BKK Post / June 5, 1998 Nan to China road project gets boost Hopes for the refurbishment of a 200km stretch of road between the Mekong River in Nan and southern China via the Laotian province of Oudomxay received a boost yesterday. Foreign Minister Surin Pitsuwan said after ending a three-day visit to Laos that Thailand had asked the Laotians to give the plan serious consideration. Once the road is upgraded and a bridge is built across the river, Nan province could become an important gateway to northern Laos and China, boosting tourism, said Mr Surin. He suggested that international development agencies step in and back the project. He said Thailand and Laos needed to sign a bilateral agreement to enable vehicles to enter each other's territory. According to the plan, Thailand would allow Laotian vehicles to enter Udon Thani and Thai vehicles to go to Vientiane. BKK Post / June 5, 1998 LAOS Thai exporters grow wary due to instability of kip Border trade slows in Northeast as firms grow more selective Saritdet Marukatat The unstable kip is hurting cross border trade with Laos as Thai manufacturers become increasingly cautious about exporting goods to the landlocked country. Sompong Jiyasak, president of the Chamber of Commerce in Mukdahan, said yesterday the recent fluctuations of the kip against the baht was discouraging exporters in the northeastern province to continue trade with Laos. "Traders here are reluctant to conduct a long-term trade deal with Laos because of the uncertainty of the kip," he said. A trader in Nong Khai acknowledged the fluctuations of the Laotian currency had compelled traders to be more careful and selective in exporting products to Laos because of the difficulty in calculating costs. The Laotian currency has been moving between 110 and 140 kip against the baht over the past few days, despite an official rate of around 80. Nong Khai and Mukdahan are the two major export markets of Thai goods to the country. Export from Nong Khai serves the capital Vientiane, the most important market in Laos, and goods from Mukdahan go to Savannakhet, the most populated province in the landlocked country and other neighbouring provinces. More than a half of Thai-Laotian trade is conducted through the border and is a major source of consumer products in Laos. The unstable kip would lead to sluggish trade between the two countries this year, traders and diplomats said. Laotians were very cautious about spending money because of the rising cost of living, a diplomat in Vientiane said. Close trade ties between Thailand and Laos means the baht plays a key role in the Laotian currency market, with one diplomat noting that the kip would not stabilise until the baht stopped its slide. The Laotian currency held its ground amid the regional currency slide, until a few weeks ago when the kip began to fall against both the baht and US dollar. Last week the value of the kip fell from 2,700 to 3,100 against the dollar. The devalued kip indicates that Laos, despite its limited exposure to the regional trade, is not immune to the economic downfall in Southeast Asia. The State Bank of Laos on Monday began issuing two new bank notes of 2,000 and 5,000 kip denominations aimed at facilitating trade. But a trader in Vientiane said the new bank notes only served to reinforce Laotian fears of a falling kip. The trader said the Lao government would develop measures to combat the growing problem after it evaluated the country's economic performance for the first six months of this year. He added that the most challenging task over the next six months would be to stabilise the kip, tackle inflation and boost foreign investment. Shrinking Markets Prompt Looser Labor Export Policy HANOI (June 4) XINHUA - The Vietnamese government is allowing more businesses to export workers in a bid to revive the sluggish labor market. In the first five months of this year, Vietnam sent nearly 4,000 workers abroad, 800 less than the same period last year or only 20 percent of the target set for 1998. The severe Asian financial crisis is blamed for the sharp drop. Japan and South Korea, the two biggest Vietnamese labor importers, took a lot less Vietnamese workers this year because of the crisis. In an attempt to boost labor export, the government is to promulgate a new policy under which qualified businesses, apart from those which are state-run, will be allowed to deal with labor export. The government will also step up its control over 53 state-run businesses which are engaged in labor exporting. Laos is another big Vietnamese labor market, having attracted more than 12,000 Vietnamese workers. The Vietnamese and Lao governments have agreed to revise their labor cooperation to boost exports in order to meet the demands of the two countries. At present, about 25,000 Vietnamese are working in more than 30 countries, with 11,000 in South Korea and about 4,000 in Japan.