LAOS

Laos,  officially the Lao People's Democratic Republic or commonly referred to its

colloquial name of Muang Lao is a landlocked country in the heart of the Indochinese
peninsula of Mainland Southeast Asia, bordered by Myanmar (Burma) and China to
the northwest, Vietnam to the east, Cambodia to the southwest, and Thailand to the
west and southwest.

Laos is a one-party socialist republic. It espouses Marxism and is governed by the Lao

People's Revolutionary Party, in which the party leadership is dominated by military
figures. The Socialist Republic of Vietnam and the Vietnam People's Army continue
to have significant influence in Laos. The capital city is Vientiane. Other large cities
include Luang Prabang, Savannakhet, and Pakse. The official language is Lao. Laos is
a multi-ethnic country with the politically and culturally dominant Lao people making
up approximately 60 percent of the population, mostly in the lowlands. Mon-
Khmer groups, the Hmong, and other indigenous hill tribes, accounting for 40 percent
of the population, live in the foothills and mountains.

Economic History of Laos since the overthrow of the Laotian

monarchy in 1975

When the current government came to power in 1975, it imposed a harsh, Soviet-style
economic system, replacing the private sector with state enterprises and cooperatives,
centralising investment, production, trade, and pricing, and creating barriers to
internal and foreign trade.
Lao authorities began to realize as early as 1979 that their economic policies were
inappropriate, but not until 1985, with the introduction of the "new economic
mechanism" (NEM), did they initiate major reforms. Initially timid, the NEM soon
was expanded to include a range of reforms that changed the structure of the Lao
economy. Free market prices replaced government-set prices. Farmers were allowed
to own land and sell crops at market prices. State firms were granted increased
decision-making authority but lost most of their subsidies and pricing advantages.
The government set the exchange rate at market levels, lifted trade barriers, replaced
import quotas with tariffs, and stimulated private sector firms by giving them direct
access to imports and credit.
These reforms have helped boost exports, reduce inflation, encourage business, and
increase the availability of goods. However, the economy is dominated by an
unproductive agricultural sector that operates largely outside the money economy,
which the public sector continues to dominate.

Recognizing these problems, Lao authorities in mid-1989 signed an agreement with

the World Bank and the International Monetary Fund committing themselves to
extending and deepening reforms. They agreed to expand fiscal and monetary reform,
promote private enterprise and foreign investment, privatize or close state firms, and
strengthen banking. They also agreed to maintain a market exchange rate, reduce
tariffs, and eliminate unneeded trade regulations.

In the last 2 years, the Lao have enacted a liberal foreign investment code, begun to
privatize public firms, and expanded economic ties with the West. They have tried
especially hard to attract foreign investment.

Effects of Cold War on Laos

The Vietnam War did not remain within the borders of Vietnam. The conflict
expanded into neighbouring countries like Laos and Cambodia, where North
Vietnamese Army (NVA) and Viet Cong soldiers moved and operated, at
times pursued by South Vietnamese and American forces. These interventions had a
profound impact on the development of Laos and Cambodia. One significant outcome
was the rise and expansion of nationalist-communist groups. Like the Vietnamese,
Laotians and Cambodians had endured generations of colonial exploitation, foreign
meddling and unwanted conflict. Vietnam’s nationalist and communist movement
inspired the rise of the Pathet Lao in Laos and the Khmer Rouge in Cambodia. These
groups would shape the destinies of their countries.

A third of the bombs failed to explode on impact, thus becoming UXO. Some of the
most harmful munitions were cluster bombs, which were dropped inside casings
meant to open in mid-air and spread the “bomblets” over a wide area. About 80
million cluster bombs didn’t detonate; less than one percent of all UXO has been
cleared.

Typical victims of UXO include farmers, scrap metal collectors, and children.
Farmers often know explosives may be lurking beneath their fields, but must plough
them anyway or lose their livelihood. Scrap metal collectors find old bombs for the
purpose of selling the metal in them for a few pennies, often mistakenly believing
they are dead. Many victims of cluster bombs are children, because the small, round
shape of the explosives look like toys. Beyond killing and injuring people, UXO
also prevents development and perpetuates poverty. 

Also, the USSR completely helped rebuild the country. Along with grants and loans,
the entire modern infrastructure in Laos was built by the Russians. Close to 7,000
Laotians were trained in Russian schools and technical institutes.

Influence of US on Laos

US Assistance Program

The United States provides relatively little foreign assistance to Laos. U.S. State
Department funding for foreign operations programs in Laos in 2009 was estimated to
be $5.0 million compared to $5.8 million in 2008. By comparison, the United States
provided neighbouring Cambodia, a country of similar economic development,
roughly $65 million in 2009. The largest aid programs in Laos focus on de-mining
and counternarcotic programs. New programs include those strengthening the
country’s legal and regulatory framework and trade capacity. Other, ongoing areas of
U.S. assistance and bilateral cooperation include HIV/AIDS prevention and treatment,
military education (training in English language and military professionalism), and
the recovery of Americans missing in action (MIAs).5 U.S. public diplomacy
programs in Laos include support for libraries, providing access to international news
and Western media, English language training, sponsoring Lao government officials
studying in the United States through the International Visitor Leadership Program,
and lectures and workshops on U.S. political and legal institutions.
Foreign Relations

Once dominated by its links to Vietnam, Laos’ foreign policy horizons have
broadened to include Southeast Asian regional powers and the United States. The
United States and Japan have stepped up efforts to engage the lower Mekong sub-
region of which Laos is a part. In July 2009, Secretary of State Hillary Clinton
attended the ASEAN (Association of Southeast Asian Nations) Regional Forum in
Thailand, which focuses on regional political and security matters. On the side-lines
of this gathering, Clinton participated in the first U.S.-Lower Mekong Delta
Ministerial meeting. At the Ministerial meeting, which included the nations of
Cambodia, Laos, Thailand, and Vietnam, the United States pledged to continue or
enhance cooperation and assistance in the areas of the environment, health, and
education.

US-Laos Trade

U.S.-Laos trade is growing rapidly but from a low base. In 2008, total trade between
Laos and the United States, the LPDR’s seventh largest trading partner, was valued at
$60 million. In 2008, the value of Lao exports to the United States doubled compared
to the previous year, to $42 million, of which about two-thirds was apparel. In 2009
(Jan-Sept), a nearly 30% drop in clothing exports to the United States was
compensated in large part by an over 4,000% increase in exports of electrical
machinery.

On November 19, 2004, Congress passed the Miscellaneous Trade and Technical
Corrections Act of 2004, which extended non-discriminatory treatment to the
products of Laos (signed into law as P.L. 108-429). For several years, U.S.-Laos
relations were largely shaped by the U.S. debate over whether to grant Laos’s normal
trade relations treatment. Between 1997, when the United States and Laos concluded
a bilateral trade agreement, and 2004, legislation to extend NTR status to Laos faced
opposition from many Members of Congress concerned about human rights
conditions in Laos and the plight of the ethnic Hmong minority.
The United States and the Lao People’s Democratic Republic (LPDR) cooperate in
important areas despite ideological differences and U.S. concerns about alleged
human rights abuses against the ethnic Hmong minority. The U.S. government has
gradually upgraded its relations with the communist state, which has strong ties to
Vietnam and growing economic linkages with China. Major areas of U.S. assistance
and bilateral cooperation include de-mining and counter-narcotics programs,
strengthening the country’s regulatory framework and trade capacity, HIV/AIDS
prevention and treatment, the recovery of Americans missing in action during the
Vietnam War, and military education and training. In 2008, the United States and
Laos exchanged defence attachés the first time in over 30 years. The U.S. government
has embarked upon a policy of economic engagement with the LPDR as a means of
influencing the future direction of Lao policy.

Laotian Economy
The Lao economy depends heavily on investment and trade with its neighbours,
Thailand, Vietnam, and, especially in the north, China. In 2009, despite the fact that
the government is still officially communist, the Obama administration in the US
declared Laos was no longer a Marxist–Leninist state and lifted bans on Laotian
companies receiving financing from the US Export-Import Bank. In 2011, the Lao
Securities Exchange began trading. In 2012, the government initiated the creation of
the Laos Trade Portal, a website incorporating all information traders need to import
and export goods into the country.

In 2016, China was the biggest foreign investor in Laos' economy, having invested in
US$5.395 billion since 1989, according to Laos Ministry of Planning and Investment
1989–2014 report. Thailand (invested US$4.489 billion) and Vietnam (invested
US$3.108 billion) is the second and third largest investors respectively.

Subsistence agriculture still accounts for half of the GDP and provides 80 percent of
employment. Only 4.01 percent of the country is arable land, and a mere 0.34 percent
used as permanent crop land, the lowest percentage in the Greater Mekong Sub
region. Rice dominates agriculture, with about 80 percent of the arable land area used
for growing rice. Lao PDR may have the greatest number of rice varieties in the
Greater Mekong Sub region. Approximately 77 percent of Lao farm households are
self-sufficient in rice.

The economy receives development aid from the IMF, ADB, and other international

sources; and also foreign direct investment for development of the society,
industry, hydropower and mining (most notably of copper and gold). Tourism is the
fastest-growing industry in the country. Economic development in Laos has been
hampered by brain drain.

Laos is rich in mineral resources and imports petroleum and gas. Metallurgy is an

important industry, and the government hopes to attract foreign investment to develop
the substantial deposits of coal, gold, bauxite, tin, copper, and other valuable metals.
In addition, the country's plentiful water resources and mountainous terrain enable it
to produce and export large quantities of hydroelectric energy. Of the potential
capacity of approximately 18,000 megawatts, around 8,000 megawatts have been
committed for exporting to Thailand and Vietnam.

Tourism

The tourism sector has grown rapidly, from 80,000 international visitors to 1.8 million
in 2010. In 2010, one in every 10.9 jobs was in the tourism sector. Export earnings
from international visitors and tourism goods are expected to generate 15.5 percent of
total exports. The official tourism slogan is "Simply Beautiful". The main attractions
for tourists include Buddhist culture and colonial architecture. The European Council
on Trade and Tourism awarded the country the "World Best Tourist Destination"
designation for 2013 for this combination of architecture and history.

Luang Prabang and Wat Phu are both UNESCO World Heritage sites, with the Plain
of Jars expected to join them once more work to clear UXO has been completed.
Major festivals include Lao New Year celebrated around 13–15 April and involves
a water festival similar but more subdued than that of Thailand and other Southeast
Asian countries. Laos is known for its silk and local handicraft product, both of which
are on display in Luang Prabang's night market, among other places. Another
specialty is mulberry tea.

Infrastructure
Much of Laos lacks adequate infrastructure. Laos has no railways, except a short link
to connect Vientiane with Thailand over the Thai–Lao Friendship Bridge. A
short portage railway was built by the French in Champasak Province but has been
closed since the 1940s. The major roads connecting the major urban centres, in
particular Route 13, have been significantly upgraded in recent years, but villages far
from major roads can be reached only through unpaved roads that may not be
accessible year-round.

There is limited external and internal telecommunication, but mobile phones have
become widespread in urban centres. In many rural areas electricity is at least partly
available. Songthaews (pick-up trucks with benches) are used in the country for long-
distance and local public transport.

Laos' progress is notable in comparison to similar developing countries. This success

is in part due to small-scale independent providers emerging in a spontaneous manner
or having been promoted by public authorities. The authorities in Laos have recently
developed an innovative regulatory framework for Public–Private partnership
contracts signed with small enterprises, in parallel with more conventional regulation
of State-owned water enterprises.

Laotian Culture

Theravada Buddhism is a dominant influence in Lao culture. It is reflected throughout

the country from language to the temple and in art, literature, performing arts, etc.
Many elements of Lao culture predate Buddhism, however. For example, Laotian
music is dominated by its national instrument, the khaen, a type of bamboo pipe that
has prehistoric origins.
Sticky rice is a characteristic staple food and has cultural and religious significance to
the Lao people. There are many traditions and rituals associated with rice production
in different environments and among many ethnic groups. For example, Khammu
farmers in Luang Prabang plant the rice variety Khao Kam in small quantities near the
hut in memory of dead parents, or at the edge of the rice field to indicate that parents
are still alive. Sinh is a traditional garment worn by Laotian women in daily life. It is
a hand-woven silk skirt which can identify the woman who wears it in a variety of
ways. In particular, it can indicate which region the wearer is from.
Laotian Political Environment

The Lao People's Democratic Republic is one of the 5 socialist states that openly
espouse Communism. The only legal political party is the Lao People's Revolutionary
Party (LPRP). The head of state is President Bounnhang Vorachith, and he is the
General Secretary of the Lao People's Revolutionary Party. The National Assembly,
which essentially acts as a rubber stamp for the LPRP, approves all new laws,
although the executive branch retains authority to issue binding decrees.
Laos's first, French-written and monarchical constitution was promulgated on 11 May
1947, and declared Laos to be an independent state within the French Union. The
revised constitution of 11 May 1957 omitted reference to the French Union, though
close educational, health and technical ties with the former colonial power persisted.

The most recent elections took place in April 2011. The assembly was expanded to 99
members in 1997, to 115 members in 2006 and finally to 132 members during the
2011 elections.