China just became the biggest investor in Laos, and Laos’s neighbors are worried

China just became the biggest investor in Laos, and Laos’s neighbors are worried

By Adam Pasick @adampasick January 30, 2014

Land-locked Laos is one of the poorest countries in the world, but it has one thing in abundance: access to the massive Mekong River. The country’s hydropower potential has earned it the nickname “the Battery of Asia” and made it a magnet for investment from its neighbors: Thailand, southeast Asia’s second-biggest economy; Vietnam, a strategic Communist ally since the 1970s; and China, which is writing checks that put the rest to shame.

Guan Huabing, Beijing’s ambassador to Laos, announced today (Jan. 30) that China’s cumulative investment in Laos now stands at $5.1 billion, edging out Thailand and Vietnam. China is also building a controversial railroad linking its Yunnan province to the Lao capital Vientiane, at a cost of $7.2 billion that it is loaning to Lao government—equivalent to 75% of the Lao GDP.

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China’s increasing influence has long been a worry for Vietnam. It “feels threatened” by its increasingly marginalized role in Laos, according to a letter last year from the Vietnamese Communist Party to its Laotian counterpart that wasobtained by Radio Free Asia. And there is more to be lost than just political influence: Laos is upstream of Vietnam, Thailand, and Cambodia on the Mekong, so any dams that it builds there with Chinese assistance could have dire consequences for its neighbors.

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Dams built on the Laotian Mekong could affect Laos’s downstream neighbors.Mekong Tourism Coordinating Office

Of the nine dams being planned in the Laotian Mekong, Chinese developers and investors have interest in at least four, according to East Asia Forum, along with at least half of the 63 dams being planned on the Mekong’s many tributaries (the government lists its planned projects here). Environmental groups and Western governments have warned that poorly planned dams could cause untold damage to the region’s economy.

When US secretary of state John Kerry visited the region in December, he said: “No one country has the right to deprive another country of the livelihood and eco-system and its capacity for life itself that comes with that river. … That river is a global asset, a treasure that belongs to the region.”

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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