24/12 Laos’s Chinese Gamble

December 24, 2010

By Tom Fawthrop

A new casino complex is supposed to transform poor Ton Pheung into a ‘Macau on the Mekong’. But some locals are already nervous.

• Laos’ Murky War on Drugs
• The Battle Over the Mekong
• China’s High Risk India Gamble
• Asia’s Opium Resurgence
• The Chinese Are Coming!

A large golden dome dominates the Laotian landscape on the other side of the Mekong River. From Chiang Saen, the ancient capital of the Lanna kingdom and now a Thai port, visitors board boats at a landing stage built by a Chinese trading company. Every 15 minutes, visitors are picked up by fast launches and whisked across the river.

Landing on the Laotian side, they’re ushered into a pompous domed edifice emblazoned with Chinese dragons on the stairway that houses the immigration arrival hall in the casino zone of Ton Pheung in Laos’ Bokeo Province. Welcome to the Golden Triangle’s glittering new gambling city, dubbed the new ‘Macau on the Mekong’.

Yet getting to stamp a 14-day free entry stamp into visitors’ passports is about the only remaining semblance of authority still exercised by the host Laotian government in this Chinese-run Special Economic Zone (SEZ).

Along the waterfront, high-powered boats disgorge Chinese businessmen, investors, gamblers and tourists. Some have made their way here not through the popular route via neighbouring Thailand, but directly from Yunnan Province in China, while others arrive by land along the vastly improved road from the Chinese border at Boten.

This may be Laos, but the 4-star hotel, restaurants, shops and the currency are all Chinese. In every direction there’s the buzz of ongoing construction in this 3000-hectare entertainment and trading zone. The resulting atmosphere jars with the country’s usual lazy charm, Buddhist culture, rich ethnic diversity and the communal village traditions of the province. Indeed it feels much more like a commercial enclave of China. But it’s an enclave that seems beyond the normal jurisdiction of its weak host state. In the words of one casino executive: ‘We have our own government inside the zone.’

A group of Chinese investors are trying to transform the Golden Triangle’s traditional image as a mecca of the international heroin trade to a ‘Macau on the Mekong’ by luring gamblers, tourists and traders. When the complex is completed at the end of next year, it will boast two golf courses, karaoke bars, massage parlours, swimming pools, hotels, a clinic and shopping centre. But it’s no accident that the first building in place is the casino. After all, gambling is illegal in both Thailand and China.

The first phase of construction, which includes a road to the nearest town of Ban Houei Xay, will cost between $200 million and $300 million. The total undertaking, meanwhile, is expected to cost about $2.25 billion dollars, with over 50 projects to be completed by 2020.

The company behind all this is little-known Dokngiewkham, registered in Hong Kong and also known by the English name The King Romans Group. Its investors are said to hail from Hong Kong, Macau and Yunnan Province, although the group has declined to divulge the names or details of their backers.

This mega project’s strategy is based on rapid regional integration and the construction of an ‘Asian highway’. Road improvements have greatly improved road access from Yunnan through Laos to the Thai border at Chiang Khong on the Mekong, while railway links are also in the works that will link northern Thailand through Laos to China.

Laos’ communist government has signed over 10,000 hectares to Dokngiewkhamon a 99-year lease basis. A prime ministerial decree in February, meanwhile, set out the guidelines for ‘the establishment and management of the Golden Triangle Special Economic Zone’ with 3000 hectares designated as a duty-free SEZ. The rest has been set aside for eco-tourism, with the government to share the profits with the developer.

Yet despite the fact that China is the biggest investor in Laos, with a plethora of rubber plantations and mines, an influx of Chinese settlers is fuelling growing anti-Chinese sentiment in this landlocked nation.

Laotian farmers already complain they’ve been pressured by local authorities to sell land for excessively low prices to fast expanding Chinese rubber plantations. The casino project, with its plans for a new city of more than 50,000 people—a prospective Chinatown in the Golden Triangle—are therefore almost certain to fuel more local resentment.

The mood isn’t helped by the fact that an older Chinese-run casino in Boten has acquired an unsavoury reputation for being rife with drugs, kidnappings, blackmail and murder. China has warned its citizens to stay away and claims to have asked the Lao government to close it down. But it remains open, still firmly in the hands of private Chinese investors who employ their own security force, which many say acts with impunity.

E. Abbas a Dokngiewkham executive, admits the group’s previous experience is limited to operating casinos in Mongla, a Chinese-dominated border town in Special Region No. 4 of Shan state in Burma. Built among the ethnic hill tribes of northern Burma, Mongla has a reputation for being a hotspot of laundering for the profits of the region’s drugs trade, all under the supervision of local warlord Sai Leun, aka Lin Ming Xian.

It’s only a short trip from Mongla across the Mekong to the casino complex in Ton Phueng. Already, there’s a fleet of SUVs and a stretch limousine parked outside. Yet Dokngiewkham’s website, for one, gives no clue at all as to the identity of the main investors in this lavish project.

Chao Wei, the chairman of the SEZ management committee, who is said to have good connections in Macau, is keeping his financial backers a close secret. Is Mongla kingpin Lin Ming Xian, known to frequent the Ton Pheung casino, among the investors? No one will say.

Thai businessman Pattana Sittisombat, president of the Committee for the Economic Quadrangle and a key figure in economic cooperation between northern Thailand, Laos and Yunnan Province, says he’s worried about where all the money is coming from.

‘I’m absolutely concerned about the possibility that illicit funds could be attracted to this project, and that it could provide opportunities for money laundering,’ he says.

Abbas, though, is dismissive of such talk. ‘I can offer reassurances that our casino doesn’t tolerate any illegal activities or money-laundering.’ Arguing that the region’s opium heydays of the 1960s through 1990s are a thing of the past, Abbas adds: ‘It’s part of our project to be a Golden Triangle theme park.’

While Afghanistan has long overtaken Burma as the world’s largest source of opium cultivation and heroin production, the Burmese narcotics trade has recently seen a resurgence. Indeed, although Special Region No. 4 has supposedly abandoned narcotics, the dominant military force in this remote region of northern Burma is still the UWSA, one of the world’s  major drug-trafficking militias, which operates in the adjoining Shan State region No. 2.  

Laotian people are already victims of the rampant smuggling of ‘Ya Ba’ (the local term for amphetamines), which are manufactured in small laboratories just across the Mekong by USWA forces. With this Chinese enclave effectively operating outside the sovereignty of the host country and shrouded in mystery with its unknown cash flows, hidden backers and secret investment partners, unrest among ordinary Lao seems bound to escalate.

Asked who he thought was in control of the complex, one villager living just outside the construction zone pointed in the direction of the casino. ‘Over there, it’s no more Lao,’ he said simply. ‘That’s China.’

Photo Credit: Tom Fawthrop

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Chinese Investment, Gambling, Golden Triangle, Laos, Mekong River, Thailand, Yunnan Province

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