Hanoi hosts Laos and Cambodia, regional Chinese debts underreported

Vietnam attempted to strengthen alliances with Laos and Cambodia, while a new AidData report reveals the extent of Chinese debt to SEA

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October 2, 2021
Hanoi hosts Laos and Cambodia, regional Chinese debts underreported

Hello! This week in Southeast Asia saw a rare meeting of the leaders of Laos, Cambodia and Vietnam in Hanoi, framed by observers as an attempt by the Communist Party of Vietnam to rebuild regional alliances in the shadow of growing Chinese influence. 

The meeting date on 26 September coincided with the anniversary of the Vietnamese military’s 1989 withdrawal from Cambodia, where they defeated the Khmer Rouge in 1979 and left Hun Sen’s Cambodian People’s Party in power. Laos and Vietnam share close ties as communist allies going back to the Vietnam-US war, but analysts have said Hanoi’s concern over an erosion of its old regional ties may not be misplaced.

In the last two decades, Chinese lending has fueled development in Laos and Cambodia, along with many other low- and middle-income countries. While China’s increasing grip on regional allies is obvious to anyone who has visited a place like Cambodia’s Sihanoukville or followed hydro dam construction in Laos, the full extent of Chinese investment became clearer after AidData, a College of William & Mary research lab, recently released a groundbreaking, data-driven report on Chinese loans in developing countries. 

Over the course of 18 years, China loaned $843 billion across 165 countries to finance more than 13,000 projects, mostly aligned with its Belt and Road Initiative, the report found. Before the BRI launched in 2013, much of China’s lending took place directly through the government, but that has shifted toward a reliance on private, state-surrogate banks and institutions, allowing fewer restrictions on lending terms and making money traces difficult.

An estimated $385 billion of debt accrued by recipient countries has been underreported to the World Bank and international financial institutions, AidData determined after years of research. Now 42 countries carry debt to China exceeding 10% of GDP, including Laos and Cambodia. 

The AidData report also noted many BRI projects have faced problems, leading recipient countries to start “mothballing high-profile BRI projects because of corruption and overpricing concerns.” The G7 hopes to capitalise on this potential BRI disenchantment with the launch of its own Build Back Better World infrastructure programme this year.

From the view in Cambodia, regional overtures by Vietnam notwithstanding, everywhere you look there seems to be another Chinese-funded project. A high-profile diplomatic meeting is one thing, the promise of cash to get things built is another. It’s hard to blame Cambodia for accepting infrastructure money from China. 

On a smaller scale, the cash is unfortunately not flowing for many Cambodian social enterprise companies, as I reported from Siem Reap, following the collapse of a business model linked with community development in one of the Kingdom’s poorest provinces. Check it out:

As Siem Reap grew into a tourism hub, many handicraft businesses linked the sale and production of handmade textiles, baskets and sculptures to the support of area communities. I spent time there earlier this month reporting on how the pandemic has gutted this tourism-dependent business model. Without government aid, companies hoping to maintain their social missions are forced to take matters into their own hands at a steep financial cost.

A massive earthquake and tsunami devastated the Central Sulawesi region in Indonesia on 28 September 2018 and many survivors still lack access to sufficient post-disaster relief. The government has failed in its handling of the disaster, writes Abdul Haris, an activist with NGO Celebes Bergerak. Survivors continue to be displaced from temporary residences and, with no solutions for permanent housing, people are taking to the streets in protest.

The National League for Democracy turns 33 years old this week. Despite having been ousted by Myanmar’s military junta, the party will likely remain a key factor in bringing democracy back to the country, writes Philipp Annawitt. While the NLD will need to build stronger alliances with ethnic groups and adopt a more progressive platform to fight the junta, the party’s strong foundation will likely help it endure.  

While solar panels promise a greener future for Southeast Asia, they have a limited lifespan and require a plan for proper recycling, writes Giap Nguyen. A member of Parliament in Vietnam first raised the issue of toxic waste from solar panels, drawing attention to an issue affecting all of Southeast Asia. 

To commemorate International Older Persons Day, Singapore artist Li Li Chung reflects on what it means to care for older persons and how we have power to prepare our own journey toward the end of life. 

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