Identifier
Created
Classification
Origin
08VIENTIANE202
2008-03-31 10:03:00
CONFIDENTIAL
Embassy Vientiane
Cable title:  

PLANNED CHINESE DEVELOPMENT IN VIENTIANE GENERATES

Tags:  PREL ECON EINV SOCI LA CH 
pdf how-to read a cable
VZCZCXRO8798
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHVN #0202/01 0911003
ZNY CCCCC ZZH
R 311003Z MAR 08
FM AMEMBASSY VIENTIANE
TO RUEHC/SECSTATE WASHDC 1936
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBJ/AMEMBASSY BEIJING 2286
RUEHCN/AMCONSUL CHENGDU 0238
RUEHGZ/AMCONSUL GUANGZHOU 0172
RUEHHK/AMCONSUL HONG KONG 7819
RUEHGH/AMCONSUL SHANGHAI 0020
RUEHSH/AMCONSUL SHENYANG 0058
RHHMUNA/CDR USPACOM HONOLULU HI
C O N F I D E N T I A L SECTION 01 OF 03 VIENTIANE 000202 

SIPDIS

SIPDIS

STATE FOR EAP/MLS (BESTIC)
STATE PASS USTR FOR BISBEE
PACOM FOR POLAD

E.O. 12958: DECL: 03/30/2018
TAGS: PREL ECON EINV SOCI LA CH
SUBJECT: PLANNED CHINESE DEVELOPMENT IN VIENTIANE GENERATES
A QUIET BACKLASH

VIENTIANE 00000202 001.2 OF 003


Classified By: CDA Mary Grace McGeehan for reasons 1.4 (b) and (d)

C O N F I D E N T I A L SECTION 01 OF 03 VIENTIANE 000202

SIPDIS

SIPDIS

STATE FOR EAP/MLS (BESTIC)
STATE PASS USTR FOR BISBEE
PACOM FOR POLAD

E.O. 12958: DECL: 03/30/2018
TAGS: PREL ECON EINV SOCI LA CH
SUBJECT: PLANNED CHINESE DEVELOPMENT IN VIENTIANE GENERATES
A QUIET BACKLASH

VIENTIANE 00000202 001.2 OF 003


Classified By: CDA Mary Grace McGeehan for reasons 1.4 (b) and (d)


1. (C) Summary: A public controversy -- a rare thing in
Laos -- is brewing over government plans to give a Chinese
firm a large 1600-hectare concession near the revered That
Luang monument close to the Vientiane city center. Although
originally described as a location for 2,000-3,000 workers
(and their families) constructing facilities for the 2009
Southeast Asia (SEA) games, rumors soon spread that up to
50,000 Chinese families would settle in the development.
This has spurred Lao anxieties about a large-scale permanent
influx of Chinese workers. In response, Deputy Prime
Minister (DPM) Somsavat Lengsavad, who is ethnically half
Chinese and is considered close to the Chinese government,
took the highly unusual step of giving a press conference to
"dispel rumors" about the project. Somsavat acknowledged
that the land concession was an explicit quid pro quo for the
construction of a stadium for the SEA games. He noted
however that any Lao with sufficient money will be able to
purchase property or a business area within the concession,
and stated that there will be no favoritism given to Chinese
citizens. Since the press conference, contacts have reported
continued unhappiness about the project among local
residents, and the mayor of Vientiane has publicly
acknowledged environmental concerns and described aspects of
the project designed to address those concerns. End Summary.


2. (C) In September 2007 rumors began to reach the Embassy
that the Lao Government (GOL) was going to allow a large
number of ethnic Chinese workers to move to Vientiane in an
area near That Luang. The That Luang stupa is the cultural
and religious heart of the nation. The That Luang marsh also
has a strong cultural association with the Lao because of
pre-1975 traditions. The marsh was the site of a traditional

royal ceremony in which the Lao kings came by royal barge to
the That Luang stupa in an annual procession well remembered
by older members of the local population.


3. (U) In October 2007 The Nation, a Bangkok newspaper,
reported rumors that 2,000-3,000 Chinese workers would be
allowed to move to Vientiane to work on the stadium for the
December 2009 SEA games. In November 2007 a number of
articles in the Vientiane Times and KPL News, the two English
language newspapers in Laos, discussed the planned conversion
of the That Luang marsh--a several hundred hectare wetland
near That Luang itself--into a special economic zone by a
Chinese company. A Lao project manager for the stadium --
which is being constructed by Chinese workers -- denied
rumors that the marsh was being handed over to Chinese firms
as a quid pro quo for development of the stadium, although
KPL news reported that he did confirm that 3,000 Chinese
workers would be living on land to be developed for that
purpose.


4. (C) Following publication of the articles, rumors spread
that a much larger number of Chinese workers would be allowed
to settle in the area -- up to 50,000 families. The
Vientiane Times reported in October that the Lao government
had originally offered the Chinese land closer to the
stadium, but that the Chinese rejected this plot as being too
far from the city center. (The stadium is located 20 minutes
by car from the city center). The That Luang marsh area was
selected instead, and plans developed to turn about 1600
hectares in and around the marsh into a mixed use residential
and business development. According to an official at the
Singaporean Embassy (protect),popular resentment within the
Lao community originally caused the government to withdraw
the offer of land at the marsh and to offer another large
plot to the Chinese developer. The Singaporean diplomat
indicated that DPM Somsavat had intervened to have this
decision reversed after the developer rejected the
alternative plot of land as too remote. The Deputy Prime
Minister, who served as Foreign Minister from 1993 to 2006,
is ethnically half Chinese and is widely regarded as being
close to the Chinese government.


5. (C) On February 11, DPM Somsavat gave a press conference
to "dispel rumors" that the government had entered into an
agreement with a developer to bring in 50,000 Chinese
families to live in the marsh area. He said that the

VIENTIANE 00000202 002.2 OF 003


government had awarded the development to a joint venture
between a Lao company (which would hold a five percent share)
and a Chinese company that had successfully developed the
Suzhou Industrial Park in China. This would be a 50-year
concession after which the developed property would be handed
over to the Lao government. (Note: It is illegal for
foreigners to own land in Laos. End note.) According to DPM
Somsavat, any Lao with sufficient money will be able to
purchase property or a business area within the concession,
and there will be no favoritism given to Chinese citizens.
Somsavat said that the project had originated when the Lao
government was seeking funding for the building of the SEA
games stadium. He had met with the governor of the Chinese
Development Bank, who offered to find a company to lend money
for the building of the stadium, with the quid pro quo that
the Lao government would offer a suitable piece of land for a
joint venture. The That Luang marsh was the agreed-upon
site.


6. (C) Since Laos's communist government rarely feels the
need to explain its actions to the public, this was a highly
unusual step. According to numerous Embassy sources, the
press conference came as resentment continued to build among
the Lao population in Vientiane and spread even to distant
provinces. While there had not been any open political
protest, public unhappiness with the planned development--or
at least its rumored contours--had been enough to cause the
government to hold a press conference featuring the DPM and
devote two consecutive days of front-page newspaper coverage
to the issue. Critics noted that several hundred families
were currently living in the area and would need to be
relocated. Most families there probably do not have legal
title to the land they occupy and residents seem anxious that
they will receive little or no compensation if forced to
resettle. The Vientiane Times reported in more detail
February 13 on the government,s compensation plan,
describing four categories of people who would be
compensated, based upon their legal title and previous
development of the land. Current land owners will, according
to the government, be compensated for their losses of land
"in accordance with the law." Of note was the DPM,s
reported comment that the government would offer "only
reasonable compensation, rather than the amount being
demanded by the landowners." (Comment: The expropriation of
land with no or minimal compensation is common in Laos and is
a leading source of discontent with the government. An
Embassy employee had a farm, on which he had paid taxes since
1982, expropriated without payment for the construction of
the SEA Games stadium. End Comment.)


7. (C) According to a March 21 Vientiane Times article, Dr.
Sinlavong Khoutphaythoune, the mayor of Vientiane,
acknowledged environmental concerns about the project in an
interview with Japanese journalists. He noted that the marsh
had in fact been shrinking for most of the past century,
leaving only a small wetland area remaining, and claimed that
population growth in that area and the resulting loss of the
wetlands could be responsible for flooding in Vientiane
during the rainy season in recent years. Dr. Sinlavong said
that plans for the area also call for a "large pond" capable
of holding 70 days of rainfall, which is intended to replace
the flood abatement role of the marsh. Other reports
clarified that approximately 450-600 hectares of land will be
used to store water, with the remainder developed for
industrial, retail, and residential use. (Note: Another
recent Vientiane Times article celebrated the recent
completion of Vientiane,s sixth drainage canal. It, like
the other five, drains directly into the That Luang marsh.
Vientiane currently lacks a water treatment system. End
Note.)


8. (C) The controversy over the marsh development is a
subject of intense interest among Vientiane's international
community. One expatriate Embassy contact noted in early
February that he had never seen so many locals upset. He
pointed out that a video of the marsh had been posted on
YouTube; it ends with a number of Chinese trucks driving into
the picture. Some sources said that a march to "Save the
Marsh" was also being considered. This would not be a
political protest march but instead would stress the

VIENTIANE 00000202 003.2 OF 003


ecological role the marsh plays in absorbing water and
preventing flooding in Vientiane. Still, such an action
would be highly unusual here and participants would risk
arrest. Another expatriate contact with long ties to Laos
noted that many war veterans are upset with the concession
and predicted the decision to locate the Chinese in the marsh
area would be reversed or that the scale of the concession
would at least be sharply reduced.


9. (C) Comment: Numerous Embassy sources have commented on
the That Luang development as being something of a catalyst
for the Vientiane population. The role of Chinese companies
in moving farmers off their land to make way for plantation
development, especially in the north, was already a matter of
concern to many Lao. The government has made efforts over
the past year to reform the land allocation and concession
process to help reduce the number of people negatively
impacted by concessions. However, the That Luang development
appears to have crystallized discontent among the Vientiane
population with the leadership's willingness to give land and
influence to China or other regional investors. The
government's highly unusual public acknowledgement of
concerns about the planned development, and its efforts to
justify it, shows that official realize that they have
touched a nerve among the usually compliant population. This
has not been enough, at least so far, to reverse the granting
of the land concession. However, it is likely that this
issue is the subject of ongoing debate within the government
and the party, as pro-Chinese officials press for a
large-scale concession and others warily monitor public
reaction.
McGeehan