BRI and SDGs progress in Lao PDR (Work in Progress)

Vanxay Sayavong

Researcher, National Institute for Economic Research (NIER)

National consultant, UN Department of Economics and Social Affairs

At Workshop on Assessing the Potential Impact of the Belt and Road Initiative on

sustainable Development Goals in Asian Economies. Organizers: UN DESA

And UN ESCAP

25-27 September 2019, Bangkok, Thailand

1

Background

2

14%

22.7%

32.1%

21.6%

7.9%

0.4%

9.8%

5.8%

National Poverty

• Many development indicators: poor in ASEAN

• Belt and Road Initiative (BRI) as the

alternative resource for development but

currently not well understood

• BRI may entail trade-offs between short-

term and long-term costs and gains within

various economic sectors and social groups.

• Its impact especially on SDGs.

Nepal

India

Bhutan

Bangladesh

China

24.3%

21.9%

25.2% 8.2% 3.1%Pakistan

Sri Lanka

24.3%

4.1%

• Long-term goals to upgrade Income Status.

• Low-middle-income to upper-middle income by

2030 (Lao PDR)

• Implemention of Sustainable Development

Goals (SDGs) is challenging

Natural disasters

Inequality

Beautiful Boten Special Economic Zone (Lao side-under construction) in Mohan-Boten Economic Cooperation Zone

Model of Vientiane Saysettha Development Zone

Selected projects under BRI Cooperation in Lao PDR

Laos-China railway project

Total Investment 5.9 billion USD or 35% of GDP

Timeline 2016-2021

Construction Distance 414 km,

Speed mountain: 160 km/h, flatland: 200 km/h, freight: 120 km/h

Stations 32 stations

Travel time (kunming to Vientiane)

10 hours (currently 24+by road)

Progress: 74.8% complete (July 2019)

Source: edited from Boten Economic Zone Office and google search

Potential Impact of Lao-China railway

• During construction:• Domestic value added: 174-290 million USD per

year

• Contribute to GDP growth: 0.4-1.0% per year.

• Construction materials are almost imported.

• Spill-over effects: Cement, electricity and others.

• Employment: 28,234 workers (July 2019).

• Provide training to workers

Source: Lao Statistics Bureau (LSB) but the projection for 2019

and 2020 is from the author

• After the complete of construction:• Lao export to China up 60% but more imports

• Increase of passengers via railway:

• 380,000-1,150,000 Chinese tourists

• Domestic passengers expected to pick up

• Transport, logistic and other services follow

• Employment: around 6,180 employees for railway operation

• Education: the establishment of railway college/university

2.6% 2.9%

1.3% 1.2% 1.5%

0.9%

1.0% 0.4%

-0.1%

1.9%1.8%

2.7%2.8%

2.9%

7.0% 6.9%6.3% 6.5%

6.8%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2016 2017 2018 2019_P 2020_P

Contribution to GDP Growth (%)

Agriculture Mining & Quarrying Electricity

Manufacturing Construction Lao-China Railway

Services Net tax GDP

In Local Communities: During Construction

Source of Photo: google search and a photo taken by the author

• Compensation and resettlement

• To 4,000 local households at 167 villages in 13 districts within 4 provinces

• Health

• Estimated 400 sex workers (HIV/AIDS or other transmission diseases)

• Limited local employment due to barrier of language

• 23,471 foreign workers

• 4,763 local workers

Pushing BRI towards SDGs in Laos: the case of railway project

Poor Performance Opportunity Risk

Goal 1: No povertyGoal 2: Zero hunger Goal 5: Achieving gender equalityGoal 7: Ensuring access to the affordable and clear energy Goal 9: Industry, innovation and infrastructureGoal 10: Reduced inequalities

Yes

YesYesYes

Yes

Yes

Good Performance Opportunity Risk

Goal 3: Ensuring good health and well-beingGoal 11: Sustainable cities and communitiesGoal 12: Responsible consumption and production Yes

YesYesYes

6

Source: The initial assessment by the author based on information from the report by ADB (2018, pp. 30–65) and author’s assessment

SDGs - No One Left Behind

Sustainable Development Goals (SDGs) in Lao PDR

Sustainable Development Goals (SDGs) in Laos

7

National SDG Goal 18: Lives Safe from Unexploded Ordnance (UXO)

• About 459 UXO booms and related 463.536 pieces in

2,931 ha had been cultivated during the construction of

Lao-China railway during January 2017-July 2019

Expected area of railway construction

• But 80 million bombs remain unexploded and many

people who lives in the outside of investment areas

under BRI

Source: edited from google search

Goal 17: Global Partnership

Chinese Official Development Assistance (ODA)

Education and related, 21%

Health and sanitation, 12%

Agriculture, 8%

Infrastructure, 47%

Technology and Science, 9%

Capacity Building, 5%

Chinese grant of 6.57 billion Yuan or

950 million USD (6.2% of GDP in

2017) for more than 1,100 projects• Indicator 17.9.1: financial and technical assistance to

developing countries • 46 million USD on average during 2000-2008 to 74.5 million USD annually

during 2009-2016

• Indicator of 17.19.1: value of all resources made available to strengthen statistical capacity in developing countries (current USD)

Source: Author summarizes the announcement letter from Lao prime minister’s office 2018Source: Photo taken by the author

Conclusion• Rapidly increase of activities (opportunities and challenges) under

BRI cooperation, the domestic capacity both public and private sectors? Transparency, accountability and efficiency.

• To maximize the opportunity and minimize the risk on SDGs particularly at the local communities.

• Requires strong political will

• Requires strong participation of local communities.

• Requires the intervention programs on health and environment at the local community

• Requires the social and environmental responsibility from firms

• Designing BRI towards SDGs and other national long term goals by 2030

• Especially the SDGs with poor performance and Goal 18 life save from UXOs

Source of Photo: google search

Thank you

Bangkok, ThailandVientiane, Lao PDR