3 August 2011
The price of Special Economic Zones

By Burrito

A lot have been said about the benefits of establishing a special economic zone (SEZ). It is seen to boost national economy as it would attract foreign investments brought by a much friendlier set of regulations in terms of duties and tariffs which results in an atmosphere more conducive to a smoother influx of goods and services. This may result in employment and, probably, development of new technologies.

Establishment of SEZs is part of the Asian Development Bank's "economic corridor" approach to development which includes construction of super highways, railways and transmission lines to hasten trade and investment among countries in a given region. An SEZ complements this development approach as it opens up a country to the global economy.

However, there are tradeoffs that may come with SEZs: prostitution, human trafficking, displacement and even drug abuse. Here's a compelling story that provides a glimpse of how SEZs  affect local communities. Focusing on Laos, the author shares the impact of establishing SEZs. Without putting the right safeguards in place to hold the government and the ADB accountable, local communities are exposed to exploitation.

According to the article, the United Nations Children Fund (UNICEF) and the United Nations Office on Drugs and Crime (UNODC) published reports documenting the present situation in Laos. And despite these concerns, the ADB has continued to support special economic zones in the country and will be supporting a new one in Huaphan province.

You may read the article below.

Local losers in Lao casino capitalism
By Beaumont Smith/Asia Times

KHANTABOULY, LAOS, 2 Aug 11 -- The girl looked no older than 14, a pale and an unconvincing sex goddess peering out from a mobile phone screen, her hair thin and straight. Trying to be sexy, she fondled a pubescent breast. Her knickers had holes, a touching but tawdry detail. Her phone number was displayed on the bottom of the screen. You could call her, the message said, and she would come to you. Child exploitation, Lao style.

The sale represents a business opportunity for Khemsath, a local motorcycle driver. "Sure, you can get sexy [girls] downloaded into your mobile phone." He went away on his motor bike and returned a half hour later with stock. "Easy to get in the markets," he said with an uneasy laugh. He was clearly embarrassed as he revealed images of kids having groping sex on his iPod.

If a draft report by United Nations Children Fund (UNICEF), the United Nations Inter-Agency Project on Human Trafficking (UNIAP), World Vision, Child Frontiers and Save the Children has it right, many of the customers for these images are from neighboring China and Thailand. The fear is that with the clampdown on tourism-driven pedophile rackets in neighboring countries that Lao children might be the next target for globe-trotting sex predators.

This comes at a time when a large number of families in Laos are being relocated or impoverished by rapid state-led development, including for so-called special economic zones (SEZs). The report, yet to be translated by the Lao government, reveals a seamy side to Laos' economic development and raises many questions about the nature and pace of change in a nation that has casinos but poor health care, a rocketing Gini coefficient and a drive towards rampant consumerism despite low wages.

Anthropologist Jim Chamberlain and his research colleagues were among the first to raise issues about the downside to development in Laos in a UNICEF-sponsored report entitled "Broken Promises Shattered Dreams". The 2005 study of child trafficking indicated that children, mainly girls, were trafficked across Laos' porous borders into Thailand, China and even into Myanmar.

The children often came from resettled or relocated villages, according to the report. Modernization and the effects of mass media were at that stage major drivers of the trend. The more recent multi-agency study can be taken as an indicator that little if anything has changed since the Chamberlain report. Indeed, a host of new social problems is emerging alongside new trends in development, including the advent of casinos dressed up as SEZs.

Santavasy, a social worker who worked on the earlier study, concurred. "The reason [girls get involved] include less job opportunities with decent pay, imbalance between social development and economic development," she said. "If the numbers are getting bigger it could mean we are getting better at finding the victims and repatriating them back to Laos, or it could mean more human trafficking of Lao youth into Thailand."

Casinos, recent research shows, are particular magnets for crime. The casino in Boten, situated along the Chinese border, greeted the outgoing head of the Swiss Development Agency Martin Sommer with a belligerent Russian thug backed by rooftop snipers when he visited in 2010, according to people familiar with the situation. Adverse publicity apparently caused the casinos at Boten to close a few months ago - at least temporarily.

But Lao's central and southern casinos, which cater mainly Thai gamblers and are protected by senior Lao politicians, are still doing brisk trades alongside rising crime ranging from child prostitution to drug abuse to robbery.

"I moved to Vientiane as I don't feel safe in Savannakhet [province] any more," said Bounma, a university graduate currently based in Vientiane. "Savannakhet has so many gangs now that they can't keep the criminals in jail. They can't afford the food for so many prisoners, so they are out in a few days."

Bounma recounted how one of her friends became a drug addict while working at Savannakhet's Savan Vegas casino. She then turned to sex work to pay her gambling debts and feed her drug habit. "She thought that because she worked there she knew the secrets, but she lost like everyone else," Bounma said. "Many pretty girls go to the casino to sleep with men then gamble the money. But then they are not clean any more, so [they] look for work in Thailand because they can't marry here. They cannot go home."

The United Nations' Office for Drugs and Crime (UNODC) has documented rising drug addiction rates in Laos, though its research has not linked the trend directly to the rise of casinos. Yet much of the drug abuse, locals say, is taking place in the vicinity of the gambling havens.

Khetdavanh, a high school teacher living on the edge of Khantabouly in Savannakhet, noted that children are being drawn into the facilities by bright lights and excitement. "Parents don't take care of the children. They gamble at the casino or are busy earning money…so the children are [abandoned]," she said. "The dropout rate is very high and half of my students are addicted to drugs. Many sell them openly in class. I have no authority."

She said methamphetamine dealing has become particularly rampant and that the local police look the other way. "Last week many motorbikes stopped me sleeping. They were going around the police station calling out insults. I recognized some as my ex-students who had become dealers. The police were too scared to come out," Khetdavanh said. "So far this year over 100 people [have been] killed in gang fights and drug arguments."

Casino-related lawlessness extends beyond drug abuse. "My friend became a [croupier] at Savan Vegas. Some of the men threatened her when they kept losing. One man followed her home in his car yelling at her," said Bounma. "Two nights later they found her body in a drain. You cannot imagine what she looked like."

"It's a big problem for women here as the foreigners who come don't care about us. My neighbor's daughters were dragged into a car as they passed outside the casino. They were both raped. When the women came back they said they had lost their souls," she said.

The Savan Vegas casino, whose ownership is attributed to an investment group in Macau, has consistently insisted in public statements and research interviews that it does not allow underage prostitution or drug abuse at its facilities. Requests to contact the casino's management for this article were not returned.

Sohmadhy, a US-trained youth worker in Savannakhet, believes the casinos are targeting Lao youth. "Schools are the pick up places for pimps working for men with big stomachs [metaphor for wealthy]. The idea of working in mobile entertainment places is very attractive, so they go," she said. "A few months ago a Lao official went to the casino and saw a Lao girl pole dancing. She was almost naked - I think he was shocked as this is not our culture. He wanted to close the place, but they [management] agreed to stop the dancing."

Gambling debts are another ill. Khammly, a local small business man, said that his brother was forced to forfeit his car as collateral for gambling debts he accrued at one casino. Officially Lao are prohibited from entering casinos, but the ban is easily circumvented. On-line Lao chat rooms are full of stories about car parks full of "debt cars'. "They say that Lao [are] not allowed but it's easy to get inside. He lost many times, big money. He had a Lexus. He was told to leave it outside."

Despite rising concerns that casino-led development and modernization has given rise to more problems than it has solved, the Asian Development Bank (ADB) continues to support the tax-free SEZs where Boten's and Savannakhet's casinos have flourished at a heavy social cost. Earlier this year the ADB announced plans for a new SEZ in remote Huaphan province, which borders on Vietnam. Social workers expect more casinos and social ills to follow.


You may also visit Asia Times by following this link:
http://www.atimes.com/atimes/Southeast_Asia/MH02Ae01.html
You may also read BothENDS's ADB and Special Economic Zones: ADB and the Greater Mekong Subregion Program



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... a watchdog network of civil society organizations and grassroots groups that have been monitoring the Asian Development Bank's programs, policies and projects since 1992.


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16 Aug 2011, 4:00 pm
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