The Lao government has rejected the findings of a UN report that claims the country’s economic model isn’t helping poverty and inequality.
Last week, the Lao government rejected the findings of a UN report that claimed the country’s development and investment policies are failing to reduce poverty and inequality.
The report by the UN Special Rapporteur on extreme poverty and human rights, Philip Alston, claims the country’s economic model has failed to create enough jobs and primarily benefited the upper class and elites while adding to the government’s ever-larger debt.
Alston’s report outlines the effects of the Lao government’s focus on resource extraction, large-scale infrastructure projects, land acquisition, and programs to attract foreign investment.
“Those living in poverty, ethnic minorities, and people in rural areas have seen very few of the benefits of the economic boom,” Alston said in a statement after visiting Laos in March. The Special Rapporteur also highlighted civil rights issues such as gender inequality and shrinking political space.
But the government of Laos has denounced the Rapporteur’s statements as “baseless allegations.” Instead, the government suggested its foreign investment policies are a vital part of its program to combat poverty and highlighted its progress to register civil society groups.
“In criticizing the development policy of the Lao Government, the Special Rapporteur has undermined the importance and value of the right to development which is being pursued by the Lao Government,” read a statement published by the Lao state-run news agency, Khaosan Pathet Lao (KPL).
Laos focuses on large infrastructure and development, but resettlement may worsen poverty
The country continues to struggle to combat poverty: 40% of the country’s rural population lives below the poverty line on less than US$1.90 per day. In urban areas, that figure falls to 10%. As much as 80% of the population lives on less than US$2.50 per day.
”The government invites foreign investment projects which in a sense pay rent to the government to exploit the country’s rivers and mineral resources and its land for cash-cropping,” Brian Eyler, Southeast Asia Program Director at the Stimson Center, told ASEAN Today.
As the government or foreign corporations develop the country’s resources, they relocate thousands of people, often from ethnic minorities—for projects like the Thai-backed Xayaburi dam, the China-Laos railway, and the Korean-backed Xe Pian Xe Nam Noy dam that collapsed last August. According to Eyler, the Lao government sometimes benefits from these resettlements as they provide a new industrial and agricultural labour force.
“Some resettlement outcomes are better than others, but there is not a single resettlement site in Laos that has restored livelihoods of affected people to a status equal to that of before people were moved.”
The Lao government began contesting the Special Rapporteur’s claims after his visit in March
On the Special Rapporteur’s visit to the country in March, he met with government representatives, civil society groups, and community members at a range of sites across the country, including the area in Attapeu province near the Xe Pian Xe Nam Noy dam site.
After Alston delivered an initial end-of-mission report, the government says it submitted corrections and comments, highlighting areas of progress in poverty reduction, human rights treaty obligations, and promoting civil society but that they were ignored.
The government contested the Special Rapporteur’s policy analysis, claiming that setbacks of natural disasters and last year’s dam collapse in Attapeu hindered progress on poverty alleviation efforts.
The government also cited the ongoing challenges of unexploded ordnance (UXO). Laos is the most heavily bombed country in the world and the KPL statement cites how UXO scattered across the country hinders local development, agriculture productivity, infrastructure building, and economic investment. According to Alston, the international community has a responsibility to rapidly clear UXO and support those impacted by it.
The Lao government contested some of the report’s statistics as well. It placed the proportion of households living in poverty at around 5%.
But Alston’s analysis is in line with findings of state-sponsored studies and some branches of the Lao government.
“My conclusions echo those of Lao PDR’s own institutions like the National Institute for Economic Research and members of the National Assembly.”
According to a 2018 study by the Lao Ministry of Planning and Investment and the University of Bern, corporate-led development is worsening wealth disparities in the country.
“The ongoing transfer of land from private households to companies is a major driver of new forms of poverty in rural areas, effectively creating an emerging class of landless poor,” said the study’s authors.
The UN has acknowledged the country’s progress: between 2003 and 2013, Laos halved the number of people living in poverty and doubled the number of people with access to electricity,
But the Special Rapporteur and other UN reports also highlight economic issues that the government often doesn’t publicise. The Special Rapporteur’s office has noted that the country’s two largest mines will close by 2021, significantly reducing the country’s revenue. Given the country’s debt burden, this could pose a challenge.
The Special Rapporteur’s report also laid out a path forward for Laos to address poverty and inequality, including steps to eliminate corporate tax loopholes and invest heavily in social support, health and education. It specifically called for the government to reevaluate its policies on hydropower, land concessions, and special economic zones (SEZs). Alston also highlighted the need for transparency, meaningful public participation, and empowerment of those living in poverty – especially those in Attapeu.
“The conditions of those affected by the Xe-Pian Xe-Namnoy dam collapse are highly unsatisfactory,” read the report. “Monthly allowances need to be increased and paid on time, the victims need to be genuinely consulted, fertile land needs to be provided and counselling made available.”