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Relations with New Zealand
Laos Overview
New Zealand ’s relationship with Laos is friendly but limited. Along with increasing dialogue under the ASEAN umbrella, the relationship has primarily revolved around development assistance and (until 2003) limited defence links through New Zealand Defence Force technical assistance in UXO clearance. New Zealand’s development assistance to Laos has been well received. There is a small Lao community in New Zealand after refugees were received in the 1980s.
The New Zealand Ambassador in Bangkok has been cross-accredited to Laos since February 1963. The Laos Ambassador in Canberra is cross-accredited to New Zealand.
Trade between New Zealand and Laos remains very limited. New Zealand products available in Laos mainly comprise telephone and transmission apparatus and, from time to time, meat, butter and cheese. Although Lao people are not culturally averse to eating red meat and dairy products (because of the earlier French influence), the market is limited in size.
There is potential in Laos for New Zealand input in forestry, education, agriculture, mining, civil aviation and hydro electricity generation projects. Some New Zealand engineering and other consultants work in these sectors.
New Zealand ’s development cooperation with Laos comprises support through a range of NZAID programmes. Principal involvement is through NZAID’s Laos country programme. Other NZAID programmes providing support to Laos include a range of regional and contestable funds as well as funds to voluntary agencies.
New Zealand has limited resources and capacity and it is therefore imperative that NZAID focuses on sectors in which New Zealand has comparative advantage, and can add value to development assistance provided by others.
Consequently, in line with NZAID’s Asia Strategy goal to eliminate poverty through a focus on sustainable rural livelihoods, NZAID concentrates its bilateral assistance on the development of pro poor tourism and natural resource management. This is complemented by regional and thematic programme assistance for trade and private sector development and human resource development. This is consistent with Laos’ National Growth and Poverty Eradication Strategy and its prioritisation of investment in agriculture and the rural sector in order to improve livelihoods and reduce poverty. Underpinning this is the recognition that the protection of human rights is pivotal to addressing poverty. NZAID’s policy to mainstream human rights will be achieved through ensuring a rights perspective in all development programme planning and implementation.
At a provincial level New Zealand’s official development assistance in Laos focuses on two main geographic areas in the north – Luang Namtha and Xieng Khouang provinces. While NZAID offers support to a discrete number of activities outside the two focal provinces, such activities must contribute to the overall sectoral and thematic focus of New Zealand’s official development assistance programme.
NZAID support to the Laos government includes English language training for officials. A number of project initiatives with government ministries are also funded through NZAID’s Asia Development Assistance Facility.
The Laos country programme allocation was NZ$2 million in the 2005-2006 financial year and is expected to grow to NZ$3.5 million per annum by 2008. In addition Laos benefits from funding from regional, thematic and multilateral sources including the Voluntary Agency Support Scheme, the Trade and Development Programme, the Asia Development Assistance Facility, and support for the Mekong Institute and the Phnom Penh Plan for Development Management. The footprint for NZAID’s country programme in Lao PDR may be expanded through these mechanisms.
In addition to Lao Aviation, the main carriers servicing Vientiane are Thai International, and Viet Nam Airlines. Lao Aviation provides services to provincial airports in Laos, with Luang Prabang in the north being the most popular and notable tourist destination. Bangkok Airways now provides direct services in and out of Luang Prabang from Chiang Mai. A number of provincial airports are currently being upgraded under an ADB supported ‘small airport improvement project’. top of page
Some New Zealand consulting services have been provided previously in forestry and cattle breeding.
Laos is pursuing WTO membership. New Zealand has provided some support to help Laos with their agricultural interests during their integration into the ASEAN Free Trade Area and accession to the WTO rules-based global trading system. This has included advice on the requirements of accession to the WTO Agreement on Agriculture (AoA). Assistance has also been provided on sanitary and phyto-sanitary standards, to lift export capability in agriculture.
The Lao government has recently established some new incentive schemes, such as tax holidays to help facilitate foreign direct investment. The Committee for Planning and Cooperation is the central body for coordinating donor and investor interests.
Official Name - Lao Peoples’ Democratic Republic (Lao PDR or Laos) - Land Area - 236,800 square kilometres (CIA) - Population - 6.3 million (July 2006 CIA estimate); Growth 2.4% (2006 CIA estimate) - Capital City - Vientiane - Location - Southeast Asia, northeast of Thailand, west of Viet Nam - Religion - 60% Buddhist, 40% animist and spirit cults (CIA) - Language - Lao (official), French, English, and various ethnic languages
Political system - One-party rule - National government - Lao People's Revolutionary Party (LPRP) - National legislature - 99 elected members to the National Assembly - Head of State - President Choummaly Sayasone - Head of Government - Prime Minister: Mr Bouasone Bouphavanh
GDP (official exchange rate) - US$2.523 billion (2005 est) - GDP per capita (PPP) - US$1,900 (2005 est) - Real GDP growth - 7.2% (2005 est) - Exports - US$379 million (2005 est) - Main exports from Laos - Garments, wood products, coffee, electricity and tin - Export partners - Thailand 19.3%, Viet Nam 13.4%, France 8%, Germany 5.3%, UK 5% (2004) - Imports (fob) - US$541 million (2005 est) - Main imports to Laos - Machinery and equipment, vehicles, fuel, consumer goods - Import partners - Thailand 60.5%, China 10.3%, Viet Nam 7.1%, Singapore 4% (2004) - Current account - -US$58.35 million (2005 est) - Inflation - 10% (2005 est)
NZ Exports (FOB) - NZ$212,000 (Year to Dec 2005) - Main Exports - Transmission apparatus - telephony, electronic goods, lamps - NZ Imports (CIF) - NZ$102,000 (Year to Dec 2005) - Main Imports - Clothing, automatic data processing machines - Services Trade - A range of consulting services are provided by New Zealand based companies (including the engineering, forestry, transport, and education sectors). Services are often funded by Asia Development Bank and World Bank loans, and bilateral/multilateral grant funding.
Laos , officially known as the Lao People’s Democratic Republic, is a landlocked ethnically diverse country sharing borders with China, Myanmar, Thailand, Cambodia and Viet Nam. The Mekong River, almost half the length of which flows through Laos, forms most of the border with Thailand. Most main towns are on the Mekong.
While still a developing country, Laos has useful resources of land, timber, gems and minerals, and significant potential for hydroelectric power generation. Most of the Lao people live in rural areas and subsistence agriculture, dominated by rice, accounts for approximately half of GDP and provides 80% of employment.
The country’s human rights record has come under scrutiny in the past. Laos denies accusations of abuses by the military against the Hmong ethnic minority. Hmong groups are reported to have been fighting a low-level rebellion against the regime since 1975.
Laos has known many years of colonisation, foreign occupation, civil war and political instability. In 1975, following the US withdrawal from Viet Nam, the Lao Communists consolidated their control of Laos, which culminated in the end of the monarchy and establishment of the Laos People’s Democratic Republic in December.
The country is a nominally Marxist-Leninist state ruled by the Lao People’s Revolutionary Party (LPRP). The head of State is the President, elected by parliament for a five year term. The head of government is the Prime Minister, appointed by the President with parliamentary approval. The nine-member Politburo of the LPRP, drawn from its central committees, is the key decision making body. A National Assembly meets twice a year and is responsible for scrutinising proposed legislation. The Assembly is elected by the people from a list of candidates approved by the Party.
In August 1991, the National Assembly adopted a constitution which formalised the establishment of a market oriented economy, guaranteed the right of every Lao citizen to own property, and provided protection for foreign and direct investment. Indicators of the more open society that has emerged over the past decade include greater freedom to travel, choice of employment, and the development of a fledging private sector.
Political stability and one-party rule remain of paramount importance to the government. So while the Lao Constitution guarantees freedom of assembly, religion and speech, in practice political or other forms of dissent are not tolerated and dealt with harshly. Freedom of speech is severely constrained, as is the practice of religious faiths outside of Theravada Buddhism. While the human rights situation has improved somewhat, the government maintains tight control over the population to minimise the potential challenges to the ruling party.
The military has always been well represented in political life. The military’s activities are diverse, including participation in reconstruction work and private business. Previous talk about a departure of the military from business has never eventuated.
A new government and legislature have been formed following the National Assembly election on 30 April 2006. Choummaly Sayasone, the head of the ruling communist Lao People’s Revolutionary Party (LPRP), was appointed by the National Assembly to succeed Khamtay Siphandon as President in June. top of page
Laos is among the least developed group of countries (LDC) and relies heavily on donor assistance. Aid to Laos in 1998 totalled US$281m[2]. Social indicators are among the poorest in the region and 34%[3] of the population are living below the poverty line. Estimated average life expectancy in 2005 was 53 years for men and 56 years for women (United Nations). A large proportion (around 80%) of the population relies on subsistence agriculture (largely peasant farming) and agricultural development is constrained by a lack of modern skills, inadequate infrastructure and capital. Laos has no railways, a basic roading system, limited telecommunications and electricity is only available in some urban areas.
In 1985 the government of Laos began decentralising control and encouraging private enterprise. The economic strategy is known as the New Economic Mechanism and it was aimed at exposing the economy to market forces, opening trade and foreign investment opportunities, strengthening the role of the private sector and improving macro-economic management. Growth averaged 6% in 1998-2004[4] (except during the Asian financial crisis in 1997) but Laos remains an economy burdened by bureaucratic regulation, dependent on aid, and vulnerable to external shocks.
Remittances from migrant workers in Thailand are an important source of revenue, particularly in southern Laos where thousands cross the Mekong annually to find work. In 2004 around 180,000 Lao workers registered to work in Thailand.[5]
The Government’s objective of removing Laos from the list of LDC by 2020 implies that the country will remain dependent on aid from the International Monetary Fund (IMF) and other international donors for some time. In the long term however, Laos has many advantages. It shares border and common interests with Thailand, Viet Nam, Cambodia and China and is starting to exploit its natural resources base; including energy production and mining.
In late 2004, Laos gained Normal Trade Relations status with the US, allowing Laos based producers to face lower taxes on exports.
[2] Foreign and Commonwealth Office Country Profiles: Laos
[3] CIA World Factbook
[4] CIA World Factbook
[5] Economist Intelligence Unit Country Report Laos – Main Report: July 10 2006
The LPRP continues to promote Lao’s integration on a broad international stage, but relations with Viet Nam continue to dominate the foreign policy agenda.[6] The relationship with Viet Nam enshrined in the 1977 Treaty of Friendship and Cooperation is the most politically important of Laos’ bilateral relationships. China is also assuming a heightened profile and influence in Laos. Like Viet Nam, close relations with China are driven firstly by ties between the respective Communist Parties of both countries. The regional weight of China is also according the Chinese greater strategic influence in Laos in comparison with other neighbours.
Thailand is also an important bilateral partner and there are strong trade and investment links. Historical enmities and distrust, however as well as political differences, insurgent activity in border areas, illegal trade in narcotics and immigrant labour continue to complicate relations. Parts of the border with Thailand are still undergoing formal demarcation.
Relations with the United States have improved. There is cooperation on drug trafficking and missing persons issues. Parts of Laos, especially those areas deemed to be the “Ho Chi Minh trail”, were heavily bombed and mined during the Viet Nam war. The United States, along with a number of other countries including New Zealand, have assisted with UXO (unexploded ordnance) and mine clearance work.
Laos is a member of the United Nations (UN), Non-Aligned Movement (NAM), Group of 77 at the UN (G77), Mekong River Commission (the Secretariat of which was relocated to Vientiane in 2004), Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS), Association of South East Asian Nations (ASEAN) and the Asia-Europe meeting (ASEM). In December 2004 Vientiane hosted the tenth ASEAN summit, as part of Laos’ year-long stint as chair of the group. As a member of ASEAN, Laos is a part of the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) negotiations underway. Laos has applied to join the World Trade Organisation (WTO).
[6] Economist Intelligence Unit Country Report Laos – Main Report: July 10 2006
The first official Lao delegation visited New Zealand in February 1994, led by the Deputy Minister of Agriculture, Mr Sitaheng Rasphone. Foreign Minister Somsavat Lengsavad made an official visit to New Zealand in July 1996, and visited again in January/February 1998 for intensive English language training. He visited New Zealand again in February 2005.
Sir Robin Gray, Associate Minister of Foreign Affairs and Trade visited Laos in February 1995 on a goodwill visit. The Hon Philip Burdon visited in March 1996 and Foreign Minister the Rt Hon Don McKinnon visited in October 1997. Hon Jim Sutton, Minister for Trade Negotiations visited in March 2003 as part of a South East Asia trade mission.
The Safetravel website provides a travel advisory for travellers to Laos [external link].
