer Exports to China Surge
Laos is expanding production of fertilizer ingredients to meet increased Chinese demand following Western sanctions on Russia and Belarus. The government has given 18 companies exploration and mining rights for potassium chloride across 162,000 hectares in Vientiane capital, Khammouane, and Savannakhet provinces.
Read more: Nikkei Asia
UnionPay Expands QR Digital Payments
China's UnionPay International has partnered with Laos' national payment network LAPNet to enable mobile payments, the second of UnionPay’s cross-border QR payment partnership in Southeast Asia after Vietnam. The move expands the Chinese financial technology presence in the region and should enable frictionless payments for users of the system.
Read more: Nikkei Asia
Infrastructure and Ag Get a Korean Revamp
South Korea has committed more than $18 million across two projects to suppot Lao infrastructure and agriculture. A $13 million project will upgrade six bridges and improve road safety on National Road No. 8, one of the main trade links between Laos, Thailand, and Vietnam. A $5.6 million water management project is expected to modernize irrigation with solar-powered systems and centralized controls, to the benefit of Laos' agricultural sector.
Read more: The Star (Infrastructure), The Star (Agriculture)
Student Drug Crisis a Growing Issue
Bolikhamxay province reports a worrying rise in drug use by students, with 309 drug-related cases seen in six months. Authorities have seized a broad array of substances including methamphetamine, ecstasy, cannabis, kratom, and heroin. New trends include drug-laced coffee and kratom consumption in social settings. A trend to watch along side the dropout rate rise in the next article.
Read more: Lao Times
School Dropout Rates Rise
Vientiane Capital saw a 13.3% increase in dropout rates during 2023-2024. Grade 1 dropout rates reached 2.31%, primary school 0.8%, lower secondary 4.23%, and upper secondary 5.79%. The main reasons reported for the dropouts include family relocations, gambling, drug use, and financial pressures.
Read more: Lao Times
Luang Prabang Named Top Asian Destination
Lonely Planet has ranked Luang Prabang as Asia's top destination for the coming year. The province pulled in nearly 2 million visitors in 11 months, up by more than a million over last year. The city also received recognition in the 2024 Green Destinations Top 100 Stories for responsible tourism.
Read more: Nation Thailand
Defense Cooperation with Vietnam Strengthened
Vietnam and Laos have committed to implementing defense cooperation mechanisms for 2025-2029, including a defense protocol and 2025 plan. Main areas of cooperation include training improvement, human resource development, border management, and coordination in international forums (or fora, if you’re a stickler for the Latin).
Read more: VOV
Public Services Transform
The LEAP project has been launched with $3 million from USAID and €1 million from Ireland to modernize public administration. The four-year project is expected to result in streamlined service delivery, increased leverage of digital tools, strengthened institutions, and better capacity to reach underserved areas and people.
Read more: The Star
Heritage Route Launched
The EU Delegation and Lao government have launched the “Vientiane Heritage Route” project featuring 59 historical buildings. The initiative includes an interactive website, map, and an e-brochure to support conservation efforts and sustainable tourism. Interesting project that we will be watching for signs of success alongside the rising number of tourist arrivals.
Read more: EEAS
That’s all for this week, Merry Christmas, and thanks for reading.
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