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Urbanization Processes in the Lao PDR

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Urbanization Processes in the Lao PDR Urbanization processes in the Lao PDR Processes, challenges and opportunities Final report, 19.11.2018 Prepared by the Centre for Development and Environment University of Bern, Switzerland Commissioned by and submitted to the Swiss Agency for Development and Cooperation SDC Urbanization processes in the Lao PDR Processes, challenges and opportunities The analysis and report were prepared in March and April 2018, with final revisions in November 2018, by Michael Epprecht, Nicholas Bosoni, and Daniel Hayward Centre for Development and Environment Country Office in the Lao PDR Simuang, Vientiane, Lao PDR Cover page photo (by Michael Epprecht, March 2018): That Luang marsh in the suburbs of Vientiane Capital City. The marsh is a large Chinese SEZ. The marsh lands were used for fishing, aquaculture, and some rice paddies, typically by poorer segments of the suburban population. Table of Contents Table of Contents 1 List of abbreviations 4 0. Executive summary by SDC 6 1. Introduction 9 2. Patterns and trends of urbanization in the Lao PDR 10 2.1. Main characteristics of urban areas and urban growth 10 2.1.1. Definition and categorization of towns and urban areas 10 2.1.2. Regional context 11 2.1.3. Urbanization and urban growth in the Lao PDR 11 2.1.4. Migration 13 2.1.5. Labor market 14 2.1.6. Poverty 14 2.1.7. Inequality 15 2.2. Projections of urban development in the Lao PDR 16 2.2.1. Overall trends of urban growth 16 2.2.2. Vientiane Capital 16 2.2.3. Large provincial towns 16 2.2.4. Small provincial and district towns 17 2.3. Key national frameworks and public institutions guiding urban development 17 2.3.1. National legal framework 17 2.3.2. National policies and strategies 18 2.3.3. Public institutions 19 2.4. Key challenges for urbanization 21 2.4.1. Ineffective urban governance and planning, and uncoordinated land management 21 2.4.2. Mismatch among the demand and supply of jobs, labor and capacity 21 2.4.3. Non‐conductive environment for employment‐seeking migrant populations 22 2.4.4. Inadequate development of public services particularly in cities 22 2.5. Potentials of cities, towns, and rural‐urban linkages for poverty reduction 23 2.5.1. Strengthened value‐ and marketing chains for clean local agricultural produces 23 2.5.2. Improved access to education and trainings for the right skills for decent work and local entrepreneurship 23 1 | Page 2.5.3. Improved urban governance to benefit urban poor and employment‐seeking migrants 24 3. Stocktaking of main development actors’ activities 25 3.1. Main development partners and areas of intervention 25 3.2. Major unaddressed issues and challenges 26 3.2.1. Rural‐urban employment‐seeking migrants 26 3.2.2. Urban governance 26 3.2.3. Link between TVET and entry into employment or self‐employment 26 3.3. Current and planned activities of SDC that reach out to (peri‐)urban contexts 26 3.3.1. Agriculture and food‐security 27 3.3.2. Governance and citizen participation 27 3.4. Issues and challenges addressed by SDC and not yet covered by other donors 29 4. Reflections and recommendations 30 4.1. Opportunities for action of SDC 30 4.1.1. Agriculture and food‐security 30 4.1.2. Governance and citizen participation 31 4.2. Main recommendations for SDC to integrate a perspective on urbanization issues 32 References 33 Annexes 36 Annex 1: Definition of towns and urban areas used in the Lao PDR 36 Annex 2: Delineation of urban areas of a town 38 Annex 3: Size and type of largest towns in the Lao PDR 39 Annex 4: Main town categories in the Lao PDR 40 Annex 5: Map of nighttime light emission in Southeast Asia 41 Annex 6: Map of location, size and administrative type of towns 42 Annex 7: Distribution and growth of urban populations 43 Annex 8: Characteristics of migrants in the Lao PDR 45 Annex 9: Annual labor growth rate in manufacturing in the Lao PDR: 47 Annex 10: Annual labor productivity growth rate in manufacturing in the Lao PDR: 48 Annex 11: Incidence and density of poverty 49 Annex 12: Maps of poverty and inequality in the four biggest towns 50 Annex 13: Distribution and growth of urban poor population 52 Annex 14: Gini index of inequality by town type 54 Annex 15: Projected population size of 15 largest towns in 2045 54 Annex 16: Planned major transit corridors in Southeast Asia 55 2 | Page Annex 17: Location of SDC funded project activities 56 Annex 18: OIganizations and projects touching on urban development issues 57 3 | Page List of abbreviations ADB Asian Development Bank AFS Agriculture and Food Security ASEAN Association of Southeast Asian Nations AusAID Australian Agency for International Development CDE Centre for Development and Environment CEGGA Citizen Engagement for Good Governance, Accountability and Rule of Law CSO Civil Society Organization DHUP Department of Housing and Urban Planning DPWT Division of Public Works and Transport FDI Foreign Direct Investment GIDP Governance for Inclusive Development Project GiZ Gesellschaft für internationale Zusammenarbeit GMS Greater Mekong Subregion GoL Government of the Lao PDR GRET Groupe de Recherches et d'Echanges Technologiques JICA Japan International Cooperation Agency Lao PDR Lao People's Democratic Republic LDC Least Developed Country LSB Lao Statistics Bureau LURAS Lao Upland Rural Advisory Service LuxDev Lux‐Development MLSW Ministry of Labor and Social Welfare MoNRE Ministry of Natural Resources and Environment MPI Ministry of Planning and Investment MPWT Ministry of Public Works and Transport MRS Mekong Region Strategy MSFNSAP Multisectoral Food and Nutrition Security Action Plan NASA National Aeronautics and Space Administration NEM New Economic Mechanism NGO Non‐governmental Organization NGPAR National Governance and Public Administration Reform NSEDP National Socioeconomic Development Plan NTFP Non‐timber Forest Products OPWT Office of Public Works and Transport PRF Poverty Reduction Fund PTI Public Works and Transport Institute PTT Policy Think Tank SDC Swiss Agency for Development and Cooperation SDG Sustainable Development Goals SECO State Secretariat for Economic Affairs SEZ Special (or Specific) Economic Zone SURAFCO Support to the Reform of the Northern Agriculture & Forestry College 4 | Page SUT Sustainable Urban Transport TABI The Agrobiodiversity Initiative TLIC Turning Land Into Capital TVET Technical and Vocational Education and Training UN United Nations UNFPA United Nations Population Fund VCOMS Vientiane City Office for Management and Services VELA Vocational Education in Laos VUDAA Vientiane Urban Development Administration Authority WWF Worldwide Fund for Nature 5 | Page 0. Executive summary by SDC by Serge Oumow, SDC Programme Manager Laos/Mekong Here below is a summary of main points and highlights from the study, hoping it will be useful for colleagues that do or do not consider urban dynamics as important and encourage them to integrate some reflections in order to better steer a development program or adapt it. A lot of what is below is relevant to many contexts and some of it is obviously more specific to the Lao PDR. I believe this study is a milestone for adapting programming in the coming four years during this current Mekong Region Strategy 2018‐2021 and paving way for the elaboration of the new strategy. Some very serious implications for our current domain of activities should be taken into consideration and further analyzed so as to be ready to meet the development challenges of tomorrow. No straight definition of what constitute a town or urban space in the Lao PDR: This is a key issue as in order to define where and how to work in urban areas, there is a need to have a common definition and understanding of what “urban” means. Despite low density and a seemingly small capital city (Vientiane) and few towns, the challenges of urban dynamics are becoming more important to follow and understand in the Lao PDR. Indeed, the urban growth rate is rather high. Currently over half of the urban population concentrates in Vientiane Capital City: this is already creating challenges for the authorities (planning, services, etc.). Urban growth is tightly connected to mobility of rural population, mainly young, towards urban centers to work. Particularly interesting and important in development terms, is the fact that annual employment growth rate is negative in the Lao PDR and specifically in Vientiane (as opposed to other countries of the region). The Government has taken this into account and is looking to support investments in services and industry in towns and per‐urban areas, but it is not yet being implemented (again contrasting other countries of the region). Interesting fact for TVET domain. Extremely important is the link between the informal sector and urban areas; with limited formal job opportunities, informal employment is large (and even more so in the migrant communities). Overall, poverty rates are more important in rural areas than in urban centers (thus the importance to address poverty in small urban centers with more rural characters); however, in absolute terms, poverty is well concentrated in urban areas. As the urban population rapidly increases, urban poverty increases too; this again most striking in smaller urban centers closer to rural life. Remittances of urban population towards rural population must be well taken into account in order to understand the connection between urban and rural areas, and the effect on livelihood in those rural areas. Inequalities are also intrinsically linked to urban growth: urbanization process benefit some, more than others. Despite years of development focus to marginalized ethnic minority groups, welfare inequality between ethnic majority and minorities remain very high both in rural and in urban areas. By 2045, the 15 largest towns will be home to 40% of the country’s projected population.
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