Can one of the world’s poorest nations join Burma on the march to development? asks Asia Sentinel’s Simon Rougheen

Although Laos is soon to join the World Trade Organization, it remains very much Southeast Asia’s forgotten country, a landlocked backpacker magnet of unexploded ordnance and bad, winding roads nicely topped off by stunning jungle, river and mountain vistas.

A fisherman works near the site of the proposed Xayaburi Dam in Paksey, northern Laos. Pic: AP.

Lying between China, Vietnam, Cambodia, Burma and Thailand, Communist-ruled Laos has moved off what economists like to call “a low base,” with the country’s economy averaging 7-8 percent gross domestic product growth, built on hydropower development – which has raised the hackles of international environmentalists – and a mining boom.

The ruling Lao People’s Revolutionary Party (LPRP) started opening slowly in the late 1980s, around the same time as neighboring Vietnam’s doi moi or renovation reforms got under way, in which a similar one-party Communist regime slowly liberalized parts of its economy. But despite the parallel paths, Vietnam’s much bigger economy – though recently struggling with slowing growth, graft scandals and inflation – is much more diversified than Laos’s, which remains one of the world’s poorest countries, with annual per capita gross domestic product by purchasing power parity of just US$2,700 per year, ranking it 177th in the world against Vietnam’s US$3,400.

In turn, Laos is trying to build a more sophisticated economy on the way to rising to lower middle income status and providing jobs outside of agriculture, which currently accounts for 75 percent of employment. Hydropower electricity sold to neighboring Thailand plays a major role in those plans.

However, three downstream governments – Vietnam, Cambodia and seven Thai provincial governments have in particular objected to the construction of the Xayaburi Dam, deep inside the mountains of northern Laos on the lower Mekong River. Their concerns are that the Mekong, which supports the largest freshwater fishery in the world, is being increasingly imperiled not just by the Xayaburi but 10 other structures planned for the Mekong, which originates in China and flows through Burma, Laos, Thailand, Cambodia, and Vietnam.

The opponents fear that the dams will wreck the fishery and imperil the lives of those who live below it. The river’s silt deposits provide rich soil nutrients for rice and other crops. It feeds a river basin populated by 60 million people. Environmentalists say anywhere between 23 and 100 fish species could be adversely affected.

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