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It’s all about neighbourhood

June 01, 2012

TINY, landlocked Laos is not often in the headlines. But as host and chair of the next Asia-Europe Meeting (Asem) summit in November, policymakers in the capital, Vientiane, are gearing up for long-awaited international stardom — and more scrutiny of the country’s political and economic future.

Preparations for the Asem meeting are in full gear in Vientiane, with China pitching in to help build the huge convention centre where the summit will be held and the so-called “Asem villas” which will house the 50 or so Asian and European heads of state and government expected in the city on November 4 and 5.

There will certainly be criticism of Laos’ decision to spend millions of dollars on building top-notch facilities for the two-day Asem meeting, money which could be better spent on improving the lives of the country’s still-poor six million people. But Laos is not alone in putting style before substance. Governments the world over have a penchant for pouring money into eye-grabbing, prestigious and costly projects, hoping that such expenditure will help raise a country’s international profile, re-branding it as modern, successful and vibrant.

After a short but intense visit to Laos last week, I’m convinced that more is at stake than national pride: it’s really all about the neighbourhood.

Almost all Asian countries — with the exception of Japan, South Korea, Singapore and Taiwan — are engaged in a difficult, uphill struggle to combat poverty and eradicate hunger.

There is a marked difference, however between South Asia and Southeast Asia. South Asian countries conduct their pro-development combat with help from international organisations, accumulating massive debt and even larger quantities of frustration along the way. In Southeast Asia, everyone in the region pitches in to help the laggards catch up.

In South Asia — with the exception of India (although even there growth is slowing down) — it appears to be a tragic race to the bottom. In Southeast Asia, countries are engaged in a fiercely competitive but heartening race to the top.And guess which region is the subject of global tears and hand-wringing, and which is making the world sit up, take notice and invest, invest, invest?

Laos gets the traditional aid packages from the World Bank and the European Union. But it is also attracting masses of money from its neighbours.

China is, of course, the leader of the pack, with investments in real estate, energy, mining but also in “friendship”: hospitals and bridges. Vientiane New World is a bold new urban development on a scale never before seen in the city. The project will encompass high-rise office buildings and apartments, shopping malls, cinemas, hotels, residential villas, parks and tree-lined boulevards.

A Chinese company is investing more than $600m in the project, which is expected to take between six to eight years to complete. As the press release puts it, “It is the first large-scale master-planned development to be built in Laos, designed to bring the latest in modern lifestyles to the capital.” Also in the game are Japan, South Korea, Vietnam, Thailand, Singapore and others.

The funds pouring in are making a difference. Laos is still a poor country, of course. Vientiane currently has very few high-rise buildings, people still ride motorcycles and bicycles and the ancient capital, Luang Prabang, retains a quiet dignity even as it struggles to thrive and survive.

But everyone knows that better times lie ahead. The World Bank has forecast that Laos is set to grow by 8.3 per cent in 2012, with mining as the main pivot.

The country wants to get rid of its ‘least developed’ status. Rising prices of gold and copper in the world market are giving a boost to the economy but a vital role is also played by construction and services, which will benefit from increased trade and tourism, transport and telecommunications, and there will be a higher demand for cement, construction materials, food and beverages.

Laos is still a communist country but after almost a decade of major economic transformation, it is also poised to join World Trade Organisation (WTO), possibly by the end of the year.

Experts point out that aligning national economic policies with the WTO regime will lead to improved economic efficiency and attract companies to invest in Laos, not because of its domestic market size but to export to the neighbouring region.

The focus on economic development — the faster, the better — does not mean neglect of the country’s vast cultural heritage. Only a few kilometres from Luang Prabang, a Unesco World Heritage-listed site, lies the cave of one thousand statues known as Pak Ou, where rows of miniature Buddha statues are sheltered behind rocks and a picket-fence-shaped wall high above the water.And there is another historical challenge: Laos is also taking the lead in international efforts to ban cluster bombs, a deadly legacy left over from the United States’ war in Vietnam that also spread to Laos and other nations. Experts say US warplanes dropped more than two million tonnes of bombs over Laos, more than the explosives dropped in Europe during World War II. Nearly four decades later, the bombs continue to exact a heavy price, with over 50,000 people killed or injured as a result of accidental explosions between 1968 and 2008.

Laos may be one of the poorest countries in Southeast Asia but it shares its ambitions with its neighbours. Following on-going reforms, neighbouring Myanmar is well on its way to discarding its once pariah status and joining other nations in the region in the race to the top.

Cambodia is not far behind, ready to follow in the footsteps of Vietnam, a country now widely recognised as the newest Asian tiger economy.

Southeast Asia certainly seems to have found the magic recipe for development: hard work, education, economic reform and a great deal of help from friends — especially those within the neighbourhood.

The writer is Dawn’s correspondent in Brussels.