It's a bumpy road back for Lao exiles
By Stephen Kurczy

LUANG PRABANG - After decades in exile, Lao refugees who sought political asylum in the West are now returning to their homeland, investingin business and boosting an economy starved for educated and cash-rich entrepreneurs. Some 250,000 took refuge in the United States and tens of thousands more landed in Europe, amounting to a far-flung Lao diaspora.

As Laos' communist leaders transition towards a market-driven economy, former adversaries are being allowed to invest in the country's capitalist future. Sommay Inthavong, who runs a French restaurant catering to upscale tourists in Luang Prabang, is among the country's returned entrepreneurs. He was also among the hundreds of thousands who fled the country when the Stalinist Pathet Lao seized power in 1975.

Fearing harassment or worse from the new communist regime because of his work in the country's pre-revolution interior ministry, Sommay moved to southern France where he found work as a dishwasher. He was later promoted to top chef, culinary skills he's brought home to Laos. "I had to leave and go into exile," said the outspoken 64-year-old in a recent interview. "It was another life. I started out with nothing."

He was not alone. Many educated Lao royals fled when the ideologically-driven Pathet Lao abolished the monarchy. One young prince, Nithakhong Somsanith, moved to Paris, where he earned a PhD in psychology from the Sorbonne and joined a French government department treating Asian immigrants suffering identity crisis.

Trained in gold thread embroidery as a youth in the Lao royal court, Nithakhong used art therapy to help immigrant Asians seeking to understand their roots. Eventually, he found himself also seeking to more fully comprehend his heritage.

"To discover yourself and make sense of your identity - it's normal and human," he said at his home in Luang Prabang, where he now teaches gold thread embroidery to Laos youth. "I need to make something for my country, my culture."

That calling is luring many former Lao refugees home. While many other Asian immigrants choose to move to the West in search of opportunity, Lao political refugees were forced to leave, engendering a deep desire to return, said Peter Kwong, head of Asian-American Studies at New York City's Hunter College.

"Laotians left in a rush to survive," Kwong said in a telephone interview. "They left suddenly, and when they got to the US they didn't feel prepared, they didn't fit in. After all these years, they are still basic refugees. So when they have a chance, they want to go back."

Lao-American families have risen out of poverty and substantially increased their incomes over the past two decades. Median income among Lao-American families rose from $23,000 in 1990 to $56,441 in 2007, according to the US Census Bureau, although this was still below the national median average of $61,173. Meanwhile the percentage of Lao-American families below the poverty line dropped from 32% in 1990 to 12% in 2007.

As these former refugees now approach retirement age, many of them are taking their savings and returning home, said Vinya Sysamouth, executive director of the Center for Lao Studies in San Francisco. More than 500,000 Lao currently live in the US, and Vinya estimates that 20,000 to 30,000 Lao-Americans have in recent years returned permanently or semi-permanently to Laos.

"The people who go back usually do small businesses, setting up dental offices, mechanic shops, car dealerships, hotel-guesthouses," Vinya said by telephone. "I know so many people retiring and living in Laos. My parents want to go back, maybe in the next five to 10 years. My father wants to die in the country he was born."

Laos' first privately owned and operated publication, a business magazine called Update, was started by a returnee from Hawaii. Mana Southichack, 41, left Laos in 1981 when his father, a soldier with the pre-communist government, was released from a labor camp. Mana returned to Laos in 1998, intending to teach at a university but he was denied the position because he was not a Lao citizen, despite his PhD in economics from the University of Hawaii.

Determined to stay, he founded Update and began a private business consultancy. "People living outside of Laos have a lot more exposure to what's going on in the market, what's being sold. So they see the business opportunities [in Laos]. They see the gap and they try to take advantage of that," Mana said.

Economists say the growing number of returnees could help rebuild one of Asia's poorest economies. "It will have a huge impact across the board" if expatriate Laotians return home, said Ekaterina Vostroknutova, senior economist for Laos at the World Bank. "There are not enough educated managers [or] high-skilled people in the country."

Unskilled boom
Laos' real gross domestic product (GDP) growth averaged 7.3% between 2003 and 2008, driven by mining, hydropower and commercial agriculture activity, according to the Asian Development Bank (ADB). (GDP growth is expected to dip to 5.5% in 2009, as key exports of clothing, hydropower and minerals fall in line with the global slump.)

Per capita incomes climbed to $840 in 2008, from $581 in 2006, and private investmentlevels climbed to 33% of GDP in 2008 from 24% in 2006. The fast growth lifted many out of poverty, which fell from 33.3% of the population in 2003 to 27.1% last year.

"There is a very stable political environment, economic growth has been impressive and the social climate is the safest anywhere. These are key aspects which are boosting investor confidence not only to foreign investors but also to diaspora Laos," ADB country economist Christopher Hnanguie told Asia Times Online.

The World Bank's country overview notes that Laos "faces significant capacity challenges, in both the quantity and quality of its workforce". Because of this, the ADB wrote in a recent report that the Laos government lacks the capacity to carry out reform policies and recommended that revenues from mining and hydropower projects be invested in education and training to make up for "shortages of skilled labor".

The Lao diaspora's contribution to closing that skills gap is still minimal, with the return of migrant Lao workers and former refugees from Thailand having a bigger impact in bridging the divide, according to the ADB's Hnanguie. The skills gap is a legacy of the communist takeover and the Stalinist regime's subsequent mismanagement.

Those who fled Laos in the 1970s and 1980s were often members of the ruling class, or the country's most highly educated. Today, only 3% of GDP is invested in education and "only one-third of students that enter first grade are estimated to complete all five grades of primary schooling", the World Bank said in a 2008 report.

Although labor is cheaper in Laos than in surrounding countries, it fails to capitalize on this comparative advantage because of a lack of skilled entrepreneurs to provide employment for these workers, said World Bank economist Vostroknutova.

That means non-Lao are mostly left to fill the entrepreneurial gap. International firms usually send in their own managers and executives to operate their branches in Laos. More visibly Westerners have opened restaurants and art shops around Luang Prabang, to capitalize on the growing throngs of tourists to the United Nations-designated World Heritage Site.

While foreigners bring much-needed capital, some note that they're also changing the face of Laos. "Luang Prabang is not a melting pot. We have our own style. We have our own identity," said Prince Somsanith, who says he would prefer to see Lao nationals return to apply their overseas business savvy to the local context.

Somsanith returned to live in Luang Prabang in 2005. He now lectures at a local university and is the cultural adviser for the soon-to-open Amantaka boutique hotel, a member of the Aman franchise. He said he sees himself as a cultural ambassador for Luang Prabang, fighting the negative impacts of mass tourism by encouraging young Lao to preserve traditional culture.

The Laos government says it is also looking at this new generation to fill the nation's entrepreneurial and managerial gap. Every year the government provides scholarships to 200 university students to study abroad, with the stipulation that they maintain their Lao citizenship and return after completing their studies.

"The government is benefiting hugely from this program because the government's capacity to implement policy is low," said Vostroknutova. "It's not just speaking English, it's also the ability to manage a firm." Yet many former Lao refugees, after decades away from their homeland, face cultural and linguistic hurdles upon their return.

"Many times I speak Lao better than they do," said Sebastian Rubis, the head chef of an upscale restaurant in Luang Prabang, who notes both an increase in returnees and their failure to assimilate. "It's a typical immigrant story. You come back and people don't recognize you as part of the community any more," said Peter Kwong, the professor at Hunter College.

Returnees also expect their income to match their educational level, but they're finding that they receive Lao-level - and not Western - wages on their return. This eventually drove Mana, the founder of Update magazine, back to the US for a higher-paying job. "Because I have a Lao name, people wanted to hire me at a Lao rate. To me, it wasn't enough," he said by telephone from Honolulu, Hawaii, where he works as an economics and business director.

Another hurdle for returnees is the Lao government's ban on dual citizenship. By contrast, exiled Cambodians and their foreign-born children are constitutionally recognized citizens, helping many of them to maintain ties to their motherland and encourage their return.

Former senator and now spokesman for Cambodia's Council of Ministers, Phay Siphan, retains his US citizenship and the fact that his father was in charge of the bodyguard unit for former prime minister Lon Nol - who overthrew the current king's father - is surprisingly unproblematic. "It's a melting pot of royalists, republicans and communists," he said of Cambodia.

The political atmosphere in Laos, however, is less forgiving of the past. The government remains wary of foreigners and communism is still used as a tool to discipline civil servants and keep state officials and other potentially unruly elements in check, according to regional security analyst Bertil Lintner. (See Laggard Laos turns the economic corner Asia Times Online, January 10, 2008.)

Prince Somsanith claims to be the first member of Lao royalty to return to work in the country, but he constantly noted that his "mission here is not for politics; it's for art". Other returnees are similarly wary of their personal histories and perceived associations. "I am a cook. I am not political," Sommay, the restaurant owner, repeatedly said during the interview.

While Sommay and Somsanith both said they're eager to invest and contribute to Laos' emerging economy, both added that they have no intent to sacrifice their key to the West - a passport - in favor of nostalgia. "My identity is in my heart," said Somsanith, "not on the paper".

Stephen Kurczy is an Asia Times Online contributor based in Cambodia. He may be reached at kurczy@gmail.com.