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Communist Laos Looks to Capitalist ASEAN Trade Bloc for New Identity

This tiny Southeast Asian nation hopes to end its isolation but also fend off neighboring Thailand's influence

By Daniel Pruzin and Maya WeberSpecial to The Christian Science Monitor / September 4, 1996


Western-style capitalism is slowly making its presence felt in this tiny, landlocked Asian nation. The proof is in the cooking.

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In Vientiane, the sleepy capital of what is officially known as the Lao People's Democratic Republic, hungry diners now have two Italian restaurants to pick from when starved for tagliatelli or a slice of tiramisu.

A new coffee and pastry shop has also opened and even the cola wars have hit town, with locally bottled Pepsi holding an apparent edge over Coca-Cola imported from just over the Mekong River from the region's economic dynamo, Thailand.

Vientiane's once-quiet days are coming to an end. In mid-1997, Laos is expected to join the seven-nation Association of Southeast Asian Nations (ASEAN).

As it tries to raise its ranking from being one of the poorest countries in Asia, there seems to be no turning back for this one-party, authoritarian state. Still communist in name, the Lao People's Revolutionary Party has clearly opted for market forces and opened itself up to foreign investment.

From backwater status in the French colonial empire and political isolation from the West following the takeover in 1975 by the communist group known as Pathet Lao, Laos will suddenly be thrust into one of the world's most dynamic economic groupings, which includes Brunei, Indonesia, Malaysia, Singapore, the Philippines, Thailand, and Vietnam.

The 21st century express

Membership means that Laos will automatically subscribe to the ASEAN Free Trade Area (AFTA) agreement, which requires member countries to reduce tariffs on more than 40,000 manufactured and agricultural goods to a maximum of 5 percent by 2003. The decision could lead to wrenching economic changes for a country that is still nominally communist and where per capita gross domestic product is about $350.

"What we're seeing is a largely agrarian society trying to move into the 21st century in one decade," says Charles Jess, a commercial officer with the US Embassy in Vientiane.

How a rural-based nation of 4.6 million people can compete with ASEAN partners such as ultramodern Singapore (per capita income: $24,500) or Indonesia (population: 190 million) remains an open question. The primary concern here is Thailand, whose goods and investors have already flooded Laos as a result of closer ties and the opening of the Friendship Bridge - the first bridge across the lower Mekong River - in 1994.

"It's inevitable that Thailand will become the dominant player in Laos," claims a Western diplomat here. "Even without the bridge there's no doubt that Laos will become a part of the Thai economy."

Laotian authorities claim they are ready for the challenges of ASEAN. "We are convinced that we will surmount any difficulties and become a full member," declares Chaleum Yiapaoheu, a member of the ruling Lao People's Revolutionary Party's Central Committee. Yet both Laotian and foreign observers admit that the process will not be easy.

"Membership is a somewhat daunting proposition," notes the departing American ambassador to Laos, Victor Tomseth. "First of all it costs money. The ASEAN procedure is that all members pay dues.... [Oil-rich] Brunei can afford it, but for Laos it's a significant amount of money."

One basic problem is finding enough educated officials who can take an active role in the more than 200 official ASEAN meetings which take place each year. Only an estimated 15 percent of Laotian civil servants hold a university or technical school degree. "One important difficulty is the lack of manpower, [people] who fully understand friendly countries ... and have the proper education level," says Mr. Yiapaoheu. Another is the low number of officials who speak English, the official language of ASEAN.