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Laos

Background: In 1975 the communist Pathet Lao took control of the government, ending a six-century-old monarchy. Initial closer ties to Vietnam and socialization were replaced with a gradual return to private enterprise, an easing of foreign investment laws, and the admission into ASEAN in 1997.
Government type: Communist state
Capital: Vientiane
Currency: 1 kip (LAK)  = 100 at

Geography of Laos

Location: Southeastern Asia, northeast of Thailand, west of Vietnam
Geographic coordinates: 18 00 N, 105 00 E
Area:
total: 236,800 sq km
land: 230,800 sq km
water: 6,000 sq km
Land boundaries:
total: 5,083 km
border countries: Burma 235 km, Cambodia 541 km, China 423 km, Thailand 1,754 km, Vietnam 2,130 km
Coastline: 0 km (landlocked)
Climate: tropical monsoon; rainy season (May to November); dry season (December to April)
Terrain: mostly rugged mountains; some plains and plateaus
Elevation extremes:
lowest point: Mekong River 70 m
highest point: Phou Bia 2,817 m
Natural resources: timber, hydropower, gypsum, tin, gold, gemstones
Land use:
arable land: 3%
permanent crops: 0%
permanent pastures: 3%
forests and woodland: 54%
other: 40% (1993 est.)
Irrigated land: 1,250 sq km (1993 est.)
note: rainy season irrigation – 2,169 sq km; dry season irrigation – 750 sq km (1998 est.)
Natural hazards: floods, droughts, and blight
Environment – current issues: unexploded ordnance; deforestation; soil erosion; a majority of the population does not have access to potable water
Environment – international agreements:
party to:  Biodiversity, Climate Change, Desertification, Environmental Modification, Law of the Sea, Nuclear Test Ban, Ozone Layer Protection
signed, but not ratified: none of the selected agreements
Geography – note: landlocked; most of the country is mountainous and thickly forested; the Mekong forms a large part of the western boundary with Thailand.

People of Laos

Laos’ population was estimated at about 5.6 million in 2001, dispersed unevenly across the country. Most people live in valleys of the Mekong River and its tributaries. Vientiane prefecture, the capital and largest city, had about 569,000 residents in 1999. The country’s population density is 23.4/sq. km.

About half the country’s people are ethnic Lao, the principal lowland inhabitants and politically and culturally dominant group. The Lao are descended from the Tai people who began migrating southward from China in the first millennium A.D. Mountain tribes of Miao-Yao, Austro-Asiatic, Tibeto-Burman–Hmong, Yao, Akha, and Lahu–and Tai ethnolinguistic heritage are found in northern Laos. Collectively, they are known as Lao Sung or highland Lao. In the central and southern mountains, Mon-Khmer tribes, known as Lao Theung or midslope Lao, predominate. Some Vietnamese and Chinese minorities remain, particularly in the towns, but many left in two waves–after independence in the late 1940s and again after 1975.

The predominant religion is Theravada Buddhism. Animism is common among the mountain tribes. Buddhism and spirit worship coexist easily. There also is a small number of Christians and Muslims.

The official and dominant language is Lao, a tonal language of the Tai linguistic group. Midslope and highland Lao speak an assortment of tribal languages. French, once common in government and commerce, has declined in usage, while knowledge of English–the language of the Association of Southeast Asian Nations (ASEAN)–has increased in recent years.

Population: 6,217,141 (July 2005 est.)
Age structure:
0-14 years:  42.75%
15-64 years:  53.94% 
65 years and over:  3.31%
Population growth rate: 2.48% 
Birth rate: 37.84 births/1,000 population 
Death rate: 13.02 deaths/1,000 population 
Net migration rate: 0 migrant(s)/1,000 population 
Infant mortality rate: 92.89 deaths/1,000 live births 
Life expectancy at birth:
total population:  53.48 years
male:  51.58 years
female:  55.44 years 
Total fertility rate: 5.12 children born/woman 
Nationality:
noun: Lao(s) or Laotian(s)
adjective: Lao or Laotian
Ethnic groups: Lao Loum (lowland) 68%, Lao Theung (upland) 22%, Lao Soung (highland) including the Hmong (“Meo”) and the Yao (Mien) 9%, ethnic Vietnamese/Chinese 1%
Religions: Buddhist 60%, animist and other 40%
Languages: Lao (official), French, English, and various ethnic languages
Literacy:
definition: age 15 and over can read and write
total population: 57%
male: 70%
female: 44% (1999 est.)

History of Laos

Laos traces its first recorded history and its origins as a unified state to the emergence of the Kingdom of Lan Xang (literally, “million elephants”) in 1353. Under the rule of King Fa Ngum, the wealthy and mighty kingdom covered much of what today is Thailand and Laos. His successors, especially King Setthathirat in the 16th century, helped establish Buddhism as the predominant religion of the country.

By the 17th century, the kingdom of Lan Xang entered a period of decline marked by dynastic struggle and conflicts with its neighbors. In the late 18th century, the Siamese (Thai) established hegemony over much of what is now Laos. The region was divided into principalities centered on Luang Prabang in the north, Vientiane in the center, and Champassak in the south. Following its colonization of Vietnam, the French supplanted the Siamese and began to integrate all of Laos into the French empire. The Franco-Siamese treaty of 1907 defined the present Lao boundary with Thailand.

During World War II, the Japanese occupied French Indochina, including Laos. King Sisavang Vong of Luang Prabang was induced to declare independence from France in 1945, just prior to Japan’s surrender. During this period, nationalist sentiment grew. In September 1945, Vientiane and Champassak united with Luang Prabang to form an independent government under the Free Laos (Lao Issara) banner. The movement, however, was shortlived. By early 1946, French troops reoccupied the country and conferred limited autonomy on Laos following elections for a constituent assembly.

Amidst the first Indochina war between France and the communist movement in Vietnam, Prince Souphanouvong formed the Pathet Lao (Land of Laos) resistance organization committed to the communist struggle against colonialism. Laos was not granted full sovereignty until the French defeat by the Vietnamese and the subsequent Geneva peace conference in 1954. Elections were held in 1955, and the first coalition government, led by Prince Souvanna Phouma, was formed in 1957. The coalition government collapsed in 1958, amidst increased polarization of the political process. Rightist forces took over the government.

In 1960, Kong Le, a paratroop captain, seized Vientiane in a coup and demanded formation of a neutralist government to end the fighting. The neutralist government, once again led by Souvanna Phouma, was not successful in holding power. Rightist forces under Gen. Phoumi Nosavan drove out the neutralist government from power later that same year. Subsequently, the neutralists allied themselves with the communist insurgents and began to receive support from the Soviet Union. Phoumi Nosavan’s rightist regime received support from the U.S.

A second Geneva conference, held in 1961-62, provided for the independence and neutrality of Laos. Soon after accord was reached, the signatories accused each other of violating the terms of the agreement, and with superpower support on both sides, the civil war soon resumed. Although the country was to be neutral, a growing American and North Vietnamese military presence in the country increasingly drew Laos into the second Indochina war (1954-75). For nearly a decade, Laos was subjected to extremely heavy bombing as the U.S. sought to destroy the Ho Chi Minh Trail that passed through eastern Laos.

In 1972, the communist People’s Party renamed itself the Lao People’s Revolutionary Party (LPRP). It joined a new coalition government in Laos soon after the Vientiane cease-fire agreement in 1973. Nonetheless, the political struggle between communists, neutralists, and rightists continued. The fall of Saigon and Phnom Penh to communist forces in April 1975 hastened the decline of the coalition in Laos. Months after these communist victories, the Pathet Lao entered Vientiane. On December 2, 1975, the king abdicated his throne in the constitutional monarchy, and the communist Lao People’s Democratic Republic (LPDR) was established.

The new communist government imposed centralized economic decisionmaking and broad security measures, including control of the media and the arrest and incarceration of many members of the previous government and military in “re-education camps”. These draconian policies and deteriorating economic conditions, along with government efforts to enforce political control, prompted an exodus of lowland Lao and ethnic Hmong from Laos. About 10% of the Lao population sought refugee status after 1975. Many have since been resettled in third countries, including more than 250,000 who have come to the United States.

Over time, the Lao Government closed the re-education camps and released most political prisoners. From 1975 to 1996, the U.S. resettled some 250,000 Lao refugees from Thailand, including 130,000 Hmong. By the end of 1999, more than 28,900 Hmong and lowland Lao had repatriated to Laos–3,500 from China, the rest from Thailand. Through the Office of the United Nations High Commissioner for Refugees (UNHCR), the International Organization for Migration (IOM), and non-governmental organizations, the U.S. has supported a variety of reintegration assistance programs throughout Laos. UNHCR monitored returnees for a number of years and reported no evidence of systemic persecution or discrimination against returnees per se. UNHCR closed its Laos office at the end of 2001.

Laos Economy

Laos is a poor, landlocked country with an inadequate infrastructure and a largely unskilled work force. The country’s per capita income in 1999 was estimated to be $241. Agriculture, mostly subsistence rice farming, dominates the economy, employing an estimated 85% of the population and producing 51% of GDP. Domestic savings are low, forcing Laos to rely heavily on foreign assistance and concessional loans as investment sources for economic development. In FY 1999, for example, foreign grants and loans accounted for more than 20% of GDP and more than 75% of public investment. In 1998, the country’s foreign debt was estimated at $1.9 billion.

Following its accession to power in 1975, the communist government imposed a harsh, Soviet-style command economy system, replacing the private sector with state enterprises and cooperatives; centralizing investment, production, trade, and pricing; and creating barriers to internal and foreign trade.

Within a few years, the Lao Government realized these types of economic policies were preventing, rather than stimulating, growth and development. No substantive reform was introduced, however, until 1986 when the government announced its “new economic mechanism” (NEM). Initially timid, the NEM was expanded to include a range of reforms designed to create conditions conducive to private sector activity. Prices set by market forces replaced government-determined prices. Farmers were permitted to own land and sell crops on the open market. State firms were granted increased decisionmaking authority and lost most of their subsidies and pricing advantages. The government set the exchange rate close to real market levels, lifted trade barriers, replaced import barriers with tariffs, and gave private sector firms direct access to imports and credit.

In 1989, the Lao Government reached agreement with the World Bank and the International Monetary Fund on additional reforms. The government agreed to expand fiscal and monetary reform, promote private enterprise and foreign investment, privatize or close state firms, and strengthen banking. In addition, it also agreed to maintain a market exchange rate, reduce tariffs, and eliminate unneeded trade regulations. A liberal foreign investment code was enacted and appears to be slowly making a positive impact in the market. The pace of reforms has slowed since the onset of the Asian Financial crisis.

These reforms led to economic growth and an increased availability of goods. However, the Asian financial crisis, coupled with the Lao Government’s own mismanagement of the economy, resulted in spiraling inflation and a steep depreciation of the kip, which lost 87% of its value from June 1997 to June 1999. Tighter monetary policies brought about greater macroeconomic stability in FY 2000,dropped to less than 1% per month.. The economy continues to be dominated by an unproductive agricultural sector operating largely outside the money economy and in which the public sector continues to play a dominant role.

GDP: purchasing power parity – $9 billion (2000 est.)
GDP – real growth rate: 4% (2000 est.)
GDP – per capita: purchasing power parity – $1,700 (2000 est.)
GDP – composition by sector:
agriculture: 51%
industry: 22%
services: 27% (1999 est.)
Household income or consumption by percentage share:
lowest 10%: 4.2%
highest 10%: 26.4% (1992)
Inflation rate (consumer prices): 33% (2000 est.)
Labor force: 1 million – 1.5 million
Labor force – by occupation: agriculture 80% (1997 est.)
Unemployment rate: 5.7% (1997 est.)
Budget:
revenues:  $211 million
expenditures:  $462 million, including capital expenditures of $NA (FY98/99 est.)
Industries: tin and gypsum mining, timber, electric power, agricultural processing, construction, garments
Industrial production growth rate: 7.5% (1999 est.)
Electricity – production: 792 million kWh (1999)
Electricity – production by source:
fossil fuel:  2.78%
hydro:  97.22%
nuclear:  0%
other:  0% (1999)
Agriculture – products: sweet potatoes, vegetables, corn, coffee, sugarcane, tobacco, cotton; tea, peanuts, rice; water buffalo, pigs, cattle, poultry
Exports: $323 million (f.o.b., 2000 est.)
Exports – commodities: wood products, garments, electricity, coffee, tin
Exports – partners: Vietnam, Thailand, Germany, France, Belgium
Imports: $540 million (f.o.b., 2000 est.)
Imports – commodities: machinery and equipment, vehicles, fuel
Imports – partners: Thailand, Japan, Vietnam, China, Singapore, Hong Kong
Debt – external: $2.46 billion (1998 est.)
Economic aid – recipient: $345 million (1999 est.)
Currency: kip (LAK)

Map of Laos