BKK Post / 14 June 1998  
THAI-LAO  
Japan to help fund second bridge over the Mekong  

   Japan has agreed in principle to loan Laos $36.5 million 
(1.5 billion baht) to construct a second Mekong River 
bridge linking the land-locked country to neighbouring 
Thailand, the official Lao press said yesterday.
   Japan is expected to approve the loan next month, and 
the construction of the bridge should begin by the end of 
2000, the news agency KPL said.
   The financial arrangement for the 1.44-kilometre bridge 
was agreed upon last Friday between the Lao Ministry of 
Communication and Japan's Over seas Economic Cooperation 
Fund, KPL said.
   The second international bridge will link Thailand's 
Mukdahan province, 640 kilometres to the northeast of 
Bangkok, to Laos' Savanakhet. The Lao city lies on Highway 
9 that runs to the ports of Hue and Danang in central 
Vietnam.
   In a separate development, Japan has agreed to grant 
$5.8 million (243 million baht) in aid. The funds will be 
used for the construction of an afforestation centre and 
malaria control as well as for debt relief for the first 
half of this year.
   An agreement was signed last Wednesday between Foreign 
Minister Somsavat Lengsavad and Japan's ambassador to 
Vientiane, Hiroomi Sakai.
   Laos, one of the least developed countries in the world, 
is emerging from two decades of communist isolation, and is 
courting foreign investment to help it upgrade 
infrastructure. - AP
   

The Nation / 14 June 1998  
Lao central bank worried over kip volatility: report  

   HANOI, June 14 -- The governor of the central Bank of 
the Lao PDR said the government is concerned with the 
recent plunge in the value of the local kip currency and is 
looking for ways to stabilize the unit, a report said over 
the weekend.
   Cheuang Sombounekhanh blamed the drop in the non-
convertible currency in part on speculators hoarding US 
dollars and Thai baht, the principal currencies used to pay 
for imports.
   His comments reported in the Vientiane Times came amid a 
renewed slide of the kip which was trading at about 3,400 
to the dollar, down nearly 75 percent from a year ago.
   He said the central bank would raise interest rates on 
deposits from 19 to 22 per cent and sell bonds to soak up 
funds, the report said.
   In order to ease the pressure on the currency, the 
central bank will work together with the Ministry of 
Agriculture-Forestry to promote domestic production and 
ensure supplies of feedstock and fertilizer which are 
mostly imported.
   Cheuang also blamed speculative selling of the kip on 
the recent introduction of new banknotes of 2,000 and 5,000 
kip denominations which had a negative psychological impact 
on people's confidence in the currency.
   Meanwhile, local economist Souphan Keomisay told a press 
conference in Vientiane that the cause of the kip's 
weakness was not linked to external debt liabilities that 
have wreaked havoc with currencies of other Asian 
countries.
   He said the kip's problem stems from a persistent 
balance of payments deficit which has worsened in the face 
of slower export growth to Asian countries and the European 
Union.
   One foreign economist said the biggest danger of a 
weakened currency was increased inflationary pressures.
   He said however that the economy looked likely to grow 
this year, provided the weather is good, as agriculture 
accounts for nearly half the country's gross domestic 
product. (AFP)