March 02, 2016

Laos starts off as Asean chair with ministers' retreat

By:  Nirmal Ghosh, The Straits Times, February 27 2016

VIENTIANE - Laos kicks off its Asean chairmanship Friday with an agenda-setting foreign ministers' retreat in Vientiane, its capital on the east bank of the Mekong River.
Analysts say this year could be a coming of age for the "lower-middle income economy", where poverty continues to be widespread, but which is one of the fastest-growing economies in the region.

Laos last chaired Asean in 2004. Its economy grew by an average of 7 per cent annually in recent years, mostly on the back of its natural resources, a construction boom in Vientiane and rising tourism.

The year will culminate with the Asean and East Asia Summits in September - held earlier than usual because of the United States election in November.

US President Barack Obama is expected to attend the summit.

The foreign ministers "will discuss the implementation of the Asean Community Vision 2025... [and] will also exchange views on Asean’s external relations, and on regional and international issues", Singapore’s Ministry of Foreign Affairs said in a brief statement Thursday.

The Asean Community Vision 2025 emerged from the 2013 Asean summit. It aims to develop a "politically cohesive, economically integrated, socially responsible, and a truly people-oriented, people-centered and rules-based Asean", the 10-member group’s official website states.

An issue that has divided Asean, the South China Sea dispute, will figure in the discussions too, officials say.

China - an Asean dialogue partner - claims almost the entire South China Sea, but its claims overlap with those of several Asean countries, most critically Vietnam and the Philippines.

Analysts have noted that Laos, which was perceived to be drifting into China’s sphere of influence, appears to have changed course and returned to its traditional closeness to Vietnam and to balancing other major powers.

New Lao Politburo chief Bounnhang Vorachit studied in Vietnam and speaks fluent Vietnamese. He is expected to be president when the new Laotian government is formed at the end of next month.

While the Laos political system is opaque, with only news reports in state media to go by, recent reports indicated that the government wants good relations with the US and Japan, observers say.

"Vietnam is a strong counterforce to China, it is seen as a trusted friend," a Vientiane-based diplomat said. "Laos has always walked a tightrope, and it will hide behind the Asean consensus."

Increasing trade ties in Southeast Asia are a boon not only for business but also for crime, though local officials have not quite figured out how to control the latter.

The United Nations Office on Drugs and Crime (UNODC), in a report released Thursday, warned of the significant danger posed by criminal activities such as drug trafficking, maritime piracy and human trafficking should local officials continue to neglect security needs thrown up by streamlined Customs controls.

"Regional integration is happening so fast it is changing the threats," UNODC’s regional representative Jeremy Douglas told The Straits Times. But regional leaders, while focusing on economic needs, are not paying enough attention to the risks brought about by closer ties within the region, as well as between South-east Asia and the rest of the world.

"The security agenda is lagging far, far behind," he said. "It hasn’t got the attention of policymakers the way it should have."

The illicit flows in Southeast Asia are valued at about US$100 billion a year, but that’s a conservative estimate.

That money - generated from the trade in drugs, wildlife, people and fake products, for example - also destabilises the region by funding criminal networks. The loss in tax revenues reduces the benefits of trade liberalization and hurts law-abiding businesses.

Within the Asean Economic Community, which came into being at the end of last year, "there has been increased pressure on border personnel to maintain a swift and lean clearing process", said the UNODC report.

"But not all clearing points are equipped to handle these pressures," the report said. "And if new rules are not accompanied by capacity-building and smarter checks, it will result in a dangerous situation of large undetected illicit flows."

Experts say the poorer countries in the region that throw open their doors to earn foreign exchange are often unprepared to police the surge of goods and people across the borders.

But the growth in traffic is unrelenting: The Pacific Asia Travel Association has predicted that visitor arrivals to the Asia-Pacific region will grow at an average rate of 6.2 per cent every year between 2014 and 2018, to hit 660 million.

Meanwhile, $5.3 trillion worth of global trade passes through Southeast Asian waters each year, making ships a ripe target for pirates. Less than 2 per cent of the 500 million containers shipped annually are inspected.

Against this backdrop, criminal networks are adapting their operations according to new connecting infrastructure.

"It appears that infrastructure projects joining eastern India to the rest of the [Greater Mekong Sub-region] has resulted in an increase in production of ketamine and methamphetamine," it said.

While the space for cross-border crime has expanded, "the systems and safeguards that accompany infrastructure projects are reflective of a time when crime was more of a local phenomenon".

The UNODC called for countries to share intelligence in real time using existing tools and technologies. It also urged them to strengthen regional data collection, as well as respond more efficiently to mutual requests for legal assistance.

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