LUANG PRABANG, Laos (AP) – Senior finance and central bank officials from Southeast Asia and major economies met Thursday in the picturesque Lao city of Luang Prabang to address the region's response to shocks such as the COVID-19 pandemic and natural disasters. We discussed ways to help build resilience. brought about by climate change.
The need for faster progress became dramatically clear when the city and surrounding areas were enveloped in thick smoke from the fires. Some fires cleared forests for crops, while others were ignited by record high temperatures and dry crater conditions. The air quality index early Thursday was near 300, or “very unhealthy.”
Laos and other Southeast Asian countries are working to find more sustainable ways to feed their people and boost their economies. The question is, where will the money come from to do that?
Green finance is one of the topics on the agenda of the Association of Southeast Asian Nations' Finance Conference related to combating the growing effects of global warming. Officials were also scheduled to discuss the ASEAN Infrastructure Fund, disaster risk financing and insurance, according to an agenda provided by the organizers of this week's meeting.
Also on the list is refining a “taxonomy” to help identify and agree on projects that support ASEAN's sustainability agenda and align with climate action and other goals.
The 10 ASEAN member countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) range from small but wealthy Brunei and Singapore to large, fast-growing countries like Vietnam and Indonesia. It covers a wide range of countries, including major economic powers. They have pledged to reduce carbon emissions to lessen the effects of climate change, but are struggling to find ways to finance the transition.
ASEAN member states are highly vulnerable to extreme weather events, drought and sea level rise. According to various estimates, investment in clean energy will need to increase five to seven times, to more than $200 billion annually. Laos and its neighboring countries are also grappling with a number of other regional issues, including human trafficking, the growing illegal drug trade, and rapidly growing enclaves of online fraud centers run by criminal organizations.
Laos, a landlocked country with a population of approximately 7.5 million people, is blessed with hydroelectric power, but its economy has shrunk in recent years, and national finances are under strain due to large amounts of external and domestic debt, currency depreciation, and inflation.
Progress has been slowed by long-standing traditions and a lack of funding to persuade farmers not to rely on crop burning, the most affordable option. The government has set a goal of reducing the number of fires by 35% by the end of 2025. Similar fires occur in neighboring Thailand, Myanmar and Cambodia, blanketing the region in thick smog for weeks at a time each spring.
Countries in the region have begun building regional power grids as a step toward improving the balance between supply and demand.
A higher priority for Laos, a communist country with an average annual per capita income of less than $2,000, is to integrate itself into the broader regional economy of some 660 million people. Together, this makes the region the world's fifth largest economy with approximately $3.3 trillion.
Like many countries in the region, Lao's economy is increasingly intertwined with China's. Those ties have deepened with the construction of a $6 billion high-speed railway that will connect to railways in southwestern China's Yunnan province and eventually to Bangkok and the Gulf of Thailand. The downside is debt, which greatly drains the country's resources.
The talks in Luang Prabang will be attended by regional financial leaders as well as senior officials from major international financial institutions such as the International Monetary Fund and the Asian Development Bank, as well as representatives from Japan, China, the United States and other major economies.
U.S. Treasury Secretary Janet Yellen will not be attending the talks, but is expected to visit China this week and meet with U.S. business leaders and Chinese officials in Guangzhou, southern China, and Beijing.
Also in Beijing this week were Indonesia's President-elect Prabowo Subianto and the foreign ministers of Vietnam, Laos and East Timor, which is seeking to join ASEAN. The successive visits highlight conflicts over influence in the region.
