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Series: The Mekong Region and Japan Part 2: Laos (2) Economic Cooperation to The Lao PDR | Professor Motoyoshi Suzuki, PhD. Executive Adviser Ministry of Planning and Investment The Lao People’s Democratic Republic (PDR) [Date of Issue: 31/May/2012 No.0207-0844]

Date of Issue: 31/May/2012

Series: The Mekong Region and Japan Part 2: Laos (2)
Economic Cooperation to The Lao PDR

Professor Motoyoshi Suzuki, PhD.
Executive Adviser
Ministry of Planning and Investment
The Lao People's Democratic Republic (PDR)


The Fourth Mekong-Japan Summit Meeting was recently held in Tokyo, with Japan presenting to the Mekong countries a list of infrastructure projects that will cost approximately 2.3 billion yen. This should generate a strong mutual correlation effect in terms of the Lao PDR’s development.


In 1990, the year after the collapse of the Berlin Wall, I was posted to the Japanese Embassy in the Lao People's Democratic Republic, so I experienced the 1991 collapse of the Soviet Union from Vientiane. The Soviet Union’s Perestroika policy heralded the end of Soviet-style socialism, and in the Lao PDR this manifested as a rapid decline in economic and military assistance from the Soviet Union as of 1988 to vanish entirely in 1991.The key players taking over the role of the Soviet Union in assisting the Lao PDR were international institutions and Western countries, but Japan too has supported the development of the Lao PDR as the top donor from 1991 through to the present day. In terms of net expenditure, in 2009 Japan’s ODA to the Lao PDR was US$92.36 million, putting Japan in first place. Australia was second with US$29.61 million, Germany third with US$27.36 million and Korea fourth with US$25.14 million. Because China doesn’t release ODA statistics, international comparisons are difficult, but the Chinese presence is strong, including the Lao National Culture Hall on the main street, which was built by the Chinese government as a gift to Laos.

The Japanese government revised its policy on assistance for Laos as of April this year. While the Lao PDR set itself a high eight-percent growth target in the Seventh National Socio-Economic Development Plan, the country is also working to eliminate poverty, aiming to break out of the Least-Developed Country (LLDC) category by 2020. To support Laos in achieving its development goals, strengthen the integration and connectivity pursued by ASEAN, and rectify disparities within the country, Japan has identified economic and social infrastructure development, agricultural development and forest conservation, development of the education environment and human resource development, and improvement of health care and medical services as the four priority areas, focusing assistance even more tightly on promoting economic growth that is also environment-friendly. Below I provide a brief explanation of these four priority areas.

Looking first at economic and social infrastructure, to realize sustainable economic growth, Japan will provide assistance to develop infrastructure helping to strengthen ASEAN connectivity (roads, bridges, airports, etc.), improve trade and investment conditions to encourage Japanese companies to set up in Laos (logistics, etc.), rectify domestic disparities in access to electricity, and promote electricity exports by expanding the safe and stable supply of power. Assistance will also be provided to help build a comfortable society in harmony with the environment that can realize balanced economic development (environmental management, water purification plants, urban planning, etc.).

Turning to the second priority area, agricultural development and forest conservation, to stimulate the agricultural sector, which is a key industry in Laos, and increase the income of the farmers who comprise the bulk of the country’s poor, Japan will provide assistance toward boosting productivity through, for example, irrigated agriculture, and promoting the cultivation of commercial crops so as to lock in stable growth for the Laotian economy and correct the disparities arising between towns and the countryside arising from economic growth. To conserve forests and eliminate poverty, assistance will be provided toward the sustainable use of forest resources and improved livelihoods.

In the third priority area, which is development of the education environment and human resource development, to develop the human resources who will be the key to socio-economic development, Japan will support development of the education environment and improvement of the quality of education and school management. In elementary and secondary education, Japan’s assistance will be focused on maths and science education, where Japan has experience in assisting many countries. Assistance will also be given to tertiary education and technical and vocational training to help strengthen the private economy sector.

In the fourth priority area, improvement of health care and medical services, Japan will assist the development of medical human resources particularly in the area of maternal and child health to help achieve the Millennium Development Goals for health care.

Deputy Prime Minister Somsavath Lengsavad

Deputy Prime Minister Somsavath Lengsavad

Japan’s assistance to Laos is reflected in the visits of key figures to Japan. In March this year, Prime Minister Thongsing Thammavong came to Japan at the invitation of the Japanese government, while Deputy Prime Minister Somsavath Lengsavad visited Japan on 15-19 April, participating in a Lao investment seminar held in Kawasaki. Prime Minister Thongsing then came back to Japan to attend the Mekong-Japan Summit Meeting.

On 20 April, during his visit to Japan, Prime Minister Thongsing met with JICA President Akihiko Tanaka, expressing hope for cooperation in building bridges, power plants and airports, as well as in realizing the Vientiane Urban Development Master Plan created by JICA. The Prime Minister also noted his appreciation that the expansion of the Wattay Airport terminal undertaken by JICA using grant assistance would allow leaders from the various countries attending the Asia-Europe Meeting in November this year to arrive in large planes.

The Fourth Mekong-Japan Summit Meeting took place on 21 April at the State Guest House. Chaired by Prime Minister Noda, it was attended by Cambodian Prime Minister Samdech Techo Hun Sen, The Lao PDR Prime Minister Thongsing, Myanmar President Thein Sein, Thai Prime Minister Yingluck Shinawatra, and Vietnamese Prime Minister Nguyen Tan Dung. Leaders adopted the Tokyo Strategy 2012 for Mekong-Japan Cooperation. Prime Minister Noda also proposed three cooperation pillars to support the building of the ASEAN Community and achievement of the Millennium Development Goals (MDGs) by the target year of 2015, and to develop societies more resilient to natural disasters, which is a challenge shared by Japan and the Mekong region. The first pillar is ‘Enhancing Mekong Connectivity’, entailing assistance toward intra-regional connectivity.
Signing the cooperation agreement

Signing the cooperation agreement

The second is ‘Developing Together’, promoting trade and development toward the economic growth of the Mekong region. The third is ‘Ensuring Human Security and Environmental Sustainability’, addressing, for example, natural disasters and maternal and child health. The Japanese government also presented a list of some 57 specific infrastructure projects amounting to an estimated project value of 2.3 billion yen for the Mekong region to realize the above. In terms of ODA, which continues to play an important role in developing social foundations such as infrastructure and basic human needs, Prime Minister Noda announced that as of the next fiscal year, Japan will utilize yen loans, grant assistance and technical cooperation over three years to institute around 60 trillion yen in assistance. As far as the development of the Lao PDR goes, a far greater effect is likely to be achieved from working together with other Mekong River Basis countries in a coordinated effort rather than pursuing domestic development in isolation.

(original article : Japanese)

(For the Japanese version of this article)


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