3.2.1 Passive support for regional integration
ASEAN integration has accelerated in recent years, and the ASEAN Economic Community (AEC) is expected to come into effect at the beginning of 2016. It is not clear whether this will be fully implemented, or whether a two tier integration will occur, with a core constituting Thailand, Malaysia, Singapore, Indonesia, and Brunei integrating more closely, Laos, Myanmar and Cambodia relegated to a lower level of integration, and Vietnam and the Philippines in an intermediate position but expected to join the core group more rapidly. In either case, the impact on Laos will be considerable
The regime has ambitious targets for economic integration, and is strongly committed to the ongoing integration measures within the Asean Economic Community (AEC). However, the regime has adopted a largely passive approach, identifying AEC as a framework for maximising foreign investment and for increasing exports, while doing little or nothing to ensure that Lao actors are able to make use of the proposed reforms. In some sectors, companies from other ASEAN member states, including some with foreign capital, are expected to invest in Laos, and to invoke the ASEAN framework to facilitate the approval of their projects and reduce protection of local enterprises. In other sectors, such as manufacturing, wholesale commerce and logistics, companies from other ASEAN member states are expected to increase their imports to Laos, and invoke the ASEAN framework to reduce the tax and other rents that currently affect imports. This would reduce the cost of goods inside Laos, but destroy significant parts of Laos’ non-competitive industrial sector.
The President of the Lao Young Entrepreneurs Association has commented that ‘small businesses in Laos are likely to face more challenges than opportunities when AEC comes into force’.
While passive regarding economic integration the regime has actively monitored the ASEAN political, social and cultural integration process and skilfully intervened to prevent the emergence of governance and human rights frameworks that could constrain the Party-State’s rule. This has been based on the existing ASEAN principle of non-interference, but has also used the rhetorical and analytical skills attained by MoFA staff through DP support.
It may prove increasingly difficult for the regime to control and limit the political impact of ASEAN integration. For example, during 2014 the regime appeared divided in its strategy regarding CSO involvement in ASEAN issues; the MoHA, which has the core role of controlling civil society, warned Lao CSOs that the state was closely monitoring their activities at the ASEAN level and would not hesitate to repress any actions that displeased the party-state, while a more confident and forward-looking MoFA encouraged the same CSOs to engage at the ASEAN level so as to consolidate the country’s integration, and to enable a (controlled) dialogue with other stakeholders.