CPC Delegation Leaves Beijing for Vietnam, Laos

   BEIJING (July 3) XINHUA - A delegation of the Communist 
Party of  China (CPC) left Beijing this afternoon for a 
goodwill visit to Vietnam  and Laos.
   The delegation, led by Zhang Dejiang, alternate member 
of the CPC  Central Committee and secretary of the CPC 
Jilin Provincial Committee,  was invited by the Communist 
Party of Vietnam and the Lao People's  Revolutionary Party.
   Among those who saw the delegation off at the airport 
were  Vice-Minister of the International Department of the 
CPC Dai Bingguo,  Minister-Councillor of the Vietnamese 
Embassy in Beijing Ho Xuan Son  and Laotian Ambassador to 
China Soukthavone Keola.


FED: AUST GIVES EXTRA $500,000 TO LAOS FOR LANDMINE REMOVAL

The Australian Associated Press

   CANBERRA, July 3 AAP - Australia would donate a further 
$500,000  towards the safe removal of explosives in Laos - 
the most heavily  bombed country in the world, Foreign 
Affairs Minister Alexander  Downer said today.
   Mr Downer, who visited the capital of Laos, Vientiane, 
during  his current trip to Vietnam, said the unexploded 
mines, bombs and  shells were left over from the Indo-China 
war, with more than three  million tonnes of bombs dropped 
on Laos from 1965 to 1974. Unexploded ordnance killed and 
injured hundreds of people in Laos  each year, many of them 
children, he said in a statement.
   "The Australian government is committed to reducing the 
horrific  deaths and injuries caused by landmines and 
unexploded ordnance  throughout the world," he said.
   Australia is spending $12 million to rid the lower 
Mekong basin  of landmines and unexploded ordnance, with 
$900,000 of that amount  allocated to Laos for 
rehabilitation of people injured in  explosions.
   Mr Downer said that Australia had provided almost $2 
million to  Laos for the safe removal of explosives over 
the past 18 months.
   Meanwhile, Mr Downer also announced Australia would give 
another $250,000 to support Laos on its entry into the 
Association of South  East Asian Nations (ASEAN).
   He said the funding would be targeted at helping Laos 
introduce  economic reforms and manage an English language 
training strategy  for government officials.
   "Integration into the ASEAN free trade area will allow 
Laos to  become more closely linked with some of the 
world's fastest growing  economies," he said.
   Laos remained one of the region's poorest economies, 
needing to  more than quadruple average incomes in order to 
move beyond least  developed country status by the year 
2020.
   Current average income stands at one dollar per person 
per day.
   "Joining ASEAN will be a very important step in Lao 
development, transforming it from a poor land-locked 
country into a prosperous  land-linked ASEAN member located 
at the crossroads of South-East  Asia," Mr Downer said.


http://www.asiatimes.com/97/07/04/04079705.html

Effect of baht floatation ripples through neighboring 
economies

   Last month, for the first time in history, Lao central 
bank officials made money out of Thailand, when they sold 
off substantial portions of their baht reserves in the 
Singapore currency markets at record profits. But with 
Wednesday's devaluation of the baht, Laos and other 
countries neighboring Thailand are likely to feel a domino 
effect on their currencies - and it will not be very 
pleasant.
   While the nearly 20 percent fall in the baht's value has 
not yet hit the Lao kip, Cambodian riel or Myanmar kyat, 
banking industry sources said monetary authorities in those 
countries were on the alert to prevent a run on their 
currencies.
   In Vientiane, the authorities, who began an 
unprecedented crackdown on illegal money-changers last 
month, are continuing their attempts to force all 
circulation of foreign exchange through official channels.
   According to Thai government officials, the Lao central 
bank had sold off a significant portion of the baht 
component of its US$191 million foreign exchange reserves 
last month, taking advantage of record high offshore rates 
for the baht that reached 22.30 baht to the US dollar in 
mid-June. A large number of Thai citizens also are reported 
to have carried their baht holdings out to offshore markets 
through Laos to take advantage of the rate differential.
   In Myanmar and Cambodia, sources said businessmen had 
already started disposing of their baht reserves, 
anticipating a further fall in the currency's value. On 
Thursday, a day after the central bank's scrapping of a 
decade-old fixed exchange rate mechanism, the baht was 
trading in Thailand in a wide range around 28 to 29 baht to 
the dollar, as against 25.85 or 25.90 before the float.
   "The fall in the value of the baht has hit us hard, 
since we did not expect it to happen so suddenly," said a 
businessman in Yangon trading in Thai goods imported across 
the border with Myanmar.
   In several Indochina countries and Myanmar, shopkeepers 
and businessmen have traditionally accepted the baht as a 
means of payment, and many hold bank accounts in baht 
inside Thailand, fearing abrupt fluctuations in their own 
currencies. Trade between Thailand and its three northern 
neighbors was worth more than US$1.2 billion last year.
   While businessmen in the region expect some benefits 
from a cheaper baht in terms of lower cost of goods 
imported from Thailand, this is likely to be only a very 
temporary affair until inflationary pressures from the 
devaluation force a rise in their price.
   Some traders are said to be buying up stocks of goods 
for resale in their countries in anticipation of a jump in 
prices, especially of electronic consumer goods, which have 
a high import content.
   In due course, the riel, the kip and kyat - and 
especially the last two - are expected to fall along with 
the baht, due to their strong dependence on trade volumes 
with Thailand. The Lao currency was trading at 39 kip to 
the Thai baht on Thursday, as against 42 kip to the baht on 
Tuesday.
   In the long run, analysts feel that if the volatility of 
the baht continues, its chances of becoming a currency of 
choice throughout the Indochina region may slowly fade 
away. Prior to Wednesday's devaluation, the value of the 
baht had stood rock steady against the US dollar for nearly 
a decade.
   "The Thai central bank should allow the Thai baht to be 
freely used for border trade purposes and not insist on 
dollar payments for all transactions," said Vichai 
Punpocha, country manager of the Dresdner Bank branch in 
Bangkok.
   This, he said, would shore up confidence in the baht in 
neighboring countries. In the long run, the increased use 
of the baht would help Thai exports to the region.
   One reason why the Bank of Thailand is supposed to be 
hesitant about making such a move is that it fears the 
increased circulation of baht outside the country would put 
its exchange value out of control, as during recent attacks 
in offshore markets by foreign speculators.
   This week's fall in the value of the baht is also 
expected to impact Thai investments in neighboring 
countries. In both Laos and Myanmar, Thai businessmen rank 
among the top investors, and their ability to sustain their 
projects could be affected seriously if their parent 
companies back home suffer large losses in currency 
transactions.
   In Laos, the liquidity problems of Thai companies have 
already resulted in the abandoning of several large 
tourism-related projects and a slowdown in investment. 
Thailand accounts for more than 41 percent of all foreign 
investment approved in Laos, and is also its main trading 
partner, providing nearly 50 percent of its imports and 
purchasing just over 20 percent of its exports.
   (By Satya Sivaraman, Bangkok, 4th July 1997, Asia Times)