Lao Government Issues Long-Awaited Decree on Associations

UNCLAS SECTION 01 OF 04 VIENTIANE 000291

SENSITIVE

SIPDIS

DEPT FOR EAP/MLS John Emery
DEPT FOR IIP Jenifer Bochner
DEPT FOR G/DRL

E.O. 12958: N/A
TAGS: PGOV PHUM PREL SOCI SCUL LA

SUBJECT: Lao Government Issues Long-Awaited Decree on Associations

REF: 08 Vientiane 456


1. (SBU) Summary. The Prime Minister's Office has officially
released the text of the new decree on the formation of non-profit
associations in Laos, opening the door for Lao-run civil society
organizations to register legally. Issued on April 29th, the decree
will permit the formation of non-profit organizations to an
unprecedented degree. Although the decree does mandate a great deal
of administrative control by the Public Administration and Civil
Service Authority (PACSA),such regulation may in fact help
strengthen the new associations by institutionalizing norms for good
governance and fiscal controls from the outset. International
observers are by and large very positive about the decree, while
potential Lao association organizers are more cautious.
WorldCONCERN and UNDP have both led programs working with PACSA to
define terms, establish parameters, and recommend language to make
this decree compatible with international standards for
non-governmental associations. To a large extent, they have
succeeded. As is often the case with Laos, however, the devil will
be in the details; impressive appearing legislation is not always
implemented the way the Western observers expect. End summary.

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The Old World
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2. As described in reftel, civil society in Laos is small and has
little influence. Organizations were previously allowed to register
only for limited purposes such as sustainable development or
agricultural projects. Associations were allowed to form as long as
they were "sponsored," in effect, by a Government of Laos (GOL) or
Communist Party organization. The Lao Bar Association, for example,
comes under the supervision of the Ministry of Justice.
Well-connected individuals who wanted to register an organization
for non-political purposes could often find a sponsor within the
government, but there was no transparent mechanism for a civil
society organization to form and to register.


3. The pre-requisites of civil society as the Western community
understands them, namely guaranteed freedom of association,
expression, and media, are not present. Groups that have registered
appear to have little interest in political advocacy or attempting
to change the status quo in any significant way; the primary goal of
most organizations seems to be disseminating information to a wider
audience. Almost inevitably, the information is drafted and
disseminated in tandem with GOL goals.

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The New World
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4. Under the new decree, applicants must overcome a set of
administrative hurdles in order to receive formal registration from
the GOL. Under this process - assuming all deadlines are met but no
one works faster than they must - registration will take
approximately 7-8 months. For Laos, the steps are set to occur
relatively rapidly. (NOTE: It is not uncommon for international NGOs
to spend one or two years securing a Memorandum of Understanding
that permits them to work in Laos.)


5. According to the decree, non-profit associations (NPAs) may be
formed as long as they are consistent with the constitution, local
and ethnic traditions, and do not threaten national stability or the
social order. Founders must be Lao citizens over age 18. The
association must have a charter, office, a yet-to-be-defined level
of assets, and a set number of members depending on whether the
association is national, provincial, or at the village level.
Associations may be economic; professional, technical and creative;
social welfare; and "other."


6. To incorporate legally, the association founder must have a
"mobilization committee" that drafts the required documents and
submits them to PACSA, or to local authorities if not a national
association. Documents must include the association's proposed
charter; personal history, certificate of residence, police record
and diplomas of the mobilization committee members; list of
association members; and certification of the office. (Note:
Article 15 of the decree also lists what must be in the charter.)


7. Within 30 days, PACSA or the local authorities must issue a
temporary license or reject the application. Once the temporary
license is received, the mobilization committee is dissolved and the
association's general assembly (of all members) must elect executive
and control boards, approve the charter, and draft a work plan
within 90 days. After the general assembly has met, the
association's new executive board has 30 days to send the report on

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the assembly's outcome, revised charter, minutes of the assembly,
work plan and any other resolutions to PACSA or the relevant local
authority. Within 60 days of receiving the general assembly
reports, the relevant authority must approve or disapprove of the
charter. If the charter is not approved, the authority must provide
"clear and complete explanations in writing" to the association.


8. The decree also describes the duties of each of the
association's boards and officers, the types of members, required
meetings, how to dissolve a registered association, and asset and
financial management (including a provision that limits gross
overhead costs to no more than 25% of the association's planned
expenditures). Associations are also required to submit annual
reports on both activities and finances.


9. The decree will go into effect 180 days after signing, which
will be October 29, 2009. Associations incorporated and operating
prior to this decree's date will have 90 days after October 29 to
apply for re-incorporation under the terms of this decree.

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There Be Dragons - Lost Continents
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10. International observers and consultants have been working
closely with PACSA to draft the decree, and will now be working to
ensure that the guidelines for implementation are not so burdensome
that they make practical application of the decree impossible.
CONCERN's staff members continue to be optimistic about the
guidelines, but admit there are some serious holes in the decree
that will have to be cleared up during the course of drafting the
application forms and specific rules for implementation. PACSA -
which knows it must be ready to accept applications on October 29 -
is already working on those rules.


11. For example, the decree states that the association must have
permission from the "relevant sectors," but does not set out exactly
how that permission should be obtained. PACSA apparently intends to
be the one-stop shop for NPA registration, allowing applicants to
deliver all the forms to the PACSA office for distribution to the
"relevant sectors" as defined by PACSA's interpretation of the
applicant's area of work. However, line ministries and other
organizations may insist on having applications submitted directly
to them, which creates another level of bureaucracy and the
potential for additional political influence and delays to an
already burdensome process.


12. In fact, the approval process from start to finish is as yet
unclear. CONCERN hopes that PACSA will be allowed to assume a
positive response if the deadlines with other offices and agencies
expire and no objection is formally registered, but that has not yet
been finalized. (Note: It would also not be consistent with general
GOL practice. End note.) The GOL also must approve changes to
association staffing, funding, and other administrative details, but
it is not clear that an NPA would have to formally submit a request
for every staff change prior to making a personnel shift, or would
be able to document all such changes in an annual report. The
contents of the annual report and the reporting requirements for
registered NPAs are also still unclear.


13. Finally, there is still no answer on how funding will be
approved, especially if the donors are not Lao. Currently, the
Ministry of Foreign Affairs says it must approve all foreign
donations to Lao NPAs and objects to allowing PACSA to approve such
financing. CONCERN staff hope the Prime Minister's office can
overcome the MFA's resistance in order to streamline the process,
ensure greater transparency, and keep all NPA-related administration
within PACSA.


14. The decree also assumes that associations will be staffed by
full-time workers with some kind of "membership" at large; have an
office; have specific projects to run; and be funded. Associations
such as alumni groups or professional associations are unlikely to
wish to register under this decree, because usually such
organizations are little more than ad-hoc groups of like-minded
individuals together for irregular contact and perhaps the
occasional conference. The PAO's enthusiasm for establishing a real
Lao Fulbright Alumni Association, for instance, was quashed as soon
as she read the terms of the decree.

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Will the Emperor Have New Clothes?
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15. CONCERN staff estimate that as many as 60-70 groups will wish
to register shortly after the decree goes into effect on October 29,

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2009, split more or less evenly between "new" associations and those
that were previously legally established through other mechanisms,
such as the LUSEA decree (see reftel). In theory, they will
apparently be required to re-register within 90 days or risk losing
their formal recognized status. "New" associations will include
groups formed and active but not previously registered; and small
organizations currently operating as parts of legally-registered
international NGOS, but that have in effect become independent units
operating under the NGO's umbrella MOU. The Gender Development
Group operating under CONCERN's wing is one such organization.
Their future founder is already working to establish the required
boards and membership so that the group is prepared to submit
paperwork as soon as the doors are open.


16. More established Lao nonprofits are less anxious to change
their status, and far more sanguine about the threat of losing their
current sponsors or permissions. The Participatory Development
Training Center (PADETC),established 10 years ago under the
auspices of the Ministry of Education, has no intention of filing
paperwork to register under this new decree, according to their
deputy director. "The current system works well for us," he said
carefully, "and we expect the new system to remain somewhat
flexible." He also noted, however, that PADETC is fully prepared to
encourage new Lao NGOs to register, and will share its experience
with boards and accounting and governance procedures.


17. PADETC - well-connected and well run - may well be correct; it
is unlikely that PACSA will succeed in breaking more established
rice bowls when the decree goes into effect. Organizations with
established reputations and a good linkage to their current
supervisory organization may see no need to mess with their
governance and perhaps unduly burden themselves with new
administrative constraints unless they are forced to do so by their
legal hosts. Post expects that would be unlikely in the case of
organizations like PADETC, which bring in money and consultants and
support to the Ministry of Education; and perhaps for the Lao Bar
Association, where the Ministry of Justice may see a good reason to
continue to oversee, however lightly, the activities of the 100
lawyers in the country who do not work directly for the GOL.

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Explorers Needed
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18. International NGO advisor and consultant Julia Demichelis, in
Vientiane on a previously-arranged Strategic Speaker Initiative
program on civil society for the Public Diplomacy Section, told a
group of Lao NGO workers that while the new decree may look
burdensome, it was in fact well in line with international best
practices. She noted that civil society has just as much temptation
for corruption and poor management as other sectors, and good
governance from the beginning will help strengthen the associations
who can comply with these rules. She encouraged the groups, who
represented associations large and small, Lao and international, to
share best practices and consult with one another on issues as they
came up. Two participants began a conversation during the break on
sharing accounting databases and donor requirements, wondering
whether their current systems will be sufficient for the new rules.
Implementing the decree, they agreed, will be a new experience for
all sides, but "great"...if it works.


19. Comment: This decree on Lao non-profit associations is clearly
a step in the right direction for a government that has resisted the
idea of ceding influence to other organizations, especially Lao
organizations, whose leaders cannot be summarily deported. Post
expects that there will be a rush of new, smaller, focused
organizations that hurry to register, often with significant support
and backing from an interested foreigner or three.


20. Comment continued: It also appears - at least at present -
that the GOL will encourage the formation of such associations to
take on some of the work it is increasingly expected to support by
the growing and increasingly educated and urbanized population, but
does not have the resources to undertake. An article in the
Vientiane Times on June 8 says the GOL intends to "hand over more
development projects to non-government organizations," according to
an interview with State Administration and Development Department
Deputy Director General Ampha Simmasone. The idea, according to
him, is to "reduce the burden on state agencies by delegating work
to social organizations." He said that the government intends to
allow those organizations to accept international funding, and will
provide "some tax relief" as an incentive. If true, and the GOL
does indeed manage to establish a clear, transparent, system with
institutionalized governance norms, it may well open the doors to a
much larger, livelier and more effective civil society.
International donors, Post hears, are waiting in the wings with open

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wallets. New organizations may find themselves with more attention,
funding, and offers of assistance than they can initially support.


HUSO