- Gateway House - https://www.gatewayhouse.in -

Laos: balancing Asian powers

This is the third in a series about the ASEAN nations.

Lao People’s Democratic Republic (PDR), the Association of South East Asian Nations’ (ASEAN) only landlocked member-state, is now trying to turn ‘land-linked’. Surrounded by China and Myanmar in the north, Thailand in the west, Cambodia in the south and Vietnam in the east, it now has rail and road networks proliferating in its neighbourhood and hydropower linkages dotting the Mekong River, which forms a large part of its boundary with Thailand.

Laos, the former name for the most low-profile state in Indo-China,[1] has come a long way – from the Lao Kingdom of Lan Xang (evocatively translated as ‘Kingdom of a Million Elephants Under the White Parasol’, 1354-1707) to single-party rule by a communist government since 1975. The French connection lasted from 1893-1953, but uppermost in people’s minds is the violent civil war that followed, embroiling the country in the U.S.-Vietnam conflict in the 1960s and 1970s. Between 1964 and 1973, U.S. forces dropped two million tons of bombs on Laos. (This is the equivalent of the total tonnage of bombs dropped on Europe and Asia in World War II – or a ton of bombs per person in Laos.)

Laos now takes pride in its political stability, ethnic harmony – the country has 49 ethnic groups – and economic growth, which was 6.9% in 2017,[2] but the per capita income of $1,925 is still well below the ASEAN average of $4,219. It gets development assistance from the International Monetary Fund (IMF), United Nations Development Programme (UNDP), Asian Development Bank (ADB) and others while China, Thailand and Vietnam, its immediate neighbours, are its three biggest foreign investors.

Neighbourhood and beyond

The immediate neighbourhood also shapes its worldview: Laos and Cambodia are China’s closest partners in the ASEAN. China and Laos describe themselves as ‘neighbours, friends, partners and comrades’. At a meeting in May 2018, Xi Jinping, president and party general secretary of China, and his Laotian counterpart Bounnhang Vorachith, stressed that their nations together formed “the community of a shared future”:[3] the Belt and Road Initiative (BRI) in their midst was calling for close political cooperation, regular strategic communication and execution of numerous economic development projects. While welcoming Laotian PM Thongloun Sisoulith in China on 4 November 2018, Xi Jinping said that the bilateral relationship was “at its best in history”.[4]

Apart from being the largest foreign investor in Laos, China is a major trade partner, second only to Thailand.[5] Its flagship project is the planned construction of a high-speed railway connecting Kunming (China) to Singapore through Laos, Thailand and Malaysia. Scheduled to be completed in 2021, the regional rail network will unlock Laos and make it an integral part of the region. An economic research agency of the Laotian government has suggested setting up a free trade zone, logistics park, smart city, eco-city and hi-tech park along the 411-km rail route.[6]

Laos’ reliance on China is plain enough, but ASEAN does not lag far behind. Experts on the region point to how Laos seeks balance in its external relationships by nurturing bilateral relations, especially with its two ASEAN neighbours, Thailand and Vietnam. Laos makes use of ASEAN to play a wider role[7] and benefits from its Initiative for ASEAN Integration (IAI) whose focus is economic development of the CLMV region.[8] It is also an active member of the CLV[9] framework under which endeavours are underway to build integrated, sustainable and prosperous economies as an indispensable segment of ASEAN Community Vision 2025.[10]

Development work requires it to ally with both China and its ASEAN neighbours in the Greater Mekong Subregion (GMS), a tested mechanism of cooperation that brings together Thailand, China and the four CLMV countries. This has been operational since 1992 and has worked well in the transport, energy, telecommunications, environment, trade and tourism sectors.[11]

ASEAN apart, Japan and South Korea balance Laos’ over-reliance on China: Japan has been of particular assistance in infrastructure, agriculture and forestry, health and unexploded ordnance removal in Laos.

Relations with India

Friendship and cooperation characterise India-Laos relations. Buddhism is a strong bond that the two countries share, with about two-thirds of the nation’s population being followers. India was also Chairman of the International Commission for Supervision and Control (ICSC) on Indo-China.

India’s conscious outreach to South East Asia through its Act East Policy – Prime Minister Narendra Modi paid a visit in September 2016 – won appreciation in Laos. But the economic and development aspects of the relationship are limited. Bilateral trade, valued at $233 million in 2016-17, has declined since. Indian companies’ drive to invest in Laos has met with modest success, but the concessional credit assistance programme has resulted in the setting up of projects for rural electrification, irrigation and power transmission lines.[12] Of late, some efforts are underway to forge links between India’s north eastern states, such as Arunachal Pradesh and Manipur, and suitable stakeholders in Laos. Cooperation in targeted fields, such as education, culture and tourism, has been forged via a sub-regional track, the Mekong Ganga Cooperation (MGC).

Human resource development has been an area where India has filled gaps, setting up flourishing centres for entrepreneurship, English language teaching, Information Technology and rural telecommunications. But it has not been able to push ahead with establishing a centre for excellence in software development and training.

Strengthening India-Laos relations needs reflection and greater drive. External Affairs Minister Sushma Swaraj may be planning a visit to the country soon. This, then, is the time to focus on scaling up bilateral cooperation.

Rajiv Bhatia is Distinguished Fellow, Gateway House. A former ambassador to Myanmar, he comments regularly on developments in Southeast Asia.

This is the third in a series about the ASEAN nations.

This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

For interview requests with the author, or for permission to republish, please contact outreach@gatewayhouse.in.

© Copyright 2018 Gateway House: Indian Council on Global Relations. All rights reserved. Any unauthorized copying or reproduction is strictly prohibited.


[1] This is also called the CLMV region — Cambodia, Laos, Myanmar and Vietnam.

[2]The country is rich in natural and mineral resources and a significant rice producer.

[3] Ministry of Foreign Affairs of the People’s Republic of China, Xi Jinping holds talks with General Secretary of the LPRP Central Committee and President Bounnhang Vorachithh of Laos, 30 May 2018, <https://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1565083.shtml>

[4] Xinhua, Global Times, Xi meets Lao prime minister, 4 November 2018, <http://www.globaltimes.cn/content/1125859.shtml>

[5] In 2017, the top three trading partners of Lao PDR were Thailand ($5.3 billion), China ($2 billion) and Vietnam (1.72 billion).

[6] Xinhua, Lao think tank suggests to maximize Laos-China railway, 6 November 2018, <http://www.xinhuanet.com/english/2018-11/06/c_137586120.htm>

[7] Sitthirath, Vannaphone, Reporting ASEAN, Looking for ASEAN in Lao PDR, 18 October 2018, <http://www.aseannews.net/looking-asean-lao-pdr/>

[8] For details, please see Association of South East Asian Nations, Initiative For ASEAN Integration (IAI) Work Plan III, 13 September 2016, <https://asean.org/?static_post=initiative-asean-integration-iai-work-plan-iii>

[9] This stands for Cambodia, Laos and Vietnam.

[10] Nhan Dan, Cambodia, Laos, Vietnam vow to further deepening comprehensive cooperation, 31 March 2018, <http://en.nhandan.com.vn/politics/item/5993302-cambodia-laos-vietnam-vow-to-further-deepening-comprehensive-cooperation.html>

[11] Nari, Swaroopini, The ASEAN Post, Lao makes its mark on the Mekong river, 11 November 2017, <https://theaseanpost.com/article/lao-makes-its-mark-mekong-river>

[12] For details, please see Ministry of External Affairs, Goverment of India, India-Laos Relations, <http://www.mea.gov.in/Portal/ForeignRelation/Laos_October_2017.pdf>