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    Southeast Asia
     Jul 26, 2008
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New-age Chinatown has Laotians on edge
By Brian McCartan

VIENTIANE, Laos - This former French colonial city is fast yielding to a new outside influence as Chinese investors bid to build a new satellite city in the mold of the many industrial towns popping up across their homeland. A controversial joint-venture project to build a Chinatown on the northeastern outskirts of Vientiane has upset residents and prompted new concerns about China's fast-growing influence over its smaller neighbor.

The Lao government recently signed off on a plan to allow Chinese developers to build shops, factories, hotels and housing in the city's underdeveloped and some say environmentally significant That Luang marsh area. Under the development plan, the project will cover 1,640 hectares, with buildings taking up less than 1,000 ha and the remaining two-thirds of the area reserved for water


resources and leisure areas. Construction and land clearing has yet to begin.

The "New City Development Project", as the government refers to it, involves a joint venture between three Chinese companies managed by the Suzhou Industrial Park Overseas Investment Co and a Lao partner. The terms of the agreement, first announced in September 2007, give the Chinese company a 50-year concession, with a possible extension for another 25 years, while the Lao partner retains a mere 5% share in the project. The project will revert to Laos once the concession period has ended.

The project has sparked public dissatisfaction among the country's repressed populace and prompted the government to make a rare public explanation of its policies. Standing Deputy Prime Minister Somsavat Lengsavad defended the government's actions in February and denied accusations made by the media and fueled by widespread rumors that an agreement had been made to bring in 50,000 Chinese to populate the new satellite city and claimed no special concessions would be made for Chinese citizens.

He said the deal had been negotiated during a meeting with the governor of the China Development Bank (CDB) to seek a US$100 million loan to build a 20,000-seat stadium and related sports complexes for use during next year's Southeast Asian (SEA) Games, to be hosted in Vientiane. The government hopes the event will showcase the country as a destination for investment and tourism.

The CDB governor made the loan contingent on Laos offering a suitable piece of land for a favored Chinese company to develop. According to Somsavat, the Chinese company, which has developed the Suzhou Industrial Park in China's Jiangsu province, will be allowed to benefit from the sale of buildings, industrial units and residences in the new satellite town. Laos will benefit from a new urban development without having to seek loans for its construction, he said.

During a follow-up press conference in March, held to again explain the project and deflect sustained criticism, Vientiane's mayor Sinlavong Khoutphaythoune told journalists that there were three main reasons for the new town's development. First, it was consistent with the government's declared policy of using domestic resources, including land, as capital to develop the country. Second, it was a form of repayment for China's funding and building of a stadium for the SEA Games. The final reason he gave, ironically, was to preserve the marsh area.

Groups such as the World Wildlife Fund estimate the 20-square kilometer marsh area provides aquatic resources for about 3,000 households and 17 villages and provides flood protection for the city by acting as a reservoir for flood waters during the rainy season. The protection provided by the marsh is valued at $2 million and the avoidance of damage caused by floods estimated at over $18 million.

The marsh area lies at the bottom of a low hill topped by Laos' most famous Buddhist monastery and national symbol, That Luang, as well as its National Assembly. According to government spokesman Yong, as recently as 30 years ago nobody lived in the area, some of which the government drained to fight mosquitoes and reclaim land for agriculture.

The area around the marsh is now a mix of residential buildings and bustling commercial properties, including several markets selling fresh produce, dry foodstuffs and other commercial goods. People living along the marsh maintain rice and vegetable fields and gather edible plants from the area, as well as fish, crabs and snails. Fishing platforms dot the length of a canal running through the area. Few residents in the area have proper land title documents and compensation for their removal is expected to be contentious.

Manhattan of Laos
An artist's rendition of the proposed new satellite town which appeared in the Lao press made the area look like a modern Manhattan.

The Lao government seems keen to develop the area along the lines of new Chinese industrial towns, of which Suzhou, where the Suzhou Industrial Park Overseas Investment Company is based, is one. Established in 1992, the Suzhou Hi-Tech Industrial Development Zone, according to the Suzhou government's website, has attracted foreign investments worth more than $6 billion. Most of the businesses established in the zone are in the IT industry, with others involved in software, precision machinery and chemicals.

Whether Laos could or should attempt to duplicate such commercial feats is debatable. While the new town scheduled for construction in the That Laung marsh is not likely to reach soon that level of development, it gives an indication of what the Lao government and its Chinese investors are aiming at. While development on this scale may bring in much-needed investment and employment, the question detractors continue to ask is where will all these workers come from?

To build the SEA Games stadium, the China Yunnan Construction Engineering Company Group Corporation has imported thousands of Chinese workers due to the severe shortage of skilled Lao labor. Although the Lao government has vehemently denied that tens of thousands of Chinese will be moving into Vientiane to populate the planned new satellite city, Laos itself does not have the skills or manpower to construct the city on its own. At current education levels, it also does not have the ability to operate a high-tech city once it is completed.

This will almost surely necessitate the immigration of thousands of workers and specialists, most probably from China. Lao government figures estimate 30,000 Chinese already live in Laos, but most analysts believe the real figure to be perhaps 10 times higher. Stores owned and operated by Chinese people have sprung up across northern Laos, while other Chinese have settled into remote villages as foremen and workers on commercial agriculture projects.

Vientiane, like every city in Southeast Asia, has a Chinese population, which has been accepted as part of the community as much as Vietnamese immigrants have. Now the fear among many people in Vientiane is that the Chinese will no longer be simply neighborhood businessmen and shopkeepers, but actually own a large slice of the city itself and encourage thousands of their countrymen to immigrate and dominate the capital's business, social and cultural life.

Lao government spokesman Yong Chanthalangsy downplays such concerns. Citing Lao investment laws, he told Asia Times Online that 85% of a business must be Lao-owned and that priority must be given to the recruitment of Lao workers. "Some professions are reserved for our population," he said, without elaborating. He noted however that the government acknowledges that some skills are lacking in the Lao labor force and that the government has agreed to allow foreign companies in certain cases to import skilled labor. "We need foreigners for jobs for which we cannot satisfy the demand. We will continue to recruit for these."

He did concede that there is a problem of Chinese workers remaining in Laos after the completion of projects, which is clearly the case in the country's northern regions, where Chinese companies have overseen new road projects.

"We must strengthen enforcement of the law to prevent people from staying. The government will take a closer look, monitor and strengthen the law on foreign laborers in our country," he said. He noted that 1,800 Chinese laborers authorized by the government 

Continued 1 2  

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(May 16, '08)

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(24 hours to 11:59 pm ET, Jul 24, 2008)

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