Laos: Mired in Economic Stagnation?

Abstract

Introduction By most accounts, 2002 was a politically quiet year for Laos. Unlike previous years, there were no student protests or bomb explosions in capital, Vientiane, and no reported rebel raids against army and police outposts. President Khamtay Siphandone's government grip on power appeared absolute with no open dissent in ranks. Elections to National Assembly were held on 24 February, and government claimed, 2.5 million eligible voters nationwide used their right to vote.1 There were few surprises when a total of 166 candidates competed for 109 seats in Assembly, which in effect is little more than a rubber-stamp body controlled by ruling Lao People's Revolutionary Party (LPRP). Khamtay is also president of Central Committee of party, which controls all aspects of life and society in country. The lack of political debate and initiative was seen by most foreign observers as main reason why Laos' troubled economy showed few signs of real improvement during year. A Western embassy in Laos stated in an internal memo dated 10 October that: the trend is disturbing. The currency, kip, continued to slide, inflation rose, foreign investment declined, not enough revenue was being collected, and government did not even have enough money to pay state employees, such as teachers. In foreign-policy field, there were problems in relationship with Thailand over border demarcation. Laos also continued to demand extradition from Thailand of seventeen Lao rebels who had been involved in an attack on a border post in 2000, and then taken refuge across frontier. Despite promises from Thailand, issue remain unresolved as 2002 drew to a close. On other hand, Laos moved closer to its old allies, Vietnam and Cambodia. In January, prime ministers of Laos, Vietnam, and Cambodia met in Ho Chi Minh City to discuss creation of a triangle development2 spanning three countries. In July, a delegation from Politburo of