Hydropower is considered one of the oldest and most established forms of renewable energy.¹ Hydropower uses the natural flow of water to generate electricity and is found in all continents with major rivers. It is considered a cheap form of energy, factoring in the longer-term costs of utilising renewable energy and beyond initial construction costs, such as maintenance, operations, and fuel.

The late 19th century saw the first hydropower plants installed in the USA, Germany, and Australia. The first half of the 20th century saw a rapid increase in innovation and development of new technologies, culminating in the large-scale development of hydroelectric projects worldwide. The later 20th century saw China and Brazil emerge as world leaders, with China developing the Three Gorges Dam, which has the largest installed capacity at 22,500MW, making it the largest hydropower station and the largest power generating facility ever built. China has continued to invest heavily in hydropower projects both in China and in countries around the world, including in neighbouring countries.

 

Investors in Hydropower

The rapid growth of the hydropower industry slowed in the 1980s and 1990s due to financial constraints and concerns over the ecological and social impacts of hydropower projects. As a result of this, the withdrawal of fundings from international financial institutions (IFIs), such as the World Bank, particularly impacted developing nations.

A report published by the World Commission on Dams (WCD) and the formation of the International Hydropower Association (IHA) reflected a shift in the focus in planning and development of hydropower projects towards a more sustainable approach designed to consider communities affected by these projects.^{2 3}

The beginning of the 21st century saw a return to investment in hydropower, particularly in nations such as Brazil and China who sought sustainable sources of power to support their rapid economic growth.

Behind this hydropower boom has been South-to-South investment (investment between Global Majority developing countries) with this becoming a critical source of both technological and financial transfer. Between 2004 and 2012 the trade in hydropower technologies between South-to-South increased from below 10% of total global trade to nearly 50%.

Hydropower investment has also been driven not just by large IFIs like the World Bank, but also national development banks and private investors from emerging economies such as China, Brazil and Thailand, demonstrating a growing trend in South-to-South Foreign Direct Investment (FDI).⁴

China has also been a strong financier of infrastructure projects as part of its Belt and Road Initiative (BRI), investing close to $25.85 billion globally. Through this investment, China has emerged as one of the main financiers of hydropower projects, particularly in the LMR.

Key Projects with funding from Foreign Investment

The LMR is home to a number of significant hydropower projects funded by foreign investment. Projects include the Cambodian-Chinese funded Lower Se San 2 (LS2) Dam (also known as the Lower Sesan 2 dam), and a number of Thai-funded projects such as the Xayaburi Dam in Laos, and the Pak Mun Dam in Vietnam, which received investment from the Electricity Generating Authority of Thailand (EGAT)

Lower Sesan 2 Dam

The 400 MW LS2 dam is a hydropower project that began operating in 2017 on the Sesan River, a major tributary of the Mekong. Located in the Se San District, Stung Treng Province in Cambodia, it is a 6.5 kilometres long dam, considered one of the longest dams in Asia and, at the time of writing, the largest hydropower project in Cambodia.

The project is estimated to have cost $816 million, and is listed as a joint venture between China Huaneng Group and Royal Group of Cambodia, and is operated by the Hydro Power Lower Sesan 2 Company Limited.

In the 1990s the Asian Development Bank (ADB) commissioned feasibility reports on the possibility of building hydropower projects on the Sesan and Srepok rivers.⁵ In 2007 a memorandum of understanding (MOU) was signed between the Ministry of Industry, Mines and Energy (MIME) and the Vietnamese state energy utility Electricity Vietnam (EVN) to conduct a feasibility study. In 2007/2008 Power Engineering Consulting Company 1, a Vietnam-based consultancy firm was contracted to undertake the feasibility study, and Key Consultants Cambodia were subcontracted to undertake the environmental impact assessment.⁶ Financial troubles saw EVN begin to reduce its investment, with the Royal Group acquiring 49% of the project in 2011. Following the approval of the project by the Cambodian government in 2012, EVN further reduced its stake to 10% with the Royal Group reducing its stake to 39% and Hydro Lancang International Energy, a subsidiary of the Chinese state-owned enterprise China Huaneng, taking on a controlling stake of 51%. In order to implement the project the Hydro Power Lower Sesan 2 Company Limited was established by these investors.

The Hydro Power Lower Sesan 2 Company Limited is reported to have provided 30% of the project’s capital with 70% sourced from bank loans. Data around the exact funding for the project is opaque at best but funding has been attributed to the Industrial and Commercial Bank of China and the Bank of China. As well as this, the policy banks China Development Bank and Export–Import Bank of China are attributed as providing funding with the project being underwritten by China Export and Credit Insurance Corporation (Sinosure).

Chinese involvement in the development and operation of LS2 extended beyond financing with PowerChina Huadong Engineering Corporation Limited and Sinohydro Engineering Bureau 8 Company Limited being contracted to design and construct the plant. While Gezhouba Group No.1 Engineering Company Limited were contracted to dig the open channel for the dam.

With Chinese Foreign Direct Investment (FDI) increasing significantly over the last 20 years, China is the main funder of major hydropower projects in Cambodia with financing from China Eximbank and the China Development Bank.

Impacts and concerns of Hydropower

Hydropower is seen as integral in the push towards green energy development in the LMR, with countries such as Vietnam and Thailand outlining their plans for green growth. Hydropower also  forms part of China’s plans to be “carbon neutral’ by 2060, with hydropower projects, both within the borders of China but also in its neighbours, seen as integral to meeting this target. Considering the Mekong region as a  whole, the Greater Mekong Region (GMR) has 745 dams, either completed or currently under construction, on the Mekong itself as well as its tributaries.⁷ 209 of these are for generating electricity, whilst the remaining are for irrigation, flood control, and other mixed-usage. The development of new dams is showing no signs of slowing with plans for the development of new Thai-Laos dams in the coming years.

The development of these planned hydropower projects is not without controversy. They are often announced against the backdrop of community and NGO protests and opposition to the projects, with the economic interests of companies foregrounded against the livelihoods of local communities. 

Hydropower, rather than being a clean energy source, has been linked with increases in methane production, riverbank erosion, and sediment and the reduction of fish stocks. As well as hydropower’s designation as a clean energy source being under dispute, the damage that hydropower projects do to local communities is also very real. Communities are frequently resettled for hydropower projects, with damage to fish stokes and biodiversity impacting the livelihoods of communities within the Mekong Delta.

It is also worth considering the imbalances in hydropower investment across the region, particularly considering the number of Thai-financed projects developed in neighbouring countries such as Laos and Vietnam. Thailand itself is home to only 12 hydropower dams, but has significantly invested in the construction of dams in neighbouring countries in particular Laos. Environmental damage and displacement of communities is offset to other countries whilst energy is exported for the benefit of neighbouring countries, boosting government’s claims of utilising green/clean energy.

Whilst the shift to renewable energy is imperative in the face of rising global temperatures, the usage of energy sources such as hydropower need to be considered in the face of the long term harm that hydropower projects do to the environment and to the local communities, with calls for international financiers to pause their investments in hydropower due to these concerns.

Related to this page

• Hydropower Dams
• Hydropower Dams
• Foreign Direct Investment in Laos
• Foreign Direct Investment in Myanmar
• Lower Sesan 2 Dam
• Dodgy deal: Lower Sesan 2 dam project
• Development of water resource infrastructures and livelihood benefits: A case of lower Sesan 2 project, Cambodia
• Summary of policy to address the impact of the Lower Sesan II dam project

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COVID-19 in the Mekong

The novel coronavirus has triggered a global response of extreme measures. The immediate changes are countable. As of April 15, 2020, over 2 million cases of the novel Coronavirus (COVID-19) have been counted globally, with over 100,000 confirmed deaths. Tech tools to track the movement of infected people are being deployed around the world, from Israel to Singapore, with some of the largest historically rival companies globally – Apple and Google – teaming up to develop a tracking system. At least 118 of the UN-recognized 195 countries have put into place travel bans or border restrictions. Social distancing measures limiting public gatherings are in place in at least 151 countries, with at least 74 countries accomplishing this by law, order, or regulation. Human movement has slowed to such a level that even the Earth’s crust is vibrating less. 

Social distancing at Chulalangkorn Hospital in Bangkok, Thailand. Photo by Chainwit. via Wikipedia.com. Licensed under CC BY-SA 4.0.

These responses are data-driven and appropriately informed by an epidemiological approach. Yet, this narrow focus on counting cases and individuals, exemplified by a drive for ever more novel data and tech solutions,¹ misses the needs of people historically invisible to the count. The absence of data doesn’t mean the absence of problems. Nowhere is this more apparent than in the Lower Mekong countries of Cambodia, Lao PDR, Myanmar, Thailand and Vietnam (the LMC or Mekong for short). The populations of the Mekong that typically remain uncounted are also the most vulnerable – indigenous and ethnic minorities, refugees and internally displaced peoples, migrants, urban slum-dwellers, and people working in the informal sector. For them, COVID-19 and the current standard responses will simply magnify existing inequalities. One recent story, from Thailand, tells of a mass exodus of 60,000 migrant workers, with no money to stock up on food and no prospective work caused by the enforced closure of businesses and impending border closures, primarily from Lao PDR, Myanmar, and Cambodia.

These existing inequalities layer one on top of the other. For instance, ethnic minority peoples, reliant on subsistence livelihoods, also commonly live in geographically isolated border regions, meaning they are less able to reach or pay for healthcare services than mainstream national ethnicities. Poor governance combined with poverty in these isolated regions means that there is insufficient infrastructure for water, sanitation and hygiene facilities. The addition of lockdown measures limits the ability of these indigenous communities, reliant predominantly on natural resources to source food and medicines, to access agricultural lands and forest resources; border closures limit trade and aid, leading to food insecurity. Thus, social isolation measures and a border closure are not simply inconveniences for such a community; it’s a matter of life or death. 

Many indigenous people and ethnic minorities live in rural areas and border towns, like in Sa Pa, Vietnam. Many are dependent on the informal economy here, such as cross-border vendors. Photo by David McKelvey via Flickr. Licensed under CC BY-NC-ND 2.0.

Increasing the use of technological solutions to collect more data might help to develop a better response to COVID-19 along the current narrow epidemiological focus. But is it effective? In the race to find solutions, this question hasn’t really been asked, despite technology being proposed as the cure-all. Yet, it is clear that in the LMCs, the basic requirements for the success of technological tools in combating COVID-19 have not been met. These include transparency of government action, citizen trust in government institutions, and widespread access to technological tools and infrastructure. The authoritarian nature of governance in the LMCs has eroded trust in state institutions, which are typically opaque in their operations. Furthermore, access to internet and digital tools is extremely uneven across the region. This reality is felt most strongly by the most vulnerable. Unless an effort is made to address these root governance, social, and infrastructure issues, tech solutions are likely to fall short in contributing to the COVID-19 response. 

Worse, in the Mekong region, the standard response could lead to a proliferation of human rights abuses. COVID-19 enters a context that already institutionalizes the marginalization of minority peoples, ranging from a denial of land and territory to a forced removal of statehood to systematic institutionalized genocide. Responses to the virus have, are, and will significantly infringe on the human and digital rights of the most vulnerable populations in the region while causing irreparable damage to development objectives. Responding to a virus should not come above human rights.

Water, sanitation and health infrastructure is notoriously limited in overcrowded refugee camps, like for these Rohingya women living in Cox’s Bazar, Bangladesh. The impacts of Coronavirus will devastate these vulnerable populations. Photo by UN Women/Allison Joyce via Flickr. Licensed under CC BY-NC-CD 2.0.

Over the next few weeks, we will be using a rights-based development perspective to take an intersectional look at COVID-19 impacts in the Lower Mekong countries. We will also consider whether civic tech might produce more responsible solutions, and how open data platforms (like those of ODI) can responsibly represent marginalized populations. Read our blog series here.

The post Pandemics first appeared on Open Development Mekong.

Introduction

The Lower Mekong Countries (LMCs) are extremely vulnerable to disasters. Vietnam and Thailand were in the top ten countries in the world most affected by weather-related events over the period 1999-2018.¹ In 2018 Cambodia, Lao PDR, Myanmar, and Vietnam all ranked in the top 50 countries most affected by weather-related events in the world.² 

Vietnam after a typhoon in 2009. Photo by Red Cross of Viet Nam via Flickr. Licensed under CC BY-NC-ND 2.0. Accessed March 18, 2020.

Disasters can have huge human, social, and economic costs. However, many disaster-vulnerable countries, like the LMCs, have limited resources to invest in emergency preparedness and building resilience, and may also have limited capacity to implement necessary measures.³ Thus, when disasters happen, they can have outsized impacts.

Careful monitoring, risk identification and early warning systems are crucial to reducing costs. Because most disasters can impact multiple countries at once, sharing accurate data in a timely manner and coordinating assistance regionally is necessary. The AHA Centre, associated with ASEAN, offers a platform and tools for this, as does SERVIR Mekong.

While disasters are often categorized as natural versus man-made, it is becoming increasingly clear that a cause of extreme weather events is climate change linked to human activity. The Mekong region has been identified as high risk for climate change, and it is important to remember that climate change is expected to exacerbate other risks, including vulnerability to disasters.

Drought

Drought is generally defined as a period with less than average rainfall. However, a variety of more specific definitions exist, dependent on factors related to weather, water, and agriculture. Because there is no standard definition,⁴ regional monitoring can be complicated.

Although seasonal dryness is normal in the Mekong Region, recently this dryness has increased in length and severity, turning into drought. Drought has a greater impact on the downstream Mekong countries, Vietnam and Cambodia.⁵ The 2015-17 drought, attributed to El Niño, particularly impacted these countries’ livelihoods, agriculture, economy, and access to water.⁶

Dry season is a normal occurrence in the LMCs, including Cambodia. Photo by Chris Graham/AusAID via Wikimedia. Licensed under CC BY 2.0. Accessed March 31, 2020.

The LMCs have been experiencing another drought, beginning in May 2019. As a result, Cambodia and Lao PDR reported the lowest Mekong River water levels in 40 years, while Thailand reported the lowest water levels in 100 years.⁷ This drought has been attributed to climate change, along with water retention in upstream dams.⁸

Storms and Floods

Storms are a short-lived extreme weather condition, and in the LMCs include tropical storms such as cyclones and typhoons. Of the LMCs, Vietnam is particularly prone to typhoons, with its long South China Sea coastline. Whether a storm is termed a cyclone or a typhoon is dependent on its origin.⁹ They can be monitored using satellites and hydrometeorological data. Numerical Weather Prediction models can be used as well, but these are expensive and many countries do not have the capacity to use these.¹⁰

Storms are likely to impact a few of the LMCs at once. For instance, 2019’s Cyclone Podul impacted Thailand¹¹, Lao PDR¹², and Vietnam¹³. In addition, a few storms may happen in a row, extending the impacts of earlier storms. For instance, prior to Cyclone Podul, Vietnam experienced another significant storm, Typhoon Wipha.¹⁴

A flood is an overflow of water from a waterway into normally dry land in a floodplain (riverine flooding), higher than normal levels of water on the coast, lakes, and reservoirs (coastal flooding); and collection of water into ponds where rain falls (flash flooding).¹⁵ Floods usually occur due to heavy rainfall, which in the LMCs is caused by regular monsoon weather, or tropical storms. Although seasonal flooding is normal for the Lower Mekong Basin, these events are becoming exaggerated due to human actions, such as deforestation, and dam building. The Mekong River Commission has hydrometeorological monitoring stations monitoring water levels along the Mekong, making up part of the Regional Flood and Drought Management Centre.

Flooding in Cambodia shown in satellite photos, January 28, 2011 – Dry season. Photos by satellite via NASA, Courtesy NASA/JPL-Caltech. Accessed March 31, 2020.

Flooding in Cambodia shown in satellite photos, August 24, 2011 – Wet season. Photos by satellite via NASA, Courtesy NASA/JPL-Caltech. Accessed March 31, 2020.

Natural seasonal variation, limited resiliency, and human actions can create significant negative cumulative effects. After heavy rains in Laos in 2018, a dam wall in Laos collapsed, leading to flash floods impacting over 600,000 people across the region and killing over 70 people.¹⁶ While the Laos government initially blamed heavy monsoon rains for the dam breach, others have attributed it to poor dam management, as the dam collapse was considered to be preventable.¹⁷ No early warning system was in place, and local communities experiencing the flooding were provided little to no information.¹⁸ The dam breach also caused floods in Cambodia, having a transborder impact.¹⁹

Floods potentially cause loss of life, damage to property, loss of agricultural crops and livestock, and increase the incidence of disease. One measure of the cost of such damage is economic loss. For instance, flooding in 2011 inundated large areas of Thailand, Cambodia, and southern Vietnam, costing Thailand alone an estimated $46 billion²⁰, making it the one of the costliest natural disasters in history.²¹ The Mekong River Commission collects flood loss data from each of the Lower Mekong Countries. This data indicates that the cost of floods in the region was an average of US$60–70 million per year from the years of 2010-2014, primarily concentrated in Vietnam and Cambodia.²² However, this data suffers from a number of shortfalls, including that more timely information has not been collected (except for Vietnam which has data up to 2017), and data is missing for some years for some countries.²³

Fires

A wildfire is any uncontrolled and unprescribed fire that may happen due to human activity or weather events. Wildfires are most commonly caused by human activity, primarily agricultural activity.²⁴ For instance, the 2019 fires in Chiang Mai, Thailand were considered to be caused, at least in part, by farmers burning for agricultural purposes.²⁵ Monitoring can be conducted via satellite. ASEAN conducts this monitoring using NOAA data.

Fires in Thailand, Cambodia and Vietnam shown using satellite photos in 2013. Photo by satellite via NASA. Access and use constraints here. Accessed March 31, 2020.

In the LMCs, forest fires are common during the dry period.²⁶ They are usually part of traditional swidden or “slash and burn” agriculture.²⁷ Although such fires are detected in all of the LMCs, satellite data suggest that the most dry season fires occur in Cambodia.²⁸ However, their impact is expected to increase in strength due to climate change, as temperatures rise and dry seasons intensify.

Earthquakes and Tsunamis

Earthquakes are a shaking of the earth along a geological fault line. All the LMCs but Cambodia lie on fault lines, meaning that earthquakes are a potential hazard.

This map of mainland Southeast Asia shows the fault lines in the region. Map by Santi Pailoplee and Punya Charusiri via Researchgate. Licensed under CC BY 4.0. Accessed March 31, 2020.

The most recent earthquakes that caused significant damage are the 2011 Tachilek and 2012 Shwebo earthquakes in Myanmar, both at 6.8 magnitude, leaving hundreds dead and many more injured.²⁹ In addition, Chiang Rai, Thailand experienced a 6.0 magnitude earthquake in 2014 which damaged houses and property.³⁰ Other less significant earthquakes occur regularly. The ASEAN Earthquake Information Centre collects seismographic and other earthquake data from the countries in the region.

Tsunamis and landslides are caused by earthquakes.³¹ Tsunamis are waves that are created by a displacement of a large amount of water. Not all tsunamis have an impact, but those that do are extremely steep and high when it reaches a coastline.³² One such tsunami, the 2004 Indian Ocean tsunami, was the result of a major earthquake with its epicenter in Indonesia. This disaster killed 228,000 people in nine countries, and resulted in damage of more than US$2.2 billion in Thailand alone.³³ Myanmar was the only other LMC to be impacted. Tsunamis are detected through ocean wave monitoring, and one such system is active in the Indian Ocean.

Epidemics

An epidemic is defined as a higher than usual occurrence in a community or region of an illness.³⁴ In comparison, a pandemic is an epidemic that occurs worldwide.³⁵ However, there is no clear criteria for what constitutes a pandemic. Recently, the WHO declared the outbreak of Coronavirus-19, a pandemic, in part due to what it has called “alarming levels of inaction”.³⁶ The WHO has indicated that it no longer uses an old definition of “6 phases”, of which one phase was “pandemic”.³⁷

The Lower Mekong, along with the rest of ASEAN, is vulnerable to epidemics. Since 2000, the region has contained outbreaks of SARS and avian flu. The present concern is with COVID-19.³⁸ Although ASEAN members have indicated that they will cooperate on a regional response to the disease, individual countries are engaging in their own protective measures.³⁹

A Vietnamese poster warning about H5N1 (Bird Flu), 2007. Photo by Joe Gatling via Flickr. Licensed under Attribution 2.0 Generic

Disasters and the SDGs

The 2030 Agenda for Sustainable Development recognizes that disaster risk reduction (DRR) is a crucial aspect of the development agenda, with 25 targets related to DRR in 10 of the 17 goals.⁴⁰ By UNESCAP’s count, DRR is relevant to 13 of the goals.⁴¹ The 2030 Agenda is intended to work in conjunction with the Sendai Framework 2015-2030, which is made up of seven global targets to reduce the risk of disasters.

UNESCAP has initiated a number of Asia-Pacific regional efforts with respect to DRR, including the development of the Asia-Pacific Disaster Resilience Network and the Regional Cooperative Mechanism for Drought Monitoring and Early Warning.

The post Disasters first appeared on Open Development Mekong.

Infrastructure development has both positive and negative impacts on many different communities. Such development can take up large amounts of land and require many people to move. They impact various segments of communities differently, especially women. For instance, women are rarely represented in public participation processes for infrastructure projects that significantly impact water, like dams and mines. Yet, women are more likely to collect water for their families, so would notice shifts to water quality first.¹

Women in the Mekong often participate in the economy by fishing, a livelihood that is highly impacted by infrastructure development such as dams. In this case a woman takes care of her child while fishing. Photo by Patrick Dugan via Flickr. Licensed under CC BY-NC-ND 2.0.

Gender mainstreaming is slowly becoming a required element in projects financed by regional development banks, such as the Asian Development Bank. However, implementation remains simplistic. For instance, ADB infrastructure projects are required to include a “Gender Equity and Mainstreaming” element. Some projects address this by simply filling in, “Some gender elements”.²

Each of the Mekong countries has its unique challenges. Yet, regional patterns emerge. The Lower Mekong Region sees a combination of cultural expectations, gaps in education and literacy levels, and limited access to information creating a disparity between men and women, and between women of different demographics.

Considering gender in infrastructure projects

It is easiest to understand gender impacts of infrastructure by looking at a project stage by stage. While each project is different, most generally follow the same stages to completion. These stages include Project Scoping, Assessment, Approval, Construction, and Post-Construction.

Project scoping

Project scoping involves figuring out what need could be met by a project, and designing the project. Initial cost estimates are made, and project financiers are found.

Involving women during this stage includes addressing women’s agendas in project design. However, culturally embedded beliefs, while an important part of society, may also contribute negatively to gender-responsive project design. For instance, Cambodian, Laos, and Vietnamese culture considers it unseemly for women to study science, including engineering. Thus, fewer women are represented in this field. The result is that women’s engagement in infrastructure design, if included, is discounted.³ 

Some aid programs aim to address the gender gap in the sciences. For instance, USAID works in the LMCs to promote women in the fields of Science, Technology, Engineering, and Mathematics (STEM). It has invested in training female scientists by providing scholarships for Vietnamese women engineers, exchanges for women, and facilitating technical exchanges among partner countries.⁴ In time, this may mean that more women are included in infrastructure project design.

Women scientists work in USAID Partnerships for Enhanced Engagement in Research Science project on “Biodiversity and conservation in the Lower Mekong: empowering female herpetologists through capacity building and regional networking” at Kasetsart University’s lab in Thailand. Photo by Richard Nyberg/USAID via Flickr. Licensed under CC BY-NC 2.0.

In addition, little focus is placed on women’s opinions and needs when designing infrastructure.⁵ International development agencies like the World Bank⁶, OECD⁷, and the International Alliance of Women⁸ acknowledge that women are impacted differently than men with respect to infrastructure use. Yet, these differences are not usually explicitly considered. For instance, the AC Energy Green Bond project, sponsored by the ADB, defines itself as a renewable energy project which can boost economic growth and might “directly or indirectly” narrow gender gaps.⁹ However, this project does not specifically promote gender equity by providing women with explicit opportunities, services or resources, or use inclusive language.

Public participation processes, now mandated by law in the LMCs, are another way that women can make their voices heard during this stage of project development. However, these processes are often ineffective. For instance, there is no requirement to meaningfully address power imbalances due to different language abilities or educational achievement causing women to be shut out of discussions. The education gender gap in the LMCs varies, but all rank in the bottom half globally. Laos and Cambodia rank 105 and 119, respectively, among 149 countries; Vietnam 101; Myanmar 98; and Thailand, the most developed of the LMCs, 81/149.¹⁰

Furthermore, so-called “super-infrastructure” projects are commonly located far from urban metropolises. Rural areas in the Lower Mekong Region continue to have lower levels of education, literacy and other capacity elements. In addition, the population of the LMCs remains predominantly rural and many living there are ethnic minorities or indigenous peoples. This means more rural people are impacted by infrastructure development, and these impacts add onto existing gender issues to make rural women disproportionately vulnerable.

Rural women, such as these Cambodia women dependent on the Tonle Sap, are particularly vulnerable to the impacts of infrastructure development. Photo by Anguskirk via Flickr. Licensed under CC BY-NC-ND 2.0.

Together, these elements mean that women are limited in their ability to take advantage of the benefits that infrastructure projects could bring. An example of the benefit can be seen in small-scale renewable energy and transport infrastructure projects. The gendered division of labor and the predominance of traditional cooking methods in many areas in the LMCs mean that women are disproportionately responsible for collecting water and wood. Clean stoves and improved roads could reduce the time women take to collect water and wood, allowing them time to attend school, improve agricultural production, or take on informal home-based enterprises if they desire.¹¹ 

Some programs have been initiated to consider women’s needs when developing new energy infrastructure projects. The Power to Poor (P2P) Program, initiated by Electricité du Laos (EDL), uses gender-sensitive poverty criterion to target those in need of electric assistance in Laos, especially female-headed households.¹² This program conducted consultation and participation inclusive of women, and presents information on electricity in an accessible way.¹³

Project Assessment

During project assessment, the environmental and social elements of a project are assessed. Examples of environmental impacts include minerals leaking into land, dams changing water flows, or air pollution from coal smelters. Social impacts include forced migration due to mine development, livelihoods being impacted by changing waterways, or increased asthma due to air pollution. Women are disproportionately impacted when they are migrated to locations far from a market where they might have sold goods, because their livelihoods are often more precarious than men, and because as primary caregivers they may not be able to take care of their health as well.

Women impacted by infrastructure development may suffer if they are relocated far from a market where they sell products. Photo by UN Women Asia and the Pacific via Flickr. Licensed under CC BY-NC-ND 2.0.

This stage is also another opportunity for public participation. However, opinions differ between the project proponent and community members on how this should be done, contributing to dissatisfaction around large projects. For instance, regarding the Don Sahong hydropower dam project, located in Laos, 500 women supported by Oxfam and GreenID, participated in community consultations to express their concerns over this project.¹⁴ Despite this, they felt that the final project result did not sufficiently take into account their concerns.

In order for project assessment processes to be responsive to gender, national policies mandating them need to have a gender element. For instance, Laos’ 8th Five-Year National Socio-economic Development Plan 2016-2020 does not mention gender in the context of national energy development. Cambodia’s Guideline for formulating the National Strategic Development Plan 2019-2023 references gender, but not in the context of projects.¹⁵, ¹⁶ 

Project Approval

At the project approval phase, a project should have completed and passed any legally required assessments. The government entity in the sector responsible for the project will issue an approval to the project proponent. While legislation may require this approval to be announced in an open and public way, in reality such announcements do not reach all affected people. For instance, those living at the project site may not have access to media or internet. In combination with being located far from the national capital where governmental processes take place, they may not know that a decision has been made. If an announcement is made in print, impacted stakeholders may not be able to read it, whether because of literacy issues, or because it is not in a language they understand. Women, especially those who live in rural areas, are statistically less literate and educated than men, but also disproportionately represented in activities that may be impacted by the approval, such as water collection or agricultural work.

Project Construction

Construction begins after approval has been received, and the length of time it takes varies widely. Impacts of construction should have been envisioned in preparation for assessment, but approvals may be given despite knowing that there will be significant impacts.

One major cause of impacts at this stage is the relocation of those living on the proposed project site. Historically, this has caused land conflicts and resulted in the loss of livelihoods. For example, the Nam Ou River in Laos was chosen as a site for a dam project by Chinese developer PowerChina Resources. Women living in villages on the Nam Ou River made a living collecting and selling a particular freshwater weed grown in the riverbed. Required to leave due to the construction of the dam, these women lost their main source of income.¹⁷ Monetary compensation, while provided, did not account for this loss. Of course, not all women take issue with the loss of a traditional livelihood. However, for others, these changes have greater impacts. Low ability to compensate for the loss of a traditional livelihood is related to lower education and lower levels of experience with different livelihood skills.¹⁸ 

Further, relocation sometimes means being sent to a location far from one’s original community. This impacts a family’s ability to access natural resources that sustain their livelihoods, thus also impacting their ability to cope with changes.¹⁹Distances to traditionally accessed water and food resources may be quite far. As women are by far the ones who take care of water, food, and home, these changes have significantly greater impact on women than men.

Aerial view of resettlement areas along the Nakai Reservoir in Lao PDR. Photo by Asian Development Bank via Flickr. Licensed under CC BY-NC 2.0.

Post-Construction

Once the project is built it becomes operational. At this point, any impacts on women identified at previous stages, but remaining unaddressed, continue to have an impact. Unidentified issues, like gendered needs, may plague the project. Overall, these issues lead to a continuation, and perhaps a growth, of gender disparity. On the other hand, an inclusively designed project may have the potential to reduce gender differences and increase gender equity.

The post Gender and infrastructure development first appeared on Open Development Mekong.

SDG 17 – “Strengthen the means of implementation and revitalize the global partnership for sustainable development” – is made up of 19 targets and 25 indicators. It covers the elements making up means of implementation: finance (17.1-17.5), technology (17.6-17.8), capacity-building (17.9), trade (17.10-17.12), and systemic issues (17.13-17.19).

SDG 17 is reviewed annually at the High-Level Political Forum.

Context

The term “partnerships” is used in two ways in the 2030 Agenda for Sustainable Development. The first is Global Partnership, which refers to working in global solidarity in order to facilitate global engagement in the implementation of the SDGs and bringing together government, civil society, private sector, the United Nations system, and other actors.¹ The second way is as a means of implementation through multi-stakeholder partnerships, which are “voluntary and collaborative relationships between various parties, both State and non-State, in which all participants agree to work together to achieve a common purpose or undertake a specific task and to share risks and responsibilities, resources and benefits”.² While separate ideas, both usages are interlinked, with multi-stakeholder partnerships seen as a way of achieving the Global Partnership and a complement to government efforts and the support of development assistance.³

The idea of the Global Partnership is at the root of SDG 17, which has its origins in the Millennium Development Goal (MDG) 8: A Global Partnership for Development. It attempted to bridge the gap between principle and policy by focusing on trade, aid, debt relief and technology transfer and represented a big shift in the global framework of development. Understood as a way for keeping rich countries accountable, one critique was that it did not indicate what specific policy changes were required and lacked clarity in targets and indicators.⁴,⁵ There was also a lack of alignment between the goal and its targets.⁶ Ultimately, countries failed to meet MDG 8.

SDG 17 attempts to improve on MDG 8 by additionally targeting the systemic issues of policy and institutional coherence, data, and multi-stakeholder partnerships. It was developed to reflect a holistic approach to the means of implementation, in addition to supplementing means of implementation targets in the other 16 SDGs.⁷ Yet, SDG 17 is considered to suffer from the same lack of concrete responsibilities, despite a more robust system of targets and indicators.⁸ The voluntary approach may be insufficient for developing the number and types of collaborations required to create the necessary transformations.⁹ In addition, the linkages between SDG 17 and the other goals are inconsistent, as MOI elements of SDG 17 are not included consistently in the other goals, nor are partnerships mentioned outside of SDG 17.¹⁰ 

Regionalisation and localisation

UNESCAP’s role in the Asia-Pacific region is to promote cooperation among countries in the region to achieve inclusive and sustainable development, and aims to deliver on the 2030 Agenda by “promoting regional cooperation and integration to advance responses to shared vulnerabilities, connectivity, financial cooperation, and market integration”.¹¹ The organization developed a Roadmap for Implementing the 2030 Agenda for Sustainable Development in Asia and the Pacific and has identified four priority areas for cooperation, one of which is the means of implementation and partnerships. In this regard it has engaged in activities on science, technology and innovation including policy advice and capacity building; conducted research and provided technical support on financing for development; is prepared to conduct policy and other analytical research on trade issues; and is committed to supporting partner countries in developing national statistical systems and providing regional indicator data and statistical information.¹² For example, UNESCAP assisted four of the five LMCs (all except Thailand) in developing their national statistical systems.¹³ Another platform that UNESCAP has developed is the SDG Help Desk, as well as a rapid response facility for responding to requests for technical assistance, prioritizing requests from least developed countries like Lao PDR, Myanmar, Cambodia, while also supporting Vietnam and Thailand.¹⁴ UNESCAP has also partnered with Asian Development Bank (ADB) and UNDP to develop the Asia-Pacific SDG Partnership Data Portal. A set of guidelines on multi-stakeholder partnerships was also developed.¹⁵ 

ASEAN has indicated its support of the 2030 Agenda, although it has not developed any additional or specific policies regarding the implementation of SDGs. It has instead opted to indicate complementarities between its community policies and the SDGs. In this regard, ASEAN notes that multi-stakeholder collaborations are one the key underlying principles of their ASEAN Community Vision 2025.¹⁶

Means of implementation

As a goal specifically on means of implementation, SDG 17’s indicators do not distinguish between substantive and means of implementation, unlike the other goals. Thus, all the indicators of SDG 17 are discussed below.

Follow up and review, monitoring and evaluation

15/25 indicators are Tier I, meaning that the indicator is conceptually clear, has an internationally established methodology and data is regularly produced by 50% of countries and of the population of each region globally. The remainder are Tiers II and III, which mean that for 40% of indicators, data are not produced regularly.¹⁷ However, despite the global trend of a majority of indicators with data, the picture in Southeast Asia and the LMCs is different. UNESCAP reports that the Southeast Asia region has insufficient data for Targets 17.1-17.5, 17.7, and 17.10-17.18.¹⁸ UNESCAP reports that SDG 17 has been stagnant in the Southeast Asia region.¹⁹ Further, reported data may suffer from a lack of political independence.²⁰

Finance

Data is available for all the Lower Mekong Countries on four of the seven finance indicators (17.1.1: Total government revenue as a proportion of GDP; 17.1.2: proportion of domestic budget funded by tax; 17.3.2: Volume of remittances as a proportion of total GDP; 17.4.1: Debt service as a proportion of exports of goods and services). The data shows that the proportion of the domestic budget funded by taxes (17.1.2; 2017) ranges in the region, from almost 75% in Thailand and Cambodia, to 57% and 47% in Lao PDR and Myanmar, respectively. The most recent data available on Vietnam is from 2013, which shows 69%; however, the previous data point (2010) indicates that the proportion was 90%, which suggests that the missing data point cannot be approximated. The data on 17.4.1 (debt service as a proportion of exports of good and services) shows that in 2017, Thailand had the lowest proportion of debt service, at 0.2%, with Cambodia and Vietnam at just over 1%, Myanmar at 5% and Lao PDR at almost 9%. See the data here.

Indicators 17.1.1 and 17.3.2 are visualised below.

There is no data available for the remaining three (17.2.1: Net official development assistance; 17.3.1: Foreign direct investments, official development assistance and South-South cooperation as a proportion of total domestic budget; 17.5.1: Number of countries that adopt and implement investment promotion regimes for least developed countries). However, 17.2.1 is primarily relevant to Thailand only.

Technology

The indicators on technology partnerships (17.6.1: Number of science and/or technology coordination agreements and programmes between countries, by type of cooperation; 17.6.2: Fixed internet broadband subscriptions per 100 inhabitants, by speed; 17.7.1: total amount of approved funding for developing countries to promote the development, transfer, dissemination and diffusion of environmentally sound technologies; 17.8.1: proportion of individuals using the internet) are not as well-developed as others, with three of four without sufficient data, one of which is still undergoing methodological development (17.6.1), and only one with sufficient data (17.8.1).

In the LMCs, data is available for 17.6.2 and 17.8.1. Yet it is important to note that these indicators, as with many others, only represent a limited aspect of the relevant targets (17.6: Enhance North-South, South-South and triangular regional and international cooperation on and access to science, technology and innovation and enhance knowledge-sharing on mutually agreed terms, including through improved coordination among existing mechanisms, in particular at the United nations level, and through a global technology facilitation mechanism; 17.8: fully operationalize the technology bank and science, technology and innovation capacity-building mechanism for least developed countries by 2017, and enhance the use of enabling technology, in particular information and communications technology). See the chart below for a brief discussion of some limitations.

Capacity building

Capacity building has only a single target and indicator (17.9.1: Dollar value of financial and technical assistance committed to developing countries). However, dollars spent is only one measure of capacity building, and understanding actual change must go beyond a simple increase in resources and look to whether institutions themselves are stronger, better and more resilient.²¹

Trade

Of the three trade indicators (17.10.1: Worldwide weighted tariff, average; 17.11.1: Developing countries’ and least developed countries’ share of global exports; 17.12.1: Average tariffs faced by developing countries and small island developing States), data is available in the LMCs for two (17.10.1 and 17.12.1). Data on 17.10.1 and 17.12.1 are disaggregated by “type of product”, but it is unclear as to how the codes are defined, as this is not well-defined in the metadata. In addition, 17.12.1 benefits from the legacy of the MDGs and has been measured since 2000.

Systemic Issues (policy and institutional coherence; multi-stakeholder partnerships; and data, monitoring and accountability)

Data for all the LMCs is available for only indicators 17.18.3 (Number of countries with a national statistical plan that is fully funded and under implementation, by source of funding), 17.19.1 (Dollar value of all resources made available to strengthen statistical capacity in developing countries) and 17.19.2 (Proportion of countries that a) have conducted at least one population and housing census in the last 10 years and b) have achieved 100% birth registration and 80% death registration).

Data on 17.18.3 indicate that as at 2018 Cambodia had a national statistical plan that is funded by the government and donors but were not yet implemented; Lao PDR, Myanmar, Thailand and Vietnam had plans that were being implemented. Data from 17.19.2 also indicates that all countries have held a census (Cambodia in 2008; Lao PDR in 2015; Myanmar in 2014; Thailand in 2010; and Vietnam in 2009) and that all but Thailand are struggling with birth and death registration (data on Lao PDR is unavailable). See the dataset here.

Data from 17.19.1 is visualised below.

Partial data is available for 17.15.1 (Extent of use of country-owned results frameworks and planning tools by providers of development cooperation; available for Cambodia, Lao PDR, Myanmar and Vietnam); 17.16.1 (Number of countries reporting progress in multi-stakeholder development effectiveness monitoring frameworks that support the achievement of the sustainable development goals; available for Thailand and Vietnam only); and 17.18.2 (number of countries that have national statistical legislation that complies with the Fundamental Principles of Official Statistics; available for Cambodia and Thailand only).

The remaining indicators have no data. (17.13.1: Macroeconomic dashboard ; 17.14.1: Number of countries with mechanisms in place to enhance policy coherence of sustainable development; 17.17.1: Amount of United States dollars committed to public-private and civil society partnerships; 17.18.1: Proportion of sustainable development indicators produced at the national level with full disaggregation when relevant to the target, in accordance with the Fundamental Principles of Official Statistics)

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Overview

In the past decade, infrastructure development has been a central focus of policymaking for countries in the Lower Mekong – Cambodia, Laos, Myanmar, Thailand, and Vietnam. Financing these projects is a complicated and large undertaking. A multi-billion dollar airport project, for instance, may require loans from banks, equity from investors, and guarantees from the government.

The Pochentong Airport in Phnom Penh, Cambodia is an example of a privately financed infrastructure project. It was first built in 1995 and a sponsor was French company Vinci. See dataset for more details. Photo by Axel Drainville via Flickr. Licensed under CC BY-NC 2.0.

Participants in infrastructure projects can involve both private and public entities from more than one country. Such participants include:

• National governments;
• Project sponsors (the entity(ies) who have equity participation in the project. It can be a private company or in some cases, a MDB, e.g. IFC and ADB);
• Project developers (the entity(ies) who develops the idea);
• Project contractors (the entity(ies) who build the project)
• Project owners (the entity(ies) who own the project);
• Project operators (the entity(ies) who run the project;
• Project financiers (the entity(ies) who provide money for the project).

Each has a different level of influence in the process. The three main decision-makers are the host government, the sponsor(s) and the financiers. The financiers have significant influence on the project – these are the entities lending and investing the money. Thus, it is important to understand how projects are financed in the Lower Mekong Countries (LMCs).

Project Financing Historically

Traditionally, infrastructure financing has relied on public sector funds, from government revenues such as taxes.¹ In this case, a government assumes 100% of the risk of development, and is responsible for all stages in the project lifecycle. Disaggregated data indicating public vs. private financing for infrastructure in the Lower Mekong is difficult to find, due to a combination of not having standard definitions or methods for measurement, a wide variation in investment structures, and low transparency on government spending.² One source indicates that approximately 80% of infrastructure investment in Southeast Asia is from public sources.³ This corroborates well with the fact that public funding usually targets health, education, transport, and utilities, as these are the basic priorities of developing economies dealing with industrialisation, urbanization, and increasing congestion.⁴ However, Southeast Asia is a large region, and countries in the region vary widely in level of development (compare Myanmar to Singapore, for example).

Highlighting the difficulty in measuring infrastructure development, another estimate suggests that private infrastructure financing is almost 40%.⁵ Private investors typically invest more in the energy, resources, and transport sectors.⁶ For instance, almost a third of Vietnam’s power generation comes from private financing.⁷. One reason why is the underlying economics of it – these types of infrastructure have better returns.⁸ For instance, almost a third of Vietnam’s power generation comes from private financing.⁹ Understandably, then, financing also varies according to sector.¹⁰ ADB also indicates that this varies by country – for instance, infrastructure spending as a percentage of GDP is relatively low in Thailand, while the spend is relatively high in Vietnam.¹¹

For developing countries, like Cambodia, Lao PDR, and Myanmar, the demand for new and replacement infrastructure is much higher than the financial capacity of their governments.¹² Nor can they take the financial risks needed to invest in this development. Bilateral and multilateral development assistance has thus played a strong role in the region.¹³ However, the need for infrastructure continues to be much greater than these financiers are able to provide. A projection for the period of 2014-2020 shows an estimated US$6.4 billion gap, mostly in transport and energy infrastructure investment, if relying solely on public and MDB funding.¹⁴ Thus, Public Private Partnerships (PPPs) are increasingly gaining popularity.

PPPs have been promoted by MDBs like Asian Development Bank as useful tools to leverage the private sector, allocate risks, and raise capital for infrastructure development.¹⁵ In PPPs, the private sector works over a long-term contract with the government to provide public services traditionally financed solely by governments.¹⁶ With limited domestic resources, the project may be financed by a foreign bank or use services from a foreign company, turning it into an internationally financed project.¹⁷ PPPs are seen as a way to leverage the efficiency of the private sector.¹⁸

Where Does the Money Come From?

Financing for PPPs can come from private investors, as well as multilateral development banks and public funds.¹⁹ Whether a funding source will finance a project is dependent on a variety of factors related to the likelihood that the project will be successful and the borrower will pay back their loans.²⁰ Public funding (usually through bond issues) is one  way money is raised, and another is project finance through banks.²¹ 

In the LMCs, PPI financing was significantly lower in 2018 than it was in 2017, dropping from USD10,190.0 million to USD 5,644.01USD.²²

Forms of PPP Contracts

There are seven different types of PPP Contracts:

• build–operate–transfer (BOT) contracts and similar arrangements;
• Service contracts;
• management contracts; 
• affermage or lease contracts;
• concessions; 
• joint ventures; and
• hybrids.²³

Build-Operate-Transfer

In the Lower Mekong region, the most common form of contract for infrastructure projects is the BOT (Build, Operate, and Transfer) model (and its variations).²⁴ Under BOT, a private sector investor develops and finances a new infrastructure project according to standards set by the government. Importantly, the private operator now owns the assets for a period set by contract. The public sector agrees to purchase a minimum level of output produced by the facility (e.g. electricity produced from a hydroelectric dam), sufficient to allow the operator to recover its costs during operation. When the contract ends, ownership is transferred back to the government. There are many variations on the basic BOT structure including build–transfer–operate (BTO) where the transfer to the public owner takes place at the conclusion of construction rather than the end of the contract and build–own–operate (BOO) where the developer constructs and operates the facility without transferring ownership to the public sector.²⁵

Service Contract

Under a service contract, the government hires a private entity to complete certain tasks or services for a set period of time, typically 1–3 years. The private partner is paid a predetermined fee to do this. The government remains the primary provider of the service. Therefore, the contractor can earn more profit if it can reduce its operating costs, if it can still meet required service standards.²⁶

Management Contract

In a management contract day-to-day management and operation of a public service (i.e., utility, hospital, port authority, etc.) is contracted out. In most cases, the private partner provides working capital but no financing for investment. The private contractor is paid a predetermined rate for labor and other anticipated operating costs. The public sector remains responsible for any major capital investments, such as to expand or improve the system.²⁷

The airport in Vientiane is an example of infrastructure built based on a management contract. For more details see this dataset. Photo by Top Koaysomboon via Wikimedia. Licensed under CC BY-SA 2.0.

Affermage/Lease Contract

Under a lease contract, the private partner is responsible for the service, including operation and maintenance but not new and replacement investments, which remain the responsibility of the public authority. No assets are sold to the private sector. An affermage is similar, but not identical, to a lease contract. Instead of paying a preset lease payment to the contracting authority, the private sector pays the contracting authority an affermage fee, typically an agreed rate per every unit sold. The affermage reduces some risks associated with low sales.²⁸

Concessions

In a concession, the private sector operator (concessionaire) is responsible for the full delivery of services in a specified area, including operation, maintenance, collection, management, and construction and rehabilitation of the system, including all capital investment. Assets are publicly owned even during the concession period. In other words, the public sector becomes the regulator, rather than a service provider. A concession contract is typically valid for 25–30 years.²⁹

Joint Venture

Joint ventures are alternatives to full privatization in which the infrastructure is co-owned and operated by the public sector and private operators. The public and private sector partners can either form a new company or assume joint ownership of an existing company through a sale of shares to one or several private investors. The company may also be listed on the stock exchange. Ideally, a company should maintain independence from the government. Both partners have to be willing to invest in the company and share certain risks.³⁰

Hybrid

Contract arrangements that adopt characteristics from a range of contract types are called hybrid contracts. They provide a tailored solution in terms of scope, risk sharing, and/or scope that is most directly suitable to the project at hand.³¹

The post Infrastructure Financing Mechanisms – Public Private Partnerships first appeared on Open Development Mekong.

Chiang Khong SEZ is a district of the Chiang Rai SEZ, all of which is located about 785 km north of Bangkok.¹ This SEZ was developed here, a logistical business center for trade, to make it easier for goods to flow from China to Laos.² It was planned by the Thai government to host agriculture and fishery, handicrafts, medical equipment and logistical businesses (eg. food processing, warehouses to support e-commerce).³ It was developed by the Industrial Estate Authority of Thailand and is under the supervision of the National Environment Board. Investors in this SEZ come from Malaysia, Singapore, Japan, Hong Kong, the United States and China.⁴ Due to its advantageous geographical location, the Chiang Khong SEZ is expected to be a transport hub linking several countries with various types of transportation infrastructure. A bridge, the Thai-Lao Friendship Bridge 4 was opened in 2013 linking Chiang Khong to Huay Xai, Lao PDR.⁵ Waterways will be connected to roads, planned to be finished by 2019.⁶ It will also connect Thailand, Myanmar, Lao PDR and China via the R3A highway.⁷

This SEZ is not yet completed, and development has been partially halted by local protests. As such, there is still relatively limited information about what is going on at the ground level at this SEZ.

The Thai Myanmar Friendship Bridge is an example of hard infrastructure. Photo by Lerdsuwa via Wikimedia. Licensed under CC BY-SA 3.0.

So far, basic infrastructure and border checkpoints at the Chiang Khong SEZ is only half complete, and urban planning is at 5/18 completion.⁸ After protests, the Subcommittee on Land Acquisition and Management has agreed to withdraw state-owned land acquisition, and plans to develop Chiang Rai SEZ, including Chiang Khong SEZ, using investment promotion measures, labour management and urban planning.⁹ No public land will be transferred to private enterprises, even though this is allowed in the Land Acquisition Act.

The entire Chiang Rai SEZ area, including Chiang Khong SEZ, benefits from investment privileges issued by the Industrial Estate Authority of Thailand. Businesses located in this SEZ will have benefits including exemption of some corporate income taxes and import duties for raw materials, 50% deductions on utility bills and transport costs, and being approved to employ unskilled foreign labour, all in the first five to ten years of investment.¹⁰ Non-tax privileges include permission to bring spouses and dependents, as well as permission to transfer foreign currency out of the Kingdom under certain conditions.¹¹

Land

When this SEZ was first being developed, the government assigned the Treasury Department to source land to acquire for SEZ development, without  public consultation or participation.¹² In 2015, Boonrueng wetland and forest in the Chiang Khong district were identified for the Chiang Khong SEZ.¹³ However, this land was ancestral Boonrueng community lands, with a community-based natural resource management plan formalized in the 1960s.¹⁴ According to the 1967 Public Land Deeds no.2540/2510, this land was reserved for agricultural activities of the Boonrueng people.¹⁵

However, to develop the Chiang Khong SEZ, the government claimed this land under the Rachapatsadu Land Act, which states that this land should be considered ‘every kind of immovable property which is State property except…(land) reverted to the State according to the land law; and (land) in use for the people or reserved for the common use of the people such as foreshores, water-ways, highways, lakes’.¹⁶ In other words, due to a lack of clarity in the law, the government allegedly revoked land rights previously granted to the Boonrueng community.

In response, the local community formed a “Boonrueng Wetland Forest Conservation Group”, protesting against the lack of public information and consultation.¹⁷ In addition, the Boonrueng community felt that the government vision of the SEZ, as solely a boost for private investment, was contrary to their vision of an ecologically-friendly SEZ with community-based entrepreneurship, such as organic rice production.¹⁸

The community group has seen some success in their protests. In particular, the government has stopped relying on land acquisition to develop this SEZ.

CSOs and other partners meet to give thanks to the Mekong River. Photo by International Rivers via Flickr. Licensed under CC BY-NC-SA 2.0.

Migration

With any mega-project development, from dams to SEZs, the amount of land required for development displaces many people off that land. The Chairman of the Rak Chiang Khong Conservation Group has estimated that if the Chiang Khong SEZ is to be implemented, it will take at least two years for local communities to move out.¹⁹ Such a move is often initiated without proper consultation with and compensation to the communities, who lose sources of income and food in addition to land.

For the Boonrueng community, whose land is impacted by the Chiang Khong SEZ, the impact adds onto the impacts of other mega-project development in the region. For example, the community, located downstream on the Ing River, has also been affected by dam-building in the region. Upstream dams, especially those located in China, have caused erratic water level fluctuations and floods.²⁰ Consequently, fish stocks, which used to be a source of food and income for the Boonrueng community, has shrunk. Now, the development of the Chiang Khong SEZ adds additional strain.

This is the crossing between Chiang Khong, Thailand and Huay Xai, Laos. Local communities depend greatly on this river for their livelihoods. Photo by John Pavelka via Flickr. Licensed under CC BY 2.0.

Human Rights

Although local activists have had some success in the Chiang Khong SEZ, human rights issues remain. The National Human Rights Commission of Thailand (NHRC) gathered comments from around 750 impacted people, reporting a wide range of human rights issues.²¹ For instance, children do not have access to quality education.²² Local workers also do not receive proper training on labour laws and safety standards, and migrant workers do not receive interpretation assistance in their workplace.²³ Women are exposed to sexual violence and forced marriage.²⁴ Drugs and intimidation by business owners are other common concerns.²⁵

SEZs are often places where regular national laws do not apply (due to investment privileges or other incentives for investors). In addition, regulation is often limited. As such, human rights issues can be more common. However, impacted people do not have access to legal mechanisms to complain.²⁶

Environment

The mission of the Chiang Khong SEZ is to attract logistical, agricultural and manufacturing companies. These companies may impact the delicate balance of the nearby wetland ecosystem.²⁷ For example, the water level in the Chiang Khong region fluctuates without warning and can change overnight.²⁸ Recent visitors have noted empty docks and river without fishing boats, while ten years ago, many fishing boats would gather at the pier daily.²⁹

The development of SEZs exacerbates existing ecosystem damage, considered by many community members to be caused by the past 20 years of upstream dam development.³⁰ From 2014 to 2016, a widespread drought in Chiang Khong left Boonrueng wetland with significantly less fish stocks than usual.³¹ Local communities attribute the cause of this to the Chinese dams upstream, which control the water volume.

Local communities engage in fishing on the Mekong River, which is the border between Thailand and Laos near Chiang Khong/Huay Xai. Photo by Akuppa John Wigham, via Flickr. Licensed under CC BY 2.0.

Waterway transportation is envisioned to play a major role at Chiang Khong SEZ. Thus, local groups are concerned about the additional impact of this water use on the river.³² Moreover, the SEZ plan to create large-scale power plants, and a warehouse and logistical center requires intense industrial development. Pollution and chemicals resulting from this development can cause severe health risks, as well as leach into water and soil, impacting fisheries and agriculture. However, these concerns remain unheard.³³ Villagers trying to preserve natural resources are told that they will be compensated by the benefits and wealth brought about by the SEZ project.³⁴ Forests are being cleared, with the government justifying it by saying that the forests are “degraded”. However, this is contradicted by research conducted by local Boonrueng people.³⁵Currently, the local community is working with academics to appeal to the government to list the Boonrueng wetland as a valuable natural resource.

Laws

The promotion of SEZ construction and planning is sometimes at odds with other concerns, such as land, environment and labour concerns. Indeed, there are relevant regulations prohibiting arbitrary construction of building and division of land, and laws requiring scrutiny of businesses wanting to build large power projects.³⁶ However, since the very purpose of Chiang Khong SEZ is to develop logistical centers and power plants, industrial sites are sure to be developed, which will be potentially harmful.

The 1992 Environment Act is applicable to this SEZ.³⁷ This law indicates that environmental impact assessments are applicable to the construction of large power plants before they proceed, such as those planned in this SEZ. However, it does not guarantee that valuable resources are preserved. For example, even though some animals are protected in the Chiang Khong SEZ and the plants in the wetland are of high value, the Boonrueng community’s ancestral forest can be exempt from cleaning only if it falls in certain category of protected zones.³⁸ Without a scientific survey, this information is not known; thus, some locals with scientific knowledge have decided to do this survey on their own.

In addition, many labour issues are addressed only in a limited way in the Labour Law. For example, while the Thai Labour Protection Act prohibits children from working in certain industries, including work related to hazardous chemicals and casinos,³⁹ child labour remains a major issue. In the nearby Tak SEZ, trafficked child labour is rampant.⁴⁰ As well, Chiang Khong SEZ’s shared border with Lao PDR means that cross-border migrant worker trafficking is a concern, as in Tak SEZ.⁴¹ Another concern is that the children of migrant workers in SEZs can become undocumented after the expiration of a parent’s visa, falling into a gap in the Thai legal system.⁴² Finally, the legal system allows for jobs with low protection and security. For example, migrant workers can obtain 30-day and 90-day border passes to work in non-seasonal agricultural or manufacturing jobs, and businesses have limited incentive to provide protection for such workers.⁴³

The post Case Study: Chiang Khong Special Economic Zone first appeared on Open Development Mekong.

Introduction

The Chinese government has accepted three recommendations (made by Ecuador, Peru, and Kenya) to address the human rights and environmental impacts of overseas Chinese investment and infrastructure projects. This signals a shift in the way that China has been approaching the human rights and environmental impacts of their projects. Yet, in ASEAN, including the Lower Mekong Countries, China’s investment activity goes largely unchecked despite being an important investor.¹

While special economic zones (SEZs) have potentially less intensity of impact than dams do, the range of possible impacts are similar. In addition, the impacts add together. For example, the Chiang Khong SEZ in the Boonruang Region is located downstream of a Chinese dam on the Ing River (at the mouth of the Mekong), and the dam is believed to have caused drought downstream.² This has in turn caused a reduction in fish stocks, meaning that people living by the river have lost their source of income, and so have needed to move.³ In addition, the government’s plan to expropriate the wetlands in Boonruang for the SEZ was completed without public consultation, meaning that local communities were not fully informed about what was happening.

Sunrise at the Mekong River in Northern Thailand, close to where the Chiang Rai SEZ is located. Photo by International Rivers via Flickr. Licensed under CC BY-NC-SA 2.0.

Transparent information, grievance procedures and human rights mechanisms remain important for people impacted by Chinese projects in the Lower Mekong Region. Though there are not many, some that are relevant are described here.

The Office of the High Commissioner of Human Rights (OHCHR)

The Office of the High Commissioner of United Nations Human Rights (OHCHR) is the United Nations’ main organization dealing with human rights. Part of it includes the Human Rights Council, which has a series of special procedures to access “independent human rights experts with mandates to report and advise on human rights from a thematic or country-specific perspective.”⁴ Individuals or groups can access these special procedures by sending a letter outlining how they believe their human rights have been violated.⁵ Then, the Human Rights Council can directly intervene with the country allegedly engaged in these human rights violations by sending a letter requesting follow-up actions.⁶

This mechanism was used in the Lower Mekong Region in 2016 by the Mekong River Commission (MRC). They expressed concern about the Don Sahong Dam in Lao PDR, constructed by China’s Sinohydro Corporation and developed by Malaysia’s Mega First Corporation Berhad.⁷ The MRC was concerned about the violation of rights to food, health, culture, housing and participation and information.⁸ The OHCHR found that impacts of the dam were estimated to negatively affect 29.7 million people,⁹ although others have estimated an impact to about 60 million people.¹⁰ The Lao PDR government has responded by saying that these findings are “exaggerated and fabricated”.¹¹ Until now, no further known exchanges are made. It is unclear whether the Lao government has made any effort to address the grievances.

The Don Sahong Dam, in Laos, was constructed by China’s Sinohydro Corporation and developed by Malaysia’s Mega First Corporation Berhad. Photo by International Rivers via Flickr. Licensed under CC BY-NC-SA 2.0.

Local community groups can also seek support from a third party, such as an NGO, to submit a joint request or statement. In the LMCs, the Mekong Youth Assembly was assisted by International Rivers to make a joint submission to OHCHR on the violation of children’s rights to education, health, adequate food and housing caused by the construction of mega hydropower dams. They claimed that in addition to non-transparent decision-making processes, local governments and other entities engaged in intimidation and violence against those engaged in speaking up about human rights.¹² In addition, they cited ecological damage, fisheries loss, direct impact on families, forced migration, a lack of public services, and no grievance mechanisms.¹³ They used the Lower Sesan II Dam in Cambodia as an example. The submission requested the government and businesses involved to abide by the Child Rights and Business Principles (CRBP) set by UNICEF, engage in meaningful consultations with local communities, and allow civil societies to explain available grievance mechanism process to affected communities.¹⁴ There is no specific response made by the Special Rapporteur to the submission.

ASEAN Intergovernmental Commission on Human Rights (AICHR)

The ASEAN Intergovernmental Commission on Human Rights (AICHR) was established in 2009, with the aim of strengthening regional cooperation on issues of human rights. However, the AICHR can only receive communications from the ASEAN secretariat; it has no legal mandate, nor the power to receive complaints from specific victims of human rights violations.¹⁵ In order for individuals to seek assistance through AICHR, they can request the ASEAN secretariat to do so via the AICHR website,  or by sending an email either to the ASEAN secretariat or AICHR representatives.¹⁶ They can also consult with civil society organizations (CSO) that have already been accredited to officially engage with  the AICHR. There are 30 of these CSOs, including Child Rights Coalition Asia, FORUM Asia, Thailand Association of the Blind, and the Vietnam Peace and Development Foundation, all of which have a presence in the LMCs.¹⁷ Asia Indigenous People’s Pact is another accredited CSO.

The ASEAN Secretariat is housed at the ASEAN headquarters in Jakarta. Photo by Gunawa Kartapranata via Wikimedia. Licensed under CC BY-SA 3.0.

AICHR works on awareness raising and calls for corporate social responsibility (CSR) by organizing thematic studies, workshops and dialogues. While there is no specific work yet in the context of Chinese investment in Mekong countries, there are many workshops covering human rights issues as a consequence of climate change, natural disasters and migration. For example, it carried out a gender-specific study on natural disaster management, which brought attention to safer investment in the LMCs.¹⁸ AICHR also holds regular high-level dialogues and forums to discuss CSR issues, although these meetings only establish suggestions and recommendations.

The AICHR cannot enforce policy recommendations or corporate obligations, and protection of human rights sometimes gives way to promoting investment.¹⁹ The AICHR has recommended that ASEAN develop ASEAN-wide CSR and human rights guidelines in accordance with internationally accepted business and human rights principles, such as those endorsed by UNDP.²⁰ Currently, ASEAN has a Human Rights Declaration 2012 but  does not apply “universal” human rights standards.

AICHR is considered to be a weak institution, with various human rights NGOs calling for greater independence.²¹ The work they do is not legally binding – for example, in the Kamchay Dam case, no commitments were made about community forest management, despite discussions.²² In addition, assistance is usually short term, with the long term well-being of impacted people not guaranteed.

Chinese Mechanisms

China has been known for being reluctant to impose limitations and conditions on its investments abroad. However, this is starting to shift. In addition to accepting the international recommendations to address human rights issues in their investments abroad, Chinese government, financiers, and companies are starting to develop relevant policies. For example in the LMCs, China’s Sinohydro Corporation and the Export-Import Bank of China (China Eximbank) (both involved in the Kamchay Hydropower project in Cambodia have each adopted an environmental policy.²³ Sinohydro has also shown willingness to engage with civil society organizations.²⁴ 

The Road Ahead 

There remains much to be improved in terms of human rights mechanisms, especially in the LMCs where there are often multiple investors. In this situation there is no standardisation in the human rights mechanisms or social impact regulations that apply. This is even the case as between different Chinese financiers. The Silk Road Fund, for example, does not have an information disclosure policy or a complaints mechanism.²⁵ It is hard to know how to hold these financiers accountable. In addition, some of these financiers have internal policies for investment impacts assessment, while others have not yet published any policies relevant to human rights or environment.

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Infrastructure Connects SEZs

SEZs need infrastructure to connect with neighbouring countries, improve quality of life, and promote trade and investment.¹ Both soft and hard infrastructure is needed. Soft infrastructure includes institutional components such as education, healthcare and human capital, whereas hard infrastructure is the physical ones such as roads, bridges, and telecommunications.² Usually the former can help to develop the later. However, when promoted as a link to outside economies, as it has been in the Lower Mekong Countries, additional work needs to be done to actually use the SEZ as a bridge that connects the rest of the country it is in to bordering countries.

The Thai Myanmar Friendship Bridge is an example of hard infrastructure. Photo by Lerdsuwa via Wikimedia. Licensed under CC BY-SA 3.0.

For example, in Tak SEZ of Thailand, the local economy and the enterprises located in the SEZ appears to be poorly connected, and the goal of improving connectivity has not been fully reached. It is highly reliant on low-cost labour (regardless of origin) – about 8000 of the employees are foreign workers, compared with less than 2300 domestic workers, and most of the workers are semi-skilled, with training not usually provided.³ Tak SEZ produces mainly for the domestic market, with few linkages to the global market – for two thirds of the firms in the SEZ, over 90% of their export and import goes to or comes from domestic market.⁴ Yet, few of the firms in Tak SEZ use foreign investments for capital mobilization and technology upgrades.⁵ When interviewed by ADB about the perceived quality of business environment in Tak SEZ, one common concern which stands out is safety and consistency of government policy.⁶

A similar pattern is found in other SEZs in the LMCs, such as in Cambodia. Only 12% of inputs for production at SEZs are from domestic resources, and 27% of outputs go to domestic market.⁷ Governance, a form of soft infrastructure, is often poor.  At the same time, hard infrastructure to link the SEZ to other parts of the country is missing. Since firms investing in Cambodia’s SEZ are only responsible for investing in infrastructure inside the SEZ, the infrastructure outside of the SEZ lacks. ADB calls such SEZs without any link to domestic economy “little more than export-processing zones”.⁸

Bridge and roads at Sihanoukville SEZ. Photo by Wikirictor via Wikipedia. Licensed under CC BY-SA 3.0.

Some Impacts of Poor Infrastructure

In some LMC SEZs, poor hard infrastructure is an impediment to foreign investment. In Myanmar, development of SEZs is faced with a key challenge, sustainable electricity. While the price of electricity is low and therefore perhaps a benefit for investors, the price is financially unsustainable for Myanmar, with the Ministry of Electricity and Energy running on a loss; this situation has not changed over the years.⁹ A lack of staff housing in the SEZ poses another challenge, deterring many labourers from entering the SEZ.¹⁰

The infrastructure in SEZs may be poorly managed by the local government, with the result that these SEZs seem like segregated places with limited access to public services like power and roads. For example, because SEZs in Cambodia are almost entirely privately operated and managed, basic infrastructure in the SEZ such as electricity is being charged at a higher price than outside the SEZ, creating friction.¹¹ Power interruptions occur often, requiring expensive backup generators.¹² Myanmar SEZ are similar: 65% of the foreign firms in Thilawa SEZ report energy shortage to be a constraint.¹³ This gap in infrastructure also acts as a deterrent to potential investors. For instance, investors turn away from Myanmar since its infrastructure connecting to the neighbouring market Thailand is poor, and electricity supply is unstable.¹⁴

Aid contributions go some way to fill the infrastructure gap in SEZs. For instance, a bridge across the Mekong River connecting Phnom Penh to Kandal Province in Cambodia is being opened, with the financial assistance of South Korea.¹⁵ Villagers expect that this bridge will enable them to sell their products in Phnom Penh. However, while some SEZs are located where ports can easily be developed, lagging infrastructure holds them back. For instance, inland waterway and sea routes in Vietnam are not optimally used due to inadequate investment.¹⁶These waterways have the potential to connect the inland to seaport SEZs such as Van Don SEZ. Only 1% of the investment in infrastructure in this SEZ went to developing inland waterway transport.¹⁷ This can lead to unbalanced development between coastal SEZs and inland parts of the country.

The Need for Soft Infrastructure

However, new roads, waterways and bridges are only a part of an efficient transportation network. These networks operate only as well as the capacity of those working on it. Even though a newly built bridge had the potential to reduce the shipping time between Bangkok and Hanoi from two weeks to three days, limited capacity, along with bureaucratic and administrative bottlenecks, delayed the process by weeks.¹⁸ Procedural issues are another problem. There are frequent stops at customs by the police and as a result, long border delays.¹⁹ Thus, customs officials have requested more training related to one stop service centers for customs, single stop inspections, and e-custom procedures.²⁰

Border Crossing at Poipet, between Thailand and Cambodia. Photo by Jorge Láscar via Wikimedia. Licensed under CC BY 2.0.

These trainings, another type of soft infrastructure, can become a potential focus for aid. However, there is limited information disaggregated to this level of detail about aid flows to this kind of training. Yet there is a need: according to a survey conducted by the Mekong Institute, the most needed capacity building related to infrastructure for firms in LMC SEZs is on customs infrastructure, and cross-border issues.²¹

In addition, training is also needed to upgrade skills of the local labour force. Two successful models have been developed in the LMCs to enable skills upgrades. The first is the Thailand Plus One model, which was developed by Japanese companies in Thailand’s industrial zones. This model enables Japanese firms in Thailand to transfer technology as well as increase capital per worker to neighboring LMCs.²² The second is the Vietnam Plus One model, which features a “train the trainer” program, to help develop skills transfer and retention of skilled labour.²³ These programs have been positive for countries that are low in skilled labour, such as Laos.²⁴

Despite these programs, challenges remain, including the lack of technology infrastructure, low R&D spending, and limited vocational and technical skills.²⁵ The LMCs have also had difficulty attracting foreign investment due to a lack of skilled labour. In Myanmar, insufficient skilled labour prevents advanced manufacturing industries and import substitution business from flourishing.²⁶ Improving such soft infrastructure can help to better link SEZs with the neighboring countries, including by promoting investor and trade confidence.

Infrastructure relevant to health, from physical structures to skills and knowledge, is also needed. However, this is frequently neglected by investors in SEZs. For example, in Myanmar’s Thilawa SEZ, only two out of the 82 approved investors do business related to managing health risks, one in medicine and one in waste management.²⁷ None of Cambodia’s four SEZs (Phnom Penh SEZ, Sihanoukville SEZ, Poipet O’neang SEZ and Koh Kong SEZ) have yet approved an investor conducting business in health-related industry. However, ADB indicates that SEZs can bring health risks such as hazardous waste for local communities in the Mekong Region.²⁸ Since most SEZs are located in outlying areas, both hard infrastructure such as roads, and soft infrastructure such as waste management are less developed than in urban areas.²⁹ Infrastructure that needs more investment includes disease data collection systems, water sanitation systems, waste management facilities, good-conditioned roads, and health services.³⁰

The Thilawa Terminal is adjacent to the soon-to-be opened Thilawa SEZ. Photo by Harry and Rowena Kennedy via Flickr. Licensed under CC BY-NC-ND 2.0.

Even though there are some international and local NGOs that aim to fill the gap between the high demand of sanitation and small proportion of ODA devoted to health, their impacts are still limited due to insufficient funding. Mismanagement of funds can be another challenge. In Myanmar, organizations helping local communities in sanitation improvement are faced with the challenge of layered accounting procedures, since they have limited funding and capacity to develop a financial management team.³¹ Donor benchmarks sometimes do not take into account these on the ground realities. These benchmarks are set to assess the success of the aid in health, but not effectiveness or sustainability. For example, WTO has multiple targets for aid in sanitation and health, including coverage for drinking-water supply, hygiene promotion and sanitation.³² While Myanmar turns out to be doing quite well in terms of meeting the target, the human capital and financial management of healthcare, as mentioned above, is still lacking. Thus, more programs emphasising monitoring is needed. For example, the Vietnam Rural Sanitation and Hygiene Program implemented by UNICEF seeks to ensure that infrastructure necessary for the sustainability of aid is in place. This includes training materials, standards for open defecation free (ODF) verification and certification, and capability of staff.³³ Such programs could help SEZs be more sustainable and beneficial for local communities.

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Since the establishment of the Shenzhen SEZ in China during the 1980s, Special Economic Zones (SEZs) as a development model have grown in popularity in Asia, alongside official development aid. SEZs have been promoted as being a resilient form of economic development, with the potential to involve local communities.¹ They are targeted toward foreign investors, especially through beneficial policies and regulations.² Although financing for SEZs is distinct from development aid, the two have significant overlap.

Shenzhen, previously a small fishing village, was developed into an SEZ in the 1980s. It is now one of the busiest ports and cities in the world. This image shows the level of Shenzhen’s development in 1999 on the left, and in 2008 on the right. Image by NASA. Image may be used for any purpose without prior permission with the exception of special cases indicated here.

How SEZs are used and promoted

In general, SEZs are intended to foster competitive development of a country, a region or an urban area.³ This goal overlaps with the aim of aid, which is to promote economic development and welfare.⁴ In the Lower Mekong Countries, SEZs are specifically intended to promote cross-border trade through export-oriented manufacturing, by encouraging domestic and international investment in specific locations.⁵ For instance, the cross-border economic zone in the Golden Triangle of Thailand, Laos and Myanmar, developed under the Lancang-Mekong Cooperation scheme. It was envisioned to expand economic links for Thailand, Myanmar, Laos and China.⁶ Development aid can contribute to this in various ways, such as by connecting different economies with relevant infrastructure. For instance, 75% of Chinese aid goes to developing natural resources and building infrastructure.⁷ Approximately half of this aid contributed to transportation infrastructure such as road construction.⁸ With more highways connecting one country to another, cross-border trade can flourish.

At the Golden Triangle of Myanmar, Thailand and Laos there is a cross-border Special Economic Zone. Photo by Anthony Tong Lee via Flickr. Licensed under CC BY-ND 2.0.

SEZs are promoted by multilateral development banks like Asia Development Bank (ADB) as development tools to be used alongside official development aid. ADB suggests that, if designed and regulated properly, SEZs could bring in foreign investment, encourage better policy reforms, and improve domestic industries.⁹ However, development through SEZs may not be so inclusive of local communities. In reality, there are few links between the SEZ and the local economy it is in.¹⁰ For example, in Cambodia, an SEZ is located at the Greater Mekong Subregion (GMS) corridor, which is well placed for border trade. However, the government has not done enough to make use of its potential.¹¹

In addition, SEZs do not usually provide opportunities for skills upgrades for local employees. As a report by ADB shows, a large proportion of local employees in Tak SEZ (Thailand) are semi-skilled laborers, and only a small proportion are non-production workers (e.g., management, sales and administration).¹² Finally, large amounts of money have been invested in increasing the potential for foreign investment and international export, with a disproportionately low amount of attention being paid to whether such investments will be beneficial for local communities. For example, large-scale service industries, like casinos, are planned in the three proposed SEZs in Vietnam, including the Van Don SEZ.¹³ It is estimated that $12 billion is needed to develop the Van Don SEZ, half of which should come from domestic resources. ¹⁴ In a country where GDP per capita is only $2342.20,¹⁵ such spending, without explicit benefit to local communities, is significant.  An additional $330 million will be invested into developing an international airport.¹⁶

Overlap with Official Development Aid

Official development aid goes some way to fill this gap. In fact, there is some overlap of financiers of development aid with investors in SEZ in the LMCs. Top financiers of official development aid (ODA) in the LMCs are Japan, ADB, Korea, China, U.S, EU, and the Global Fund.¹⁷ Japan and China are also major investors in SEZs in the region. In Cambodia, Chinese investors make up the biggest portion of foreign investments in SEZs, which accounted for 29.92% of all foreign investment in 2016, followed by Japan 22.78% and Thailand 4.61%.¹⁸ In Myanmar SEZs, the biggest investor is Singapore, with $452.91 million invested at Thilawa SEZ, followed by Japan ($361.05 million), and Thailand ($125.31 million).¹⁹ In Laos SEZs,  29 of the 51 companies are from China, followed by Thailand and Lao (5 companies each), Malaysia (3 companies) and Singapore (2 companies).²⁰

Only some of the LMCs are visualized here due to availability of data.

A common priority for financiers of both SEZs and ODA in the LMCs is infrastructure. As infrastructure is defined quite broadly, this includes both the infrastructure for the SEZ itself (for investors in SEZs) as well as economic infrastructure (for investors in ODA).

Infrastructure is necessary to connect the SEZ with the rest of the country. However, this development does not always keep pace with the development of the SEZ. Generally, high trade costs can mean poor-quality transportation infrastructure. However, substantial investment in road improvements does not guarantee good trade due to poor soft infrastructure (defined as institutions that are essential to the economy such as governance, health and education²¹) in the LMCs. Examples of issues include lengthy border delays and frequent stops by the police.²² Thus, development aid dedicated to social infrastructure like governance and regulation may be conducive to more inclusive SEZ development.

If development aid is used to facilitate infrastructure development around SEZs, there can be an increase of connectivity. For example, before the establishment of East-West Economic Corridor, many Thai traders took boats across the Mekong River to sell their items in Vietnam, which took a long time.²³ But after a bridge was built, traders took buses or cars instead, which was more time efficient. Thus, as prioritized by Chinese investors, hard infrastructure projects as a form of development aid such as roads can promote connectivity of local communities.

Making Connectivity Useful

However, simply having such installations is not enough, since low skills, poor technology uptake, or limited understanding of regulations by local communities may mean that the increased connectivity cannot be used. For example, the three proposed SEZs in Vietnam bring with them the mission to build “smart cities”, with a focus on high-tech industries.[ref]Nhan Dan. 2019. Developing smart cities in Vietnam. Accessed July 4th, 2019.[/ref] However, this does not necessarily benefit all, as consultations are less than inclusive, and these smart cities will not be accessed by all.²⁴ Digital awareness and system synchronization in Vietnam remains lacking, despite ODA into smart city development.²⁵ In addition, there is a lack of skilled labor in Vietnamese market, which could limit the benefit of high-tech industries for Vietnamese workers and citizens.²⁶ In general, however, SEZ financiers pay only limited attention to improving local people’s access to technology. In this circumstance, aid directed towards soft infrastructure is helpful. Japanese aid in Cambodia is an interesting case, as the country has provided aid to establish SEZs.²⁷ In 2016, Japanese ODA to Cambodia included $1084 million in loan aid, $1831 million in grant aid, and $808 million in technical assistance.²⁸ The Phnom Penh SEZ’s facilities are supported by the Minebea industrial zone, where Japanese firms have created an environment of learning and capacity building.²⁹

The Second Thai-Lao Friendship Bridge connects the two countries and is near the Savan-Seno SEZ in Lao PDR. Photo by Premica Pata via Wikimedia. Licensed under GNU Free Documentation License Version 1.2.

Indeed, while SEZ brings about more employment opportunities, it does not necessarily empower local people to benefit from businesses in SEZ. While as mentioned above, most financiers prioritize infrastructure in SEZ, in some SEZs, in order to attract more attention from foreign investors, governments prioritize entertainment businesses. For example, the Savan-Seno SEZ in Laos remained a place primarily filled by casinos and hotels during the first several years after the opening of the second Thai-Lao Friendship Bridge in 2007. Critics connect this to issues around sex work and child labour around the SEZ.³⁰ In addition, despite the fact that much aid is provided for economic infrastructure, including energy, they do not necessarily benefit the local people. SEZs in Myanmar, for example, are considered to be part of the Belt Road Initiative, and some of the SEZs export gas to the Yunnan Province of China, rather than retaining it for use in Myanmar.³¹ In addition, much of the land used for entertainment businesses are expropriated from locals. The Savan-Seno SEZ is built on land which was previously used for agricultural purposes.³² However, those directly impacted by this expropriation of land are neither adequately consulted nor properly compensated. Nor is there transparency – local government officials have said the compensation amount is not available until the land concessions are approved.³³ Also, in Thailand’s Nakhon Panom SEZ, the land was expropriated from local villagers by the military junta in 2014, who refused to discuss compensation.³⁴ Local civil society organizations that protested against this arbitrary expropriation of land reported that they were threatened and harrassed by the police.³⁵

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