Urbanization processes

Transcription

1 Urbanization processes in the Lao PDR Processes, challenges and opportunities Final report, 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

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3 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.

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5 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 Main characteristics of urban areas and urban growth Definition and categorization of towns and urban areas Regional context Urbanization and urban growth in the Lao PDR Migration Labor market Poverty Inequality Projections of urban development in the Lao PDR Overall trends of urban growth Vientiane Capital Large provincial towns Small provincial and district towns Key national frameworks and public institutions guiding urban development National legal framework National policies and strategies Public institutions Key challenges for urbanization Ineffective urban governance and planning, and uncoordinated land management Mismatch among the demand and supply of jobs, labor and capacity Non conductive environment for employment seeking migrant populations Inadequate development of public services particularly in cities Potentials of cities, towns, and rural urban linkages for poverty reduction Strengthened value and marketing chains for clean local agricultural produces Improved access to education and trainings for the right skills for decent work and local entrepreneurship 23 1 P age

6 Improved urban governance to benefit urban poor and employment seeking migrants Stocktaking of main development actors activities Main development partners and areas of intervention Major unaddressed issues and challenges Rural urban employment seeking migrants Urban governance Link between TVET and entry into employment or self employment Current and planned activities of SDC that reach out to (peri )urban contexts Agriculture and food security Governance and citizen participation Issues and challenges addressed by SDC and not yet covered by other donors Reflections and recommendations Opportunities for action of SDC Agriculture and food security Governance and citizen participation 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 Annex 16: Planned major transit corridors in Southeast Asia 55 2 P age

7 Annex 17: Location of SDC funded project activities 56 Annex 18: OIganizations and projects touching on urban development issues 57 3 P age

8 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 P age

9 SUT TABI TLIC TVET UN UNFPA VCOMS VELA VUDAA WWF Sustainable Urban Transport The Agrobiodiversity Initiative Turning Land Into Capital Technical and Vocational Education and Training United Nations United Nations Population Fund Vientiane City Office for Management and Services Vocational Education in Laos Vientiane Urban Development Administration Authority Worldwide Fund for Nature 5 P age

10 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 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. Vientiane capital has the highest projected growth rate of all provinces: 67% increasing the population to 1.4 million by 2045; for a projected total population of 9 10 million by There is an estimated 1.3 million Lao living abroad with 900,000 in the ASEAN region. There are high growth rates for provincial cities, such as Phonesavanh, and small provincial towns such as Xaysomboun, Sekong and Atapeu. Demand for food will increase at a similar rate as the speedy growth of these new urban centers, increasing pressure and vulnerabilities on one hand, but also creating opportunities for rural, peri urban and urban agricultural production. This is to bear in mind for future AFS programming. With the increase of building in urban areas, demand for builders and related jobs will also increase, as will production and trade of construction materials: again here interesting for TVET. The summary on legal framework and national policies is useful to point out what is done and what is not, related to urban issues: for example the fact that most urban planning, despite being developed in 6 P age

11 most provincial and district towns and centers, is outdated and not being put into practice, underlines that most urban development is taking place uncontrolled; there is here also an opportunity to accompany authorities in designing relevant and updated urban plans. Chapter 2.4 is most interesting as far as pointing out the ineffective urban governance and planning: lack of structure to deal with the issue; no administrative boundaries between towns and rural periphery encouraging uncontrolled urban sprawl and resulting in unplanned low density expansion; this makes the provision public services more difficult to deliver and more expensive; poorest urban and peri urban populations being pushed towards more marginal lands in urban settings. The implication of uncontrolled urban development is well described in the following passage at page 21: The uncontrolled and unplanned conversion of agricultural and wetlands into residential areas and economic zones means not only a loss of agricultural production potential and green space in a sprawling urban environment, but drastically reduces the drainage and buffer capacities of the land, making floods more frequent, the damages more costly, and the effects particularly on the poor more severe. The comment about SEZ is very interesting as SEZs are used to trigger investment for urban development; and there is a drive to transform SEZ into city. This however is often done excluding the poorer strata of population. The urban environment and growing middle class also create opportunities: for more income generating fresh organic vegetable production and marketing in peri urban areas. Skills for more production or services of urban consumers must be promoted, especially since it will strengthen rural urban linkages. This can also encourage further links to the private sector. Improved urban governance will provide more opportunities for rural migrants to get access to the formal economy. Migration is an important aspect of urbanization processes. Undocumented internal migration to urban areas, needs to be better analyzed, understood and integrated somehow in development programming. Better knowledge and research on job preferences of the rural poor and need in both rural and urban areas must be carried out. Reinforce the link between rural and urban linkages at all level of programming but especially in the AFS. Better understand products demand amongst urban and peri urban consumers in order to better target needs with sustainable supply chains and market systems. Three important quotes from chapter 3.4, page 29: o SDC has built a strong standing in the area of supporting the most vulnerable in the country, with a focus on marginalized rural areas. With increased rural urban migration, and thereby potentially a growing number of marginalized poor urban dwellers, SDC certainly has strong comparative advantages there based on its current portfolio and experiences. o The strong focus and expertise of SDC supported project activities on improving and promoting safe and organic agricultural produces is possibly unique to SDC in the Lao PDR, and certainly has a potential for expansion, particularly in connection with, but not limited to SDC s engagement in the hospitality and tourism sector. o An important niche of SDC is certainly the promotion of national cross sectoral information integration and analysis for integrated planning and governance, which has significant potential for improving integrated urban governance. The comment that it will be possible to quite easily integrate key urban context issues into the current programming (chapter 4 p.30) should be underlined: o However, the many current and potential links of the different ongoing and planned SDC projects to the urban context identified and described in the previous chapter will likely allow SDC to achieve the above stated shift of orientation, or rather broadening of focus towards a stronger emphasis on challenges in urban areas without any drastic alteration of the current strategic orientation. The recommendations on opportunities to integrate urban aspects into SDC activities. SDC is well positioned to take a leading role in promoting rural urban linkages: o in AFS domain: reinforce value chains and links to market system. This can be done through ongoing discussions with current partners and key actors in this field. Commissioning of further research studies to have key data and facts in order to obtain evidence based information; 7 P age

12 o o o o o in Governance domain: support the improvement of local urban governance to provide adequate social public services, and look at urban land management sector in larger towns and capital city; in Employment domain: consider integrating undocumented rural urban migrants in training programs; better establish needs and desires of rural poor seeking employment, especially youth and women in order to match these with available opportunities; strengthening engagement with private sector with urban rural linkages from rural producers to urban consumers; better integrate urban development planning into the existing governance reform program; in the longer term (next strategy ) consider engagement in clean air and cleaner transport (with SECO potentially). 8 P age

13 1. Introduction Today, more than half of the global human population lives in urban areas. By 2050, two thirds of earth s people are estimated to live in towns, with the bulk of this increase to happen in Asia and Africa. Against this background of major global trends in urbanization and the respectively emerging challenges and opportunities, highlighted for instance in the Sustainable Development Goal (SDG) 11 on inclusive, safe, resilient and sustainable cities, the Swiss Agency for Development and Cooperation (SDC) is reflecting on its long term positioning to contribute to this agenda, to face the new challenges and to potentially work increasingly also in urban and peri urban contexts. This initial brief assessment of urbanization processes in the Lao PDR shall contribute to an information basis for discussion of SDC s strategic orientation in the country in particular, and in the Mekong region more generally. The objectives of this country study, commissioned by SDC to the Centre for Development and Environment (CDE) of the University of Bern, is therefore to provide an assessment on how an urban lens could be integrated into the implementation of the current cooperation strategy in the Mekong Region (MRS), and how the existing and planned project portfolio can be adapted in terms of sustainable urbanization and rural urban linkages in view of the elaboration of the next MRS To that end, the study shall a) describe the main issues and challenges in urban and peri urban development in the Lao PDR, with a focus on areas where development cooperation in general and SDC specifically can make a difference, b) to describe the landscape of existing development cooperation that relates to urban and periurban development, and c) to identify potential areas where planned or existing SDC interventions could extend its focus towards challenges of urban and peri urban areas and people. The study is based on a review of existing literature on the issue, an analysis of available statistical and spatial data for the Lao PDR, interviews with key informants and stakeholders in Vientiane, and a review of descriptions of relevant projects. The report is structured in three main parts, covering (1) a description of the main patterns, trends and challenges in urbanization processes in the Lao PDR, (2) an overview of main development cooperation stakeholders in the sector and their areas of interventions, and (3) a reflection on potential areas of opportunities for SDC in the field, considering its current and planned cooperation portfolio. 9 P age

14 2. Patterns and trends of urbanization in the Lao PDR 2.1. Main characteristics of urban areas and urban growth In order to assess patterns and dynamics of urbanization in the Lao PDR, clarity on the way urban areas or towns are defined is essential. We therefore first discuss how urban areas and towns are and can be defined and classified in the Lao PDR, before taking a closer look at the patterns and trends of urbanization Definition and categorization of towns and urban areas The definition of what constitutes a town or an urban space in the Lao PDR is a lot less straightforward than one would expect. Indeed, there are a number of different ways in which urban areas and/or towns are loosely defined in the Lao PDR s laws, although a clear official delineation or definition of towns does not exist (see Annex 1 for a discussion of official definitions of, and criteria for towns and urban areas used in the Lao PDR). In the national censuses, urban areas are defined based on a small selection of criteria such as a village s access to electricity, water supply, roads or markets. This is not very useful to define town areas, as by that definition clearly many villages with rather rural characteristics are included. This means that each analysis of trends in urbanization in the Lao PDR uses a different definition of the size and extent of towns in the country, resulting in a wide range of figures and trends. As the available definitions were not deemed particularly useful for this analysis of major patterns and trends in urbanization in the Lao PDR, we defined for the purpose of this study the different towns by their current physical extent of the built up area, using recent satellite imagery. All villages within such delineated areas were counted as part of that urban space/ town (see for an illustration of this approach the description and map example in Annex 2). This results in somewhat different population figures for each town than what is reported in other studies that are based e.g. on the urban definition of the censuses, which include many rural and scattered or isolated villages, but also excludes some of the poorer urban villages. Based on the delineated urban areas of the different towns in the Lao PDR, aggregated population figures derived from the latest population and housing censuses of 2005 and 2015, and a classification of towns by population size, as well as by administrative type, largely in line with the typical categorizations of towns used in the Lao PDR (see Annex 1), we can infer the following typology: National city, equivalent to the status of a province, with a population greater than 100,000 people, along with its main agglomerations; Large provincial capitals, with a population of at least 50,000 inhabitants often referred to as secondary towns, along with their main agglomerations; Small and medium size provincial and district capitals, with over 10,000 people; and all other very small provincial and district capitals and rural towns of at least 1,000 inhabitants. 10 P age

15 Annex 3 provides an overview of the size and administrative type of the top 20 towns in the Lao PDR (19 of which have a population of at least 10,000), while Annex 4 provides an overview of the population numbers in each of the main categories 1. Besides the centrally located town area of Vientiane Capital city, with slightly more than half a million people, there are three larger towns in the Lao PDR, all with a population of over 50,000: Luang Prabang in the North, and Pakse and Kaysone Phomvihane town (hereafter referred to as Savannakhet town) in the South. Particularly in the peri urban agglomerations of these relatively larger towns, as well as in the country s smaller and medium sized towns, the share of households engaging in agricultural activities is over one third of all households, representing a relatively high proportion compared to the nearby main town. There are currently fifteen small to medium size towns in the Lao PDR, three quarters of which have a population of 10,000 20,000 inhabitants. While in those smaller ones, over 40% of all households engage in agricultural activities, it are in the larger ones about one quarter of all households that engage in agricultural activities,. Many provincial capitals are rather small 22% of all provincial capitals have less than 10,000 inhabitants, and 10% less than 5,000 inhabitants. Over 80 percent of all district capitals have a population of less than 5,000 inhabitants. Relatively large shares of all households in those towns engage in agricultural activities. District capitals with less than 1,000 people typically represent a group of geographically dispersed rural villages, and so cannot be considered as a town. Annex 6 provides an overview of the spatial distribution of the different town types across the country Regional context The Lao PDR, with a size of approximately 3 quarters that of Vietnam, has a population which is just about 7% that of Vietnam. The entire population of the Lao PDR is less than half of the metropolitan population of Bangkok. Around three quarters of the country s population of around 6.5 million people live in rural villages or in very small rural towns of fewer than 1,000 people. Annex 5 shows an analysis of NASA satellite imagery of night time light emission of 2012 (white) and 2016 (increases in pink), illustrating this stark difference of population density and urbanization in the Lao PDR compared to most of its neighbors. Nonetheless, despite the low population density, and the relatively few and smaller towns, dynamics of urbanization are a growing challenge and increasing concern in the Lao PDR. Vientiane City, with a population of just over half a million inhabitants in 2015, is a relatively small capital compared to other regional centers such as Bangkok (estimated 9.5 million inhabitants 2015), Hanoi (nearly 7.7 million 2016), and Phnom Penh (1.7 million 2015). Its population density is relatively low (1,744 persons per km 2 in its core urban area in 2015), characterized by only very few high rise buildings, and a sprawling urban development, which brings its own challenges particularly with regards to infrastructure provision and efficient use of land (see chapter 2.4 on challenges) Urbanization and urban growth in the Lao PDR The urbanization rate, i.e. the share of urban residency in the whole population is relatively low in the Lao PDR: based on our analysis 2, the share of the population in urban areas was only 6.9 percent in Clearly, the Lao PDR is not a country with the kind of metropolis and large cities typical for most other countries in the region, and attributes such as large and* small etc. will need to be seen within its own context. 2 For 2015 we use the geographic delineation of the urban areas of towns. For 2005 we calculate the sum of the 2005 population of all villages within the current urban area, and designate those villages as urban which had the same average 11 P age

16 and grew to 23.3 in 2015, an increase of 16.4 percent in the urbanization rate over the ten years period 3. The current share of the population in urban areas falls well below a global average of 50 percent and that of neighboring Thailand (52%), and puts the Lao PDR among the least urbanized countries in the Asia Pacific region. However, the figure based on the census definition of urban areas does roughly correspond to Vietnam (32%) and Myanmar (35%), and is higher than Cambodia (21%) (Lao Statistics Bureau, 2016; UN in Lao PDR, 2015; World Bank & UN Population Divisions, 2017). Nonetheless, the urban growth rate, i.e. the growth of the urban population, is rather high, largely due to the relatively small size of the country s towns. While the growth of the population in current urban areas was around 4.7 percent per year, the growth of the area and respective population that can be considered as urban was much higher, and is estimated at 17.3 percent per annum 4. The two indicators reveal the degree of change in the current urban areas, and the change of the urban characteristics of the population, respectively. Annex 7 provides an overview of estimated urban populations and respective growth rates for the different types of towns in 2005 and The growth rates vary greatly among the different town types. Very small provincial and district towns with a population of 5,000 10,000 people, as well as the largest province capitals with populations between 50, ,000 along with their agglomerations, have seen the strongest growth rates of around percent per year, whereas the urban population of Vientiane Capital grew by 11 percent per year. Nonetheless, it is interesting to note that the urban population increasingly concentrates in Vientiane Capital City, where over half of the country s urban population lived in This significant growth is clearly a challenge for the GoL. In the 2015 Population and Housing Census, the proportion of the population residing in areas of Vientiane Capital designated as urban stood at 78%, an actual decrease from the 2005 figure of 82% (Lao Statistics Bureau, 2016, p. 24). This suggests that an expanding population, which includes the influx of migrants, is moving to outlying areas of the city faster than authorities can supply accompanying services, and planning is struggling to keep up with real life developments. For example, the 2008 Comprehensive Vientiane Capital Urban Transport Master Plan has been 70% implemented under assistance by JICA, and yet the reality of transport ownership and usage has far outstripped all projections. An overview of recent history can partially explain this trend of sudden rapid urbanization: In the initial years of the Lao PDR, anti urban rhetoric and policy by the Revolutionary Party stunted expansion and the towns remained small. Only following the New Economic Mechanism (NEM), instigated from 1986, has urban development once more started to thrive, with set prices abolished, international trade promoted, state enterprises allowed to access markets (Rafiqui & Gentile, 2009), and possibly most share of agricultural households as in today s total urban area. The share of agriculture in urban areas of 2015 increases as the size of the towns decreases. Given that the towns in the Lao PDR likely also underwent a transformation of gradually decreasing agricultural activities in urban areas over time, our measure of urban in 2005 is somewhat too restrictive, and underestimates the actual urban population in The share of the Lao PDR classified as urban in the national censuses comprises 33% of the national population in 2015, increasing from 27% in 2005 and 17% in 1995, which is much higher than the results of our analysis, but implies a significantly smaller urbanization rate. However, the urban variable of the census reflects first and foremost the development progress of the Lao PDR in the past decade in terms of infrastructure coverage, as the definition of urban in the censuses is largely based on aspects such as access to water, transport, market, and electricity infrastructure (see definition in annex 1). A geographic analysis of the distribution of villages classified as urban in the 2005 and 2015 censuses reveals significant changes in both directions, whereby new areas are now classified as urban, whereas former urban areas are now classified as rural. While the former implies an improvement in household s access to infrastructure, the latter is an indication for a population increase that outpaces progress in infrastructure development. 4 As our estimates of the urban population of 2005 might be restrictive and low, the resulting growth rates are also somewhat too high. The actual growth rate likely lies somewhere between the estimated growth rate of the urban population, and the estimated growth of population within the current urban area. 12 P age

17 importantly, the strong promotion of large scale foreign investment in peri urban and urban areas, which points to an increased rural urban migration Migration The trend of urban growth chimes with an image of rural to urban migration, where young people move to work in cities. To a certain extent, this image bears out with demographic data showing urban growth outstripping rural, in which internal growth is bolstered by new incomers. The analysis of census data from 2005 and 2015 reveal that in the core 4 districts of Vientiane Capital province, 45% of its growth is due to migration, and 55% due to natural growth in the city 5. More than 42% of the total migrants move to urban areas, and almost half of the rural urban migrants within the Lao PDR moved into Vientiane City between 2005 and 2015, with about a third of them as students, and nearly 20% in search of employment (which account for half of the employment seeking migrant population). There is also a continuing legacy of in migration to Vientiane by Chinese and Vietnamese migrants, which in recent times often includes construction workers on large scale FDI infrastructural projects (Molland 2017). According to the census of 2015, however, only 12% of all migrants were foreigners with the majority being from Thailand (37%), Vietnam (26%) and China (23%). While the Chinese and Vietnamese tend to migrate to towns (40 and 50% respectively), Thai migrants largely migrated to rural areas (87%). Thai migrants in rural areas predominantly work as private employees. In Vientiane, 30% of foreign migrants were Chinese and 33% Vietnamese, with 30% of the former for business and to a lesser extent (20%) in search of employment, and the latter in 40% of the cases in search of employment. About one third of the Vientiane bound migrants from China and Vietnam work as employees, and another one third as own account workers. In Savannakhet, Vietnamese migrants accounted for 56% of the total foreigner migrants between 2005 and 2015, while in Pakse and Luang Prabang the share of Vietnamese migrants reach 40% of the total foreign migrants. In the towns of Huayxay and Sayaboury, Chinese migrants are by far in majority, accounting for 68% and 90% of the foreign migrants respectively. Chinese migrants in these two towns are mainly own account workers. Over half of the country s almost exclusively female domestic workers that migrated, moved to Vientiane City. Migrants to the large secondary towns of the country are largely students, and people who moved due to a transfer of workplace. One sixth of all migrants moved to tiny province and district towns of 1,000 5,000 inhabitants every third of them as a result of transfer of workplace. This town category is home to the biggest share of the migrant unpaid family workers, most of them women. Migrants to Vientiane City, as well as to the three large secondary towns are typically young over half of them between 15 and 24 years old, whereas migrants to smaller towns have a higher average age. This reflects the large body of student migrants that moved to the larger towns. The census statistics further reveal that migrating government employees are predominantly male, while not surprisingly migrant unpaid family workers, and those with mainly household duties, are largely female. Among the migrant students, male students dominate in the north of the country, while female students outnumber their male counterparts in the southern parts. Little is currently known about the permanency of those migrants. 5 As an influence, the Lao PDR has long seen extensive movements of its people, whether under collectivized agriculture, to rehouse (semi ) nomadic shifting cultivators as subjects of national development policy, or to free up land for large scale investment projects (Évrard & Baird, 2017). If rural to urban migration seems a more recent phenomenon in demographic terms, it is also borne out of thirty years of networks constructed around the country (Bouté, 2017), mixing forced relocation and the agency of migrant choices. Yet, in actuality migration practices are much more complex, with a plurality of scales over time (permanent, temporary, circular, seasonal), space (internal, cross border, regional, international), and motivation. 13 P age

18 Annex 8 provides summary statistics on the migrant population based on the latest population census 6. Overall, the main trends of migration include migrations from the north to Vientiane, and from the southern parts to Pakse, Savannakhet, and largely also to Thailand Labor market The national economic development strategies of the past 30 years have generally focused on the exploitation of natural resources in rural areas. The past remarkable growth, which is largely based on this economic model, does, however, not create any significant number of jobs. Indeed, current statistics show a stark contrast of the formal employment and job market in the Lao PDR compared to other countries in the region: According to the World Bank s Enterprise Surveys, the annual employment growth rate is negative in the Lao PDR for 2016 particularly in Vientiane, compared to 5 10% positive growth rates in the other Asian economies (see Annex 9). The annual labor productivity growth rate (i.e. the growth of real economic output per labor hour) is strongly negative in the Lao PDR again particularly in Vientiane, compared to rather small positive or negative rates in the other countries of the region (see graphs in Annex 10). Realizing this challenge, the GoL now attempts to aim its attention increasingly to investments in services and industry, largely agglomerated in towns and their peri urban areas (see e.g. Vientiane Times, March 30, 2018, p10). However, this structural transformation, which other countries in the region went or are going through, has not happened in the Lao PDR yet. At the same time, businesses that do need a larger number of labor (e.g. SEZs) do seem to encounter difficulties in finding enough reliable workers, and participants of skills for work training courses often return to their villages after completing the training. This is often attributed to a non capitalist mindset of many of the rural people, where the peace of village life is valued higher than a stable income at the cost of daily 8 to 5 factory working hours. Furthermore, manual labor is increasingly frowned upon, as youngsters and their parents prefer a student based career, resulting in many of the jobs involving manual work being filled by Vietnamese and Chinese workers. The limited number of formal jobs underscores the importance of the informal sector in the Lao PDR, particularly for job seeking migrant populations, and the relevance of the high labor demand in Thailand Poverty Generally, poverty rates tend to be lower in towns compared to rural areas. With overall poverty rates in 2015 of 10 and 29 percent in the country s towns and rural areas respectively, the Lao PDR is no exception to this. Furthermore, the smaller the towns, and the more rural their character, the higher the poverty rates, gradually increasing along this gradient to the level of rural poverty (see Annex 13). However, the much higher concentration of people in towns compared to the rural areas also means that in absolute terms, poverty may well be concentrated in urban areas. Indeed, the maps in Annex 11 illustrate this pattern well, where the mountainous remote rural areas have by far the highest rates of 6 Practices of the GoL of the past attempted to restrict migration to urban areas, although anecdotal evidence suggests these restrictions were not particularly effective. What is means, however, is that migrants to urban areas may find it difficult to register for residency there, so that they remain registered in their village of origin. Census practices in urban areas to have the village headman filling out the forms for all residents of the respective village means that only registered people are counted there. Therefore, there is possibly a considerably large number of rural urban migrants likely largely job seeking which is not captured by these census statistics. A large proportion of these new migrants are women, of whom some may work in garment factory, and others in the sex industry. Migrations may be forced, with human trafficking an acknowledged concern within and out of the Lao PDR (Bouté, 2017). More reliable national data that sheds light on the actual figures of rural urban migration are not available. 14 P age

19 poverty, whereby the much more densely populated lowland urban and peri urban areas along the Mekong valley are home to half of the country s poor. With rapid increase of the urban population, an increase of the number of poor there, and possibly also the rate of poverty in towns, might be expected. However, our analysis of statistical data confirms this pattern only partially, and provides a rather mixed picture: While the urban population multiplied by more than factor 4 between 2005 and 2015, the number of urban poor almost tripled. But since the urban population grew faster than the number of urban poor, we observe an actual decline in urban poverty rate by 5.75% between 2005 and The annual growth rate of the urban poor is smallest in Vientiane City, and strongest in the urban agglomerations of Pakse and Savannakhet, where possibly most of the rural urban (or in this case periurban) migrants manage to set up informal housing and residence. The strongest declines in urban poverty rates, on the other hand, are observed in the small and tiny provincial and district towns, as well as in the urban agglomerations around Vientiane City. Within the current urbanized area, the actual number of poor decreased significantly, despite a strong population growth there: countrywide, the population in current urban areas increased by 57%, while the number of poor dropped by 20%. This means that in the areas where the population transformed from a rural to an urban livelihood between 2005 and 2015, a large share of the formerly poor managed to escape poverty. These figures, however, vary greatly among different towns in the country, as shown in Annex 12: Within the urban area of 2015, the poor population decreased most strongly at a rate of 5 percent per year in Vientiane City and its agglomerations, but grew at an annual rate of 3 percent in the agglomerations of Pakse. With 23% of the total population, and 10% of the poor population living in urban areas in 2015, these areas directly contributed around 12.5% to total poverty reduction. Indirectly, urban areas probably contributed significantly more to the improvement of livelihoods in their surrounding peri urban and rural areas, as well as in the rural areas of origin of the rural urban migrants through remittances. While poverty rates tend to increase with increasing distance from a town s center (see Annex 12), it also appears that the outskirts of the current towns benefited significantly from the recent economic growth Inequality With increasing commercialization and economic growth, some manage to benefit more than others, and some are completely left out, so that growing inequalities is an important concern in development contexts. Urbanization processes are often accompanied by growing inequalities both within the growing urban spaces, as well as between urban and rural areas. Indeed, with the significant decrease of poverty between 2005 and 2015, inequality grew somewhat in the Lao PDR; the increase of the Gini index of inequality from 0.33 to 0.36 puts the country into a similar league with e.g. Thailand and Myanmar, but higher than e.g. Vietnam or Cambodia, although not as high as for instance Indonesia, Malaysia, or China. Much of the country s inequality is between urban and rural areas, where the gap has widened between 2005 and 2015, as well as within the urban areas, where an increasing number of wealthy lives alongside of a growing middle class, and the many less fortunate. As illustrated in Annex 14, inequality increases with the town size, with highest inequalities within Vientiane City. Very noteworthy is, however, that many urban villages in the core areas of the big towns, where poverty rates are the lowest, inequalities tend to be very low, implying that in those wealthier core urban areas, residents tend to enjoy a rather equal standard of living, while in newer urbanized areas of the outskirts, the inequalities tend to be much higher. In the ten years between 2005 and 2015, inequality increased roughly at the same rate in all town categories. Average inequality within rural villages, on the other hand, remained in 2015 at the same low level as in 2005, although the differences between the villages increased, with those closer to towns generally having been able to benefit from the economic progress much more than the villages in marginal areas of the country. 15 P age

20 Besides the significant rural urban divide, the other economic fault line is between the ethnic Lao and Thai on the one hand, which are the majority in the Lao PDR, and the many smaller ethnic minority groups on the other: the welfare inequality between the ethnic majority and the minorities remains very high with a poverty rates of 14 and 28% respectively, both in rural (30% versus 17%) as well as in urban areas (13 and 7% respectively), despite years of development focus to marginalized ethnic minority groups, illustrating the persisting unequal access to a range of services and opportunities Projections of urban development in the Lao PDR Overall trends of urban growth Population projections for the Lao PDR until 2045 have built upon recent demographic surveying (2015 census, Lao Social Indicator Survey, Demographic Health Survey). They are based around factors of fertility, mortality and migration. The former is the principal informer for projections done by LSB with support from UNFPA. However, projections are available at province level only, and do not differentiate between urban and rural populations. Overall, the projection calculates a rise of the Lao population from 6.7 million in 2015 to between 9 and 10 million in In general, the projection represents a demographic shift from high to low fertility, and low mortality, resulting in an aging of the total population 7. In the absence of any official projections on urban growth in the Lao PDR, we estimate the population growth of the different towns based on the calculated growth rates of the years between the two last population censuses. We thereby assume that the past population growth rate within the urban area of 2015 is a good approximation for expected future population growth rates of each town. Based on these calculations, the 15 largest towns would then be home to around 40 percent of the country s projected population in Given the wide variety of growth rates among the different towns, the resulting projections also reveal changes in the ordering of the towns in terms of size Vientiane Capital Besides the expected high growth rate of the population in the new and sparsely populated province of Xaysomboun, Vientiane Capital province has the highest projected growth rate among all provinces in the Lao PDR, pointing to an expected further rapid urbanization of the capital (Lao Statistics Bureau, forthcoming). Although the birth rate in the province of Vientiane Capital is the lowest in the country, the highest estimated life expectancy is also found here (71.2 years). However, of greatest importance for high urban growth is the high net migration rate inwards. The province s projected growth rate of 67 percent will increase the province s population to million people by This official projection of LSB is well in line with our estimation based on past growth rates Large provincial towns The populations of Savannakhet and Champasak provinces are projected to grow 43 percent and 35 percent respectively from 2015 to A large share of this growth is likely due the fast growth of the two regional towns there, which are projected to grow dramatically to important regional cities (see Annex 15). The projected growth rate for Luang Prabang province is much lower (16 percent) (Lao Statistics Bureau, forthcoming), influenced by a high net migration outwards, which for the period Placing the influence of migration into the equation carries some uncertainties. For instance, there is a lack of administrative recording of movements into and out of the country. Many labor migrants are operating without documentation, as in the case of Lao migrants working in Thailand. The World Bank estimates there are 1.3 million Lao nationals living abroad, with 900,000 remaining in the ASEAN Region. 16 P age

21 to 2015 saw a loss of over 9,000 people. Nonetheless, based on the past growth rate of the town, Luang Prabang town would still be projected to quadruple its size until If Phonesavanh town continues to grow at the current fast rate, it would have overtaken Luang Prabang and Savannakhet in terms of population within the next 25 years, and become the third largest town of the country by Although the town s recent rapid growth is impressive, it is hard to imagine that the still rather isolated town would be able to compete with regional centers such as Savannakhet, Pakse, Luang Prabang, that lie along major transport corridors. Indeed, with the substantial developments of the GMS east west corridor through Savannakhet, and the GMS North South corridors through Luang Namtha and Houayxay on the one hand and the China Indochina Peninsula Economic Corridor section of China s Belt and Road Initiative through Oudomxay, Luang Prabang, and Vientiane Capital City on the other hand, one would expect these towns to grow even faster (see Annex 16). Nonetheless, if the north eastern section of the China Indochina Peninsula Economic Corridor through Sayaboury and north of Phonesavanh through Samneua materializes, the importance of these towns would certainly increase. Indeed, Sayaboury town is also projected to exceed 100,000 inhabitants by Small provincial and district towns Attapeu, Sekong and Xaysomboun are the three smallest province with 2015 populations all under 15,000 people. Yet outside of Vientiane they are projected to show the three highest growth rates up to 2045 (at medium variant, 96% for Xaysomboun, 60% for Sekong, and 59% for Attapeu) (Lao Statistics Bureau, forthcoming). The currently smaller towns of the north (Oudomxay, Houayxay, Samneua, and Luang Namtha) would all be in the ,000 population category, along with Thakhek of the center of the country. The small southern towns Sekong, Salavanh and Attapeu are projected to have between 30 50,000 inhabitants Trends in rural urban linkages With cities, towns, and their urban populations in the Lao PDR expected to expand further at rapid speed, the demand for food will increase at a similar rate, increasing pressure and vulnerability but also creating opportunities for rural, peri urban, and potentially even urban agricultural production catering for the urban dietary preferences. The scale of and linkages among points of production, processing, and consumption of food in demand in urban areas will therefore inevitable have to increase dramatically along the rural urban trajectory, which will increase economic opportunities for rural, as well as peri urban and urban workers and entrepreneurs alike. The same will hold true for instance for the production and trade of construction materials in demand in urban areas, such as gravel, sand, concrete, bricks and wood Key national frameworks and public institutions guiding urban development National legal framework Urban planning is framed around the following legal formulations, many of which are presently undergoing revision: 1. Law on Urban Planning (No /NA, 1999): The law is currently under revision. Rules and regulations for the classification and management of urban planning, land use, and construction, are systematized under this law, operating at national and local levels. The new revised version is in its final form, and ready to be submitted to the National Assembly for approval. In general, the new legislation aims for clearer policy on the promotion of urban development, promoting investment roles for government, the private sector, public private partnerships and FDI. More details are provided for operationalization of the law and 17 P age

22 management rules, with an emphasis given to harmonization with the recently revised Investment Promotion Law (No. 032/NA, 2016). When it comes to the creation of urban master plans, most areas already possess one, with the implementation of those plans being the greatest area of concern. 2. Land Law (No. 04/NA, 2003): The law is currently under revision. Land management in Lao PDR operates under the Department of Land (which brought together the two departments of land administration and land allocation), placed within the Ministry of Natural Resources and Environment (MoNRE). The Land Law is currently under revision, attempting a more detailed and refined legislation. A final draft should be presented to the National Assembly in April Road Laws (No. 021/NA, 2016) revised: Defines classes of roads and their management. Related laws on land transport and land traffic also contain important legislation on topics such as parking. 4. Law on National Heritage (No. 022/NA, 2013) revised: Important provisions on natural conservation areas, cultural heritage sites, and public parks. 5. Law on Environmental Protection (No. 29/NA, 2012) revised: Offers regulation on natural conservation areas, the maintenance of biodiversity, and pollution. 6. Law on Local Administration (No. 47/NA, 2003): The law outlines the organization of the administrative bodies in the country, defining roles and functions at the different administrative levels. The law outlines three levels of local administration: the Provincial level (provinces, cities and special zones), the district level (districts and municipalities) and the village level. The local administrations are responsible to the government for administering political, socio economic and cultural affairs; human resource management; the utilization, preservation, and protection of natural resources; national and local defense security; and other responsibilities assigned by the central government. There is no provision for an administrative body specific to urban areas. 7. Vocational Education Law (No. 060/NA, 2014): The law is intended to ensure the offered education and training matches actual demands on the labor market. Legal revisions aim to refine the existing system, and improve coordination between implementing ministries and departments. Of particular significance is a harmonization with investment policy, emphasizing mechanisms to attract FDI. For example, the new Land Law potentially provides new articles stipulating on land leases for foreign investors, SEZs, and high rise buildings, thereby aligning with the government strategy of Turning Land into Capital (TLIC) National policies and strategies The centerpiece of national development policy is the five year National Socio Economic Development Plan (NSEDP). The previous, 7 th NSEDP ( ) acknowledged the need for zoning and its role in a shift to industry and services (MPI, 2011). It promoted spatially concentrated developments in these sectors, which can stimulate labor migration to urban areas, and domestic and foreign investment, with planning assuring that growth takes place in an orderly, beautiful and clean manner (MPI, 2016, p. 25). In the 8 th NSEDP ( ), the overall objective seeks to ensure political stability, peace and order in the society; the poverty of the people is reduced significantly in all areas; the country is developed out of LDC status by 2020 through continuous, inclusive and sustainable growth; there is effective management and efficient utilization of natural resources; development is enhanced through the 18 P age

23 national potential and advantages; Lao PDR participates in regional and international integration with ownership (MPI, 2016, p. 87). The focus lies strongly on rapid economic growth through the efficient use of natural resources, on human resources and capacities development in the public and private sectors, and reduction of poverty and inequalities to justify, maintain and secure the grip on power of the Party, and to upgrade and promote the status of Lao PDR in the international community. There is very little explicit reference to the urban context, instead showing more concern for regional integration. The Sam Sang ( Three Builds ) directive (Politburo Resolution No.03/CPP/2012). Concerns the implementation of regulatory frameworks from national to local levels, which has proved troublesome in Lao PDR. Launched in 2012, Sam Sang identifies three tiers of public administration with: i) provinces as strategic units; ii) districts as sectorial strengthened units; iii) villages as development units. The reporting of pilot studies has suggested limited devolution of decision making processes (LADLF, 2015), and it could be seen that Sam Sang actually centralizes power. In terms of urban planning, Sam Sang acts as a motor, defining the partition of tasks, duties and responsibilities from the center to the local level for the different levels of towns defined in the Law on Local Administration. A land titling program initially commenced from 1997, where 540,000 titles were issued in urban and peri urban areas. Certain areas of the Lao PDR have witnessed emerging land markets and rising land prices. This potentially prohibits poorer populations from either retaining or gaining access to land. A potential consequence sees growing numbers of informal urban settlements without adequate services. Further, the 2003 Lao Land Law allows requisition of land by the state for public purpose or interest, conditions that are open to broad interpretations (Hirsch & Scurrah, 2015), and may have further exclusionary effects on certain sections of the population. Urban development strategy 2030 outlines MPWT s vision on urban development and the country s regional integration into main transport and development corridors of the Great Mekong Subregion from 2016 to The main objective is to define directions, targets and investment plans for urban development, and should serve as a main reference for infrastructural developments and the protection of the country s architectural, cultural and environmental heritage. Rationales include the urbanization of rural areas through the development of small towns towards reducing rural urban disparities, as well as strengthened regional integration through the development of economic centers along main transcounts corridors. Nearly all provincial and district towns and centers in principle have an urban development plan, which spells out the individual development strategy for each town. Most of those plans are from the mid 1990s, and a number of them from early Besides the fact that most of these plans are rather outdated, an important problem appears to be that neither those plans, nor any relevant law, are being followed in practice. The current urban masterplan of Vientiane City is of While JICA has supported the development of a major new urban development masterplan for the city in 2012, its approval is still pending. The urban development has in reality largely ignored those plans, rendering most of the proposed developments obsolete. Using infrastructural development, the Lao government is attempting to shake off an image as a landlocked country to one that is land linked. Vientiane is seen as key to this strategy, whether through its position within the Greater Mekong Subregion (GMS) Economic Corridors, or as a hub for regional train networks being built by China Public institutions The main public actors in centralized urban planning are: The Ministry of Public Works and Transport (MPWT) is mandated with the macro management of housing, urban planning, transport, roads and waterways in Lao PDR. 19 P age

24 The Department of Housing and Urban Planning (DHUP) oversee the laws, decrees, regulations, budgets and training governing the planning of urban areas. The Public Works and Transport Institute (PTI) is tasked with the technical production of urban plans. The Ministry of Planning and Investment (MPI) has the mandate to attract and manage investment for urban development including FDI. The Ministry of Natural Resources and the Environment (MoNRE) is the key actor in land management, and in charge of the development and implementation of national policies on climate change. The Ministry of Labor and Social Welfare (MLSW) is in charge of labor rights, migration, and for the coordination of preparedness and emergency response to natural disasters. Core public actors at sub national levels include: Division of Public Works and Transport (DPWT): Management of non core urban areas of Vientiane Capital and other cities, with a focus on housing; planning; and transport, roads and waterways Office of Public Works and Transport (OPWT): Management of public works and transport at district level in urban areas Vientiane City Office for Management and Services (VCOMS, formerly VUDAA): Municipal organization, managing the greening and cleaning in core urban areas of Vientiane Capital Urban Development Administration Authority (UDAA): Urban organizations in the main towns (Pakse, Thakhek, Savannakhet, Luang Prabang) initially meant to be tasked with overall urban management, they are currently largely tasked with urban greening activities. The recent re imagining of VUDAA as Vientiane City Office for Management and Services (VCOMS) represents an acceptance that: i) the previous authority suffered from overlapping responsibilities with DPWT and a confused role; ii) funds were insufficient to fulfil its full mandate, and has now reduced responsibilities focusing on greening and cleaning (including solid waste, waste water and drainage). It is hoped that this new division of tasks will result in more efficient management, and smoother coordination between the different organizations, particularly as Vientiane expands rapidly. In working in urban development, it must also be acknowledged that in spite of a centralized singleparty state, many parts of the country display strong decentralized power at provincial or district level, often acting apart of national policy formulations (Hirsch & Scurrah, 2015). Therefore, as much as there is a need to engage in national level policy dialogues, working at other tiers remains vital in project work. In conclusion of this section it is no stretch to say that there seems to be no coherent strategy for urbanization in the Lao PDR. Neither at the level of legal frameworks and policies, nor does the institutional architecture convey the impression of a well coordinated and strategically aligned politics. A major deficiency is the fact that towns and cities lack an independent administrative representation as they are governed within their provincial framework. ADB has forcefully pushed for the establishment of urban administrations in the past, but little is left from these earlier attempts. The question remains whether this is a consequence of bad governance, including badly coordinated institutions, or weak institutions in general, a competition between institutions, or a lack of willingness by the government to address the complex issues around urban development. Based on these insights, the following section discusses key challenges for urbanization in the Lao PDR. 20 P age

25 2.4. Key challenges for urbanization Based on the analysis of the trends in urbanization in the Lao PDR, we identify the following key challenges (in no particular order): Ineffective urban governance and planning, and uncoordinated land management The administrative system of the Lao PDR does not differentiate between urban and rural areas. With the exception of Vientiane Capital City which is equivalent to a province, none of the Lao towns has a mayor, nor a dedicated town administration. The governance of towns falls under the authority of the province or the district. Even in Vientiane Capital City, its mayor is in charge of the entire province, of which large parts are rural. As a consequence, there are no administrative boundaries between towns and its rural periphery. While this might facilitate informal urban rural exchange, uncontrolled urban sprawl is an obvious result of this, which results in large, unplanned low density expansion of towns. Such unplanned low density expansions are a challenge for authorities, as the provision of public services becomes more expensive, and more difficult to realize. Indeed, it seems that planning in urban areas has becoming reactive rather than proactive, constantly having to redress spatial designs and regulatory frameworks as urban development speeds forward regardless of any managed approach. Further complicating matters, there appears to be little coordination among the sectors in development planning: while MPWT is the main authority in charge of urban planning, investment promotion efforts under the MPI, for instance, are being realized largely irrespective of urban development plans of the former. In Vientiane City, for instance, almost all initially designated natural conservation areas have now experienced a conversion into special economic zones or other large scale investments (Don Chan island, former park area where Vientiane Center and World Trade now are, the That Luang marsh, etc. are just the more prominent examples). The lack of zoning, and even more so the lack of any implementation of existing zones, results in increased traffic, unattractive and unhealthy mixed residential industrial environments, increased land competition favoring always the better off urban residents. Indeed, the unclear allocation and ineffective management of land largely favors the more affluent residents, as well as medium and large scale commercial investments. The land tenure insecurity particularly of the poor means that they are at constant risk of a loss of land, housing, and livelihoods. The poorest urban and peri urban populations are pushed towards the most marginal lands in urban settings, often swamplands, where they can make a living on small scale agriculture and fishing. These more marginal lands have, however, experienced in recent years a conversion to commercial developments at an alarming rate. The urban poor and less fortunate are so pushed out even further, or to the proximity of SEZs, where the older generations typically have very limited income opportunities. The uncontrolled and unplanned conversion of agricultural and wetlands into residential areas and economic zones means not only a loss of agricultural production potential and green space in a sprawling urban environment, but drastically reduces the drainage and buffer capacities of the land, making floods more frequent, the damages more costly, and the effects particularly on the poor more severe. These challenges clearly link to SDC s priorities in the Mekong region in local governance and citizen participation, but also in agriculture and food security Mismatch among the demand and supply of jobs, labor and capacity There appears to be a mismatch between what actual and potential job seekers desire, and what the employment market offers and requires: Manual labor is largely frowned upon among the young urban and peri urban population, which is reinforced by the parent s preference for university education 21 P age

26 rather than technical or vocational training. This results in many available manual jobs being filled by foreign workers largely Vietnamese and Chinese. At the same time, the current employment market beyond basic manual labor is rather limited, and the supply of well educated people is limited, leaving a gap in manual labor, an oversupply of rather basically trained academics, and a lack of well qualified labor in urban areas. The rather small market for formal employment also amplifies the importance of the informal sector, provides little security particularly for the landless and marginal urban poor. Particularly in small provincial and district towns along main transition routes, the few opportunities for formal employment particularly for female migrants increases the risk for human trafficking and the sex trade. These challenges link to SDC s priorities in the Mekong region in employment and vocational education and training, as well as in local governance and citizen participation Non conductive environment for employment seeking migrant populations Studies around the Mekong Region show how migrants are often more vulnerable than other social groups, regardless of whether they have undergone forced relocation or moved through their own agency (Kim, 2011; Markussen et al., 2011). Cities often struggle to provide the land and services necessary to support a burgeoning population. The private sector will not take a lead here, despite acting as a pull into areas with emerging industries or service jobs, or a push out of areas where extractive industries may be monopolizing land use and marginalizing local livelihoods (Barney, 2007). Further, those affected by State policies embracing population displacement, whether to support land acquisitions for extractive industries and agribusiness, or to address rural poverty in the movement from Lao upland to lowland areas (Bird, 2007), are not necessarily provided with the support to recover from the changed livelihood scenario. A growing concern involves processes within urban areas, where residents may be relocated to much less attractive areas to make way for new commercial, industrial or infrastructural developments. Socially, households may become stressed around adapted or newly forced livelihood strategies. In particular, the impacts on gender relations around the increasing movement of women is an underresearched area. Migrant groups may also exist in informal living and working set ups, lacking a voice within policy circles. Indeed, the notions of participation and civil society are extremely problematic in the Lao PDR. Managing migrants (within urban contexts) and harnessing the economic benefits they can bring, while supporting and protecting their rights, proves a complex puzzle throughout the region for policy makers. These challenges, too, link to SDC s priorities in the Mekong region in employment and vocational education and training, as well as in local governance and citizen participation Inadequate development of public services particularly in cities Various studies show the spatial impact of growth in Vientiane Capital City, highlighting sprawl, roadside development, annexation of surrounding settlements and rapid deforestation (ref: Sharifi et al., 2014; Vongpraseuth & Choi, 2015). Ineffective implementation of urban plans and planning regulation threaten to create problems for the whole population, although invariably it is the poorest and most vulnerable who feel the impacts most keenly. In particular, Vientiane is failing to keep pace with the growth of private transport use. Infrastructural service systems (such as water supply, drainage and solid waste) are struggling to be maintained, let alone cope with an increasing demand. As yet, there is no operating wastewater system. The environmental management of Vientiane City must also be scrutinized. Fears remain over deforestation and the destruction of natural wetlands (and farmland) that could have a strong impact upon the natural hydrological cycle of the city, particularly during 22 P age

27 monsoon flooding (Sharifi et al., 2014). That Luang Marsh is a well known example here where the FDI has been used despite concerns of the environmental impact of the project. The reference to SEZs (named as Special Economic Zones and Specific Economic Zones) is an important and particular one for the Lao PDR. While other regional countries are creating such zones in peripheral border areas, aiming to benefit from emerging trade lines along GMS corridors, the Lao PDR is also using the mechanism as a driver to instigate investment for urban development. In the Decree of Special Economic Zone and Specific Economic Zone in the Lao PDR, Section IV emphasizes the policy of Transforming SEZ into City, providing an array of commercial, industrial and infrastructure services (Prime Minister s Office, 2010). The actual number of SEZs is unclear but at least five are clustered around Vientiane Capital alone, including That Luang, Vientiane Industrial and Trade Area, and Long Thanh Golf Course. It remains to be seen how a fundamentally exclusionary process of demarcating space can assist the provision of infrastructure services for a growing urban populace. Lucrative infrastructural projects may bring in vital investment for the city as a whole, but are often implemented at the expense of poorer communities, bringing into question an ability to provide inclusive development. For example, entire communities have been relocated to make way for recent projects. These involve Don Chan island (with developments including a five star hotel and luxury villas), That Luang marshlands (for residential and commercial facilities under status as a Special Economic Zone) and the site of the new national stadium (built for the 2009 Southeast Asian Games). Communities from all sites have been relocated to the area of Industrial Zone Km 21 where it is hoped that they can contribute to a demand for labor catering to the needs of local industrial development. For those practicing agriculture, the compensation of new land is often of poor quality and insufficient to maintain their previous livelihood. These challenges link to SDC s priorities in the Mekong region in improving local governance and citizen participation Potentials of cities, towns, and rural urban linkages for poverty reduction Strengthened value and marketing chains for clean local agricultural produces With rapidly growing urban areas across the country, with an increasing lower middle class population, demand for food catering to this social segment sharply increases. Besides an increased demand for meat, growing consciousness about food safety increases the demand for high quality clean local agricultural products. The Lao are generally rather conscious about food safety, proud about local produces, and increasingly ready to pay the premium for quality produces. This creates significant potential for income generating fresh organic vegetable production and marketing in peri urban areas, as well as for quality processed and well marketed local agricultural niche produces from more remote poor areas. However, mechanisms for quality control and certification, means for appropriate processing, as well as knowledge for better marketing, are lacking. Lao s tourism sector can also be an important market for safe agricultural produces, particularly in tourism destinations such as Luang Prabang Improved access to education and trainings for the right skills for decent work and local entrepreneurship Improved access to education and training bears clearly the biggest potential for poverty reduction in the medium term, which requires, among other thing, better income opportunities for the poor parents to start with. In combination with income generating opportunities such as the ones mentioned above, facilitated access to and strengthened and diversified provision of training for new skills that broaden 23 P age

28 the opportunities of rural poor in their villages still has untapped potential. New skills that can be of economic use in the rural villages for productive or service work geared towards urban consumers can be of particular value, as this may strengthen rural urban linkages. Such skills may include basic skills for entrepreneurship, such as accounting skills, basic understanding of relevant legal rights and duties, etc. A stronger close collaboration with the private sector, combined with basic practical skills in business, particularly for women, can increase the potential for successful local entrepreneurship. Practical skills in the hospitality sector can open doors for work in the tourism sector in urban areas as well as in the rural areas Improved urban governance to benefit urban poor and employment seeking migrants Administrative hurdles for employment seeking rural urban migrants e.g. to get registered in urban areas prevents formal residence and employment there. Without formal residence, migrants in urban areas are invisible to recruiting schemes for education and training, as well as for formal employment, leaving only the informal sector as an option. Remittances cover much attention in migration literature, with conflicting claims as to its long term ability to redistribute wealth and alleviate poverty. While family members remaining in rural locations may benefit from the contributions of rural urban migrants, these very members often represent an aged population, threatening the dynamism and future prospects for rural communities. While some may achieve a successful livelihood transformation, with labor migration to urban area offering an important line of wealth transfer from the urban to the rural poor, this is far from guaranteed, particularly when migrants are left in informal and vulnerable status, and the poorest may be the last to gain any benefits. A better inclusion of such migrants in the formal economy through improved urban governance and respective attention to the poorest segments of the population can provide a promising avenue for poverty alleviation both in rural as well as in urban areas. 24 P age

29 3. Stocktaking of main development actors activities 3.1. Main development partners and areas of intervention When it comes to infrastructural support in cities, intergovernmental agencies and bilateral partners have been core supporters through loans and aid. The Japanese International Cooperation Agency (JICA) has been a long term technical supporter of urban development, in particular for transport and waste systems, and acting as a partner in the production of the 2011 Vientiane Capital Urban Master Plan. The Asian Development Bank (ADB) is similarly influential with a series of loans supporting transport, water, and urban services towards the improvement of Laos role within GMS economic corridors. Most recently, ADB is the main partner in a proposed US$100 million loan for a Sustainable Urban Transport (SUT) system in Vientiane. Korean foreign assistance has also shown a focus in transport and water supply, although its overall portfolio on aid in Lao PDR is more wide ranging, engaging social services and skills development. If specific present projects are unclear, Thai and Chinese assistance to Lao PDR has been prolonged and engages infrastructure and prestige investment projects such as the 2 nd Thai Lao Friendship Bridge (Thai) and the development of That Luang Marsh area in Vientiane (Chinese). Particularly in the case of China, assistance blurs the line between private and state sector support. Bilateral aid from Europe and Australia has focused primarily upon social impacts of urban development (gender issues for AusAID), or social services such as health (LuxDev), education (GIZ, AusAID) or administration (LuxDev). NGOs and projects of bi and multilateral donors operating in Lao PDR, particularly those focused on some form of poverty alleviation, have predominantly geared their efforts to rural areas, where the highest incidences of poverty (percentage of poor among the local population) in the country are found. In an assessment of activity programmers in the Lao PDR, 40 development projects were judged to be working solely in rural areas, while activities of 22 NGOs related to urban development, either in the past or the present. However, there appears to be a growing interest in urban cases. Although strictly part of an intergovernmental organization, the Lao Red Cross, for example, has recently undertaken a pilot programmer in urban climate resilience. Further, in October 2017, the Lao government signed up as a member of the Global Green Growth Institute, which is instigating urban related projects in waste management, transport and green finance. Other donors and NGOs engage in urban issues through indirect linkages to a predominant rural focus, or overtly highlighting a desire to engage in urban development. Some of the rural urban linkages are seen in projects focused on migratory practices, particularly regarding human trafficking (with Village Focus International being one such example). Different labor groups are addressed with NGO activities offering support and skills, such as unions for thuk thuk drivers (Oxfam) or women in garment factories or the entertainment industry (Care International). Recent dialogue on legislative renewal, such as the Land Information Working Group consultation on the new Land Law, has involved development partners in the discussion of government policy that has important implications for urban development. However, the most significant area of urban related development work can be seen in the provision of social services for education and health, as organizations focused in rural areas often engage the livelihoods of a population moving to provincial towns as well as larger cities. When considering the role of academia, various university departments, particularly in the National University of Laos, have been commissioned by government agencies to carry out urban related work. For example, the Department of Urban Environment in the Faculty of Architecture has been asked to pilot district level urban planning in the Vientiane Capital area as part of a long standing working relationship with government. Annex 18 provides a list of projects with relevance to the urban context. 25 P age

30 3.2. Major unaddressed issues and challenges Rural urban employment seeking migrants Migration is an important aspect of urbanization processes. Much focus in the Lao PDR has rested upon historical programmers of relocation and on international labor migration to countries such as Thailand. Of less certainty are the patterns of domestic migration to urban areas, and the provision of supporting services, or the lack thereof. Greater attention is needed in this area as urbanization increases, looking at the government policies that impact upon these movements and migrants, and the potential opportunities of rural urban migrants. As most poor employment seeking rural urban migrants likely go unrecorded, these segments of the population are more difficult to actively engage in programs that would increase their chances on the labor market. Currently, there is to our knowledge no development cooperation initiative that addresses such challenges Urban governance As various laws are revised, including those on land and urban administration, challenges will emerge in how to link up work between different stakeholders and government sectors, particularly in terms of promoting integrated spatial urban planning. While ADB and JICA have had significant support programs for integrated urban development planning and governance in the years around 2010, they have now turned their focus largely to infrastructural planning and development. There remains thus much need and potential for support work here, assisting with institutional development, capacity development in management, analytical, and technical skills for a much more integrated urban development approach and respective coordination among competing policies and aims Link between TVET and entry into employment or self employment The GoL currently provides TVET in all towns across the country, significantly supported by GIZ and SDC, as well as by Korea and Japan, with training and education provided in a range of subjects. The direct link to and continuous exchange with the local private sector appears to be limited, though, and the provided skills training might therefore not match the actual needs of the local economy. Special programs specifically targeting disadvantaged and marginalized groups, and women in particular, are supported by SDC. A relatively high rate of trainees returning to their villages and their traditional trades after completion of the program possibly points to opportunities to adjust the offered training programs towards skills that can enable young people from rural areas to engage in rural entrepreneurships that cater to urban and peri urban consumers, or e.g. tourism. In general, research on and better knowledge of job preferences and desires of the rural poor, and the possibilities in urban and rural areas are needed to better match the two sides Current and planned activities of SDC that reach out to (peri )urban contexts SDC s diverse portfolio of engagement in the Lao PDR focuses on the three domains of agriculture and food security, governance and citizen participation, and employment and vocational education and training. While a number of SDC projects and initiatives have a national or even regional focus, with their center of operations in Vientiane Capital City, many of SDC s projects have their geographic focus in the central and eastern part of the North of the Lao PDR (see Annex 17). While only few projects have at least partly an urban focus, many of SDC s projects have an indirect outreach to urban contexts. In the following, a number of current and planned SDC projects and initiatives are listed by domain of the 26 P age

31 cooperation strategy, and described with regards to their direct or indirect outreach to different urban contexts, including their geographic focus Agriculture and food security While projects in this domain by nature focus on rural areas where agriculture is the main economic basis of the vast majority of the households, several of SDC s projects in this domain have an obvious link to urban contexts. Projects in this domain are focusing on the northern provinces of Luang Prabang, Xieng Khouang, Huapan, and Oudomxay, as well as on the national policy level. The LURAS project, active in Xieng Khouang and Oudomxay provinces, provides support for farmer organizations as a means for improving collective action and the bargaining power of smallholders for more inclusive and profitable value chains and marketing systems from rural farmers to urban and periurban traders, processors, and consumers. A strong focus is promoting and supporting of cleaner, pesticide free or reduced agricultural production, with expected benefits for local as well as urban consumers. TABI, aimed at improving local rural livelihoods while maintaining agroecological biodiversity as the rural capital of the future. The project supports local initiatives in Huapan, Xieng Khouang and Luang Prabang provinces, among others also in developing and marketing local produces to urban and peri urban markets. SDC supports two related projects (implemented by GRET and WWF) that aim at strengthening the sustainable use, processing, and marketing of rattan and bamboo. These non timber forest products (NTFP) have a significant potential to improve local livelihoods and reduce rural poverty through its sustainable economic use as construction materials and for crafting furniture and other everyday products in demand among urban and peri urban consumers. These projects support the development of sustainable supply chains from rural poor communities to urban and peri urban consumers, with a geographic focus on the northeastern province of Huapan by GRET, and by WWF in Bolikhamxay. Main urban and peri urban target areas for processing and marketing include the small sized towns and their surroundings of the northeast, with a strengthened link to more remote and poor rural communities as the source of the supply chain. Through its support to the reform of the country s agriculture and forestry colleges (SURAFCO), SDC s engagement contributes to the strengthening of the agricultural extension system, potentially towards enhanced pro poor rural urban linkages and agricultural production that caters to urban consumers. The project's geographic focus is on all five colleges of the country, located in Luang Prabang, Pakse, Savannakhet, Paksan, and Thangon, outskirts of Vientiane City. Through SDC s support to the implementation of the national Multisectoral Food and Nutrition Security Action Plan (MSFNSAP) through the ENUFF project, the project potentially has a reach to urban context through the migration of rural populations from marginalized rural areas in Oudomxay and Huaphan provinces, which is the primary geographic focus of the support Governance and citizen participation The projects in the governance domain tend to have a broad geographic largely national reach, some of which with a predominantly rural focus. The SDC supported national Governance and Public Administration Reform (NGPAR) Programme promotes the administrative decentralization and strengthened capacities of the public administration at the local level to improve service delivery. Through its Governance for Inclusive Development project (GIDP), local administrations shall be better enabled to fulfill their mandates. The focus of the engagement is on local province and district officials in the target provinces of Salavanh and Sekong in 27 P age

32 the south, Vientiane Capital City in the center, and in the four northern provinces of Xieng Khouang, Houaphanh, Oudomxay, Luang Namtha, and Luang Prabang. Although the focus is on improving basic public service delivery to poor and marginalized communities, the project has a potential to strengthen capacities also with regards to the governance of small local province and district towns, particularly with regards to rural urban linkages in trade, services, and labor. The Lao DECIDE info project is operation at the central level, supporting government institutions from across a wide range of sectors to better coordinate and collaborate on information integration and analysis for more inclusive development planning. Although the focus has predominantly been on processes and policies in rural areas, the project has a strong potential to support urban governance processes with information integration and analysis and supporting multi sectoral urban development policy dialogue. The project has no specific geographic focus, putting an emphasis on national highresolution inform nation that allows for contextualization at any level. The CEGGA project aims at strengthening the capacities and improve the opportunities of civil society and their organizations (CSOs) to engage with the National Assembly to raise issues of concern and bring in additional local expertise and perspectives. While the focus currently is on ethnic minorities in remote rural areas, strengthened CSOs will be engaging also in smaller towns, facilitating a strengthened link and exchange among citizens in rural, small town, and larger urban areas. The PRF s explicit focus on improving infrastructure and service delivery in the poorest villages in remote areas of the country has a rather direct impact on the improvement of the rural urban connectivity by improving physical access to urban services and markets. The PRF is currently active in the poorest districts throughout the country, covering villages in six provinces of the north and northeast, and in four provinces in the south. The Policy Think Tank (PTT) aims to help guide the country with scientific analysis and knowledge towards economic growth and poverty alleviation. Although the PTT initially focused on improving agricultural sector policies, and is therefore an initiative within SDC s domain of agriculture and food security, we do list it here due to its increasingly broadened governance focus. The PTT initiative has a potential to strengthen knowledge on rural urban linkages and have an impact on respective policy decisions. The initiative has no particular geographic focus Employment and vocational education and training This domain has a very obvious and strong link to the urban context. The different projects focus on improving the provision of education and training particularly to marginalized groups traditionally in remote and poor villages, but with an increasing potential to address also urban and peri urban marginalized populations. The VELA project supports the reform of TVET in the Lao PDR to improve access to quality education and training particularly for youth groups from marginalized communities. Trainings aim at providing new skills for employment in the industry and service sectors, and shall enable the rural youth to better compete in the domestic labor market, that is currently strongly concentrated in urban and peri urban areas. The ongoing Skills for Tourism/ Lao 029 project as well as the planned Hospitality Skills Development project aim to provide the youth from disadvantaged communities with the skills and opportunities needed to successfully enter decent employment in the tourism sector. The project has a great potential to provide formal entry points for employment seeking rural youth in urban settings. The geographic focus of these initiatives is nationwide, with a focus on areas with particular potential for tourism employment. The regional PROMISE project funded by SDC aims to improve the formal employment chances of migrants in the Mekong region, and to contribute to poverty reduction in the region through safer and 28 P age

33 better skilled labor migration within the region, particularly for poor women. As such migrations are typically targeting areas in and around towns and cities, this project has a strong relevance for the urban context Issues and challenges addressed by SDC and not yet covered by other donors While SDC has a number of projects that are exclusively funded by Switzerland, many of its projects are co funded and jointly supported by SDC and other bi or multinational donors or institutions. There are therefore few issues and challenges that are addressed exclusively by SDC. Nonetheless, SDC has built a strong standing in the area of supporting the most vulnerable in the country, with a focus on marginalized rural areas. With increased rural urban migration, and thereby potentially a growing number of marginalized poor urban dwellers, SDC certainly has strong comparative advantages there based on its current portfolio and experiences. Although SDC s engagement in the hospitality skills sector is implemented jointly with Luxembourg, Switzerland's experience, competencies, and reputation in the sector certainly gives SDC a strong standing in the sector. The strong focus and expertise of SDC supported project activities on improving and promoting safe and organic agricultural produces is possibly unique to SDC in the Lao PDR, and certainly has a potential for expansion, particularly in connection with, but not limited to SDC s engagement in the hospitality and tourism sector. An important niche of SDC is certainly the promotion of national cross sectoral information integration and analysis for integrated planning and governance, which has significant potential for improving integrated urban governance. 29 P age

34 4. Reflections and recommendations With its current diverse, but well balanced portfolio within the identified three thematic priority areas in agriculture and food security, governance and citizen participation, and employment and vocational education and training, SDC is well positioned to achieve the outcomes set forth in its regional Strategy. The current draft of the new MRS states that With the acceleration of urban growth, this strategy recognizes the increasing importance of addressing rural urban linkages. More attention will be given to employment and income aspects in TVET and in agriculture and food security. Recognizing the in depth knowledge and understanding of the SDC Mekong team of the strengths and challenges of its current portfolio, and the extensive deliberations and careful analysis that went into the development of the new Strategy, it would certainly not be not make sense to provide recommendations on potential alterations or modifications of the strategic orientation. However, the many current and potential links of the different ongoing and planned SDC projects to the urban context identified and described in the previous chapter will likely allow SDC to achieve the above stated shift of orientation, or rather broadening of focus towards a stronger emphasis on challenges in urban areas without any drastic alteration of the current strategic orientation. Based on the current context or urbanization in the Lao PDR, the identified key challenges and opportunities, and the particular strengths and comparative advantages of SDC in the Lao PDR, the authors may provide the following concrete recommendations on how an urban lens can be further integrated into the existing SDC portfolio and strategy Opportunities for action of SDC Identified opportunities for potentially strengthened future engagement of existing or planned projects of SDC in urban contexts to further poverty alleviation processes and efforts are described hereafter, grouped by the three strategic thematic orientations of the MRS Agriculture and food security Strengthened urban rural linkages through improved value chains from rural producers through rural, peri urban, or urban processors to the rapidly growing urban markets and consumer base is clearly one of the key potential areas for rural economic growth and poverty reduction. SDC, with its current project portfolio, is in a strong position to take a leading role among the donor community in supporting specific areas of this field: both the TABI, as well as the LURAS projects, are well established and recognized strong engagements of SDC in the provinces of the northeast, supporting farmers and farmer organization in the identification and development of marketable agricultural and non timber forest products. While TABI has its particular strengths in supporting farmers in the identification and development of the products, LURAS support to farmer organizations in developing fairer trade schemes complements the former well. A stronger formal involvement of the private sector in local towns as well as in the regional and national towns and city could strengthen to marketability of these produces. LURAS strong engagement in promoting clean and safe agricultural production provides an important opportunity for further promoting and improving supply, packaging and marketing of products to urban markets catering to a growing middle class, and to the hospitality sector in both Vientiane City and Luang Prabang, and potentially to a smaller degree also in Phonesavanh. Such engagements will offer synergies to the ongoing and planned projects of SDC in the hospitality sector, and can build on experiences made through the bamboo and rattan promotion projects. 30 P age

35 Projects in this domain are focusing on the northern provinces of Luang Prabang, Xieng Khouang, Huapan, and Oudomxay, where the focus of strengthened rural urban linkages would concentrate on the respective small and medium sized provincial towns of Oudomxay, Samneua and Phonesavanh, and the larger sized town of Luang Prabang. With the construction, and subsequent operation of the railroad through Luang Prabang and Oudomxay, increased demand for products catering to the respective clientele can be expected, and new fast transportation opportunities to other, bigger towns and cities, can be expected to emerge in the not too distant future Governance and citizen participation The governance of urban areas is a challenge for an administrative system that knows no dedicated administrative entity for towns and cities, lacks the relevant capacities, and where the lack of crosssectoral coordination processes and mechanisms allows sectoral laws and interests compete in a way that let the faster and economically stronger succeeds in creating new realities in urban developments on a nearly daily basis. Through its longstanding active engagement, SDC in partnership with multinational heavyweights is in a strong position to support and influence the improvement of local urban governance that manages to provide adequate social public services to the needy, and to chart development pathways for urban areas that are balanced among the claims of competing claims of unequal powers. In selected small and medium sized provincial towns of the north, ideally where other SDC projects already established a good local accord with the authorities such as in Luang Prabang and Phonesavanh, SDC may work through GIDP NGPAR to develop local capacities and processes in the public administration that can deliver services to rural migrants in search of employment in urban areas. Scientific analysis work and new knowledge on urban development processes, including much improved knowledge on rural urban migration is essential for better planning, and facts based dialogue among stakeholders within the public administration and beyond. In collaboration with the Lao DECIDE info project, both CEGGA and GIDP can support at local level a well informed engagement of CSOs with public institutions in promoting more inclusive, facts based and cross sectoral planning dialogue for much needed integrated spatial planning works for the development of local urban areas. The need and potential for such engagement can be particularly pronounced in the urban land management sector in larger towns and Vientiane City Employment and vocational education and training SDC s strong engagement in the TVET sector through the VELA project, particularly with regards to the support of most disadvantaged population segments, and in cooperation with the engagement of local governance projects (see above), provides the Agency with a comparative advantage for future stronger engagement of undocumented rural urban migrants in the offered education and training programmers. Such engagement can make sense in any of the towns where the TVET program is currently provided (i.e. in all provincial towns). Targeted assessments focusing on establishing better the desires of rural poor employment seeking youngsters, particularly women, can help improving the matching of offered training programs and the career desires of the rural youth. This may include a stronger focus on the training of skills that can be of use in local rural entrepreneurship, particularly also with regards to potential synergies with a potential strengthened support to enhancing rural urban economic linkages. 31 P age

36 4.2. Main recommendations for SDC to integrate a perspective on urbanization issues Based on the identified opportunities described above, the following main recommendations for a potential refinement of the new Strategy and a potential inclusion in the next strategy, could be brought forward: 1. Based on the significant potentials of the existing SDC portfolio to build on strengthened ruralurban linkages to improve livelihoods both in rural, as well as potentially in urban areas, a strengthened engagement of the private sector could be envisioned in two domains: a) In the agriculture and food security domain, a close collaboration with selected relevant local private sector stakeholders can help building stronger and fairer urban rural linkages in value and supply chains from rural producers to urban consumers. b) In the domain of employment and vocational education and training, the alignment of TVET training programs to the local needs for skills and desires for work can be improved when done in close collaboration with selected local private sector stakeholders. Such strengthened public private partnerships appear synergetic in both domains, and signify a promising avenue to make best use of the existing potentials of SDC projects. 2. Support government institutions through the existing governance reform programs in achieving better integrated urban development planning. While both JICA and ADB have had rather limited success in supporting the development of urban administrations with their urban focused programs about a decade ago, strengthening a dedicated urban perspective within on going national public administration and governance programs appears promising given the increased realization of the need for improved management of urban land and other resources. Several of SDC s current projects such as e.g. the Lao DECIDE info, NGPAR or GIDP, may well contribute to strengthening urban governance both in smaller as well as in larger towns. This may involve supporting the creation of urban task forces (if urban administrations are beyond feasibility) that have the skills and mandate for integrated analysis and urban planning. It should particularly include a focus on providing needed services and documentation to undocumented migrant workers, as well as cross institutional processes for urban land management. 3. Given the predicted rapid pace of urban growth of many of the towns in the Lao PDR, the challenges the public authorities face keeping up with the fast developments, and the potential effects of these developments also on rural areas, a stronger focus on urban development could be placed in the subsequent strategy Based on SDC s (and SECO s) experiences in such areas of cooperation in the region, a stronger engagement in the field of clean air through clean production and cleaner transport with electrified vehicles, appears as a potential area where SDC can have comparative advantages. 32 P age

37 References Barney, K., Power, Progress and Impoverishment: Plantations, Hydropower, Ecological Change and Community Transformation in Hinboun District, Lao PDR (YCAR Papers No. 1), Political Ecology series. York Centre for Asian Research, CIFOR. Bird, K., Voluntary Migration in Lao People s Democratic Republic (No. 3), Policy Brief. Overseas Development Institute. assets/publicationsopinion files/3379.pdf Bouté, V., Reaching the Cities: New Forms of Network and Social Differentiation in Northern Laos, in: Bouté, V., Pholsena, V. (Eds.), Changing Lives in Laos: Society, Politics and Culture in a Post Socialist State. NUS Press, Singapore, pp Chantavanich, S., Middleton, C., Michiko, I. (Eds.), On the Move: Critical Migration Themes in ASEAN. International Organization on Migration (IOM) and the Asia Research Center on Migration (ARCM), Institute of Asian Studies, Chulalongkorn University., Bangkok. Évrard, O., Baird, I.G., The Political Ecology of Upland/Lowland Relationships in Laos since 1975, in: Bouté, V., Pholsena, V. (Eds.), Changing Lives in Laos: Society, Politics and Culture in a Post Socialist State. NUS Press, Singapore, pp Hirsch, P., Scurrah, N., The Political Economy of Land Governance in Lao PDR. Mekong Region Land Governance. DR.pdf Kim, A.M., Talking Back: The Role of Narrative in Vietnam s Recent Land Compensation Changes. Urban Studies. 48 (3), LADLF, L.A.D.L.F., Sam Sang in Practice: Early Lessons from Pilot Implementation. Adam Smith International, Australian Aid, Vientiane. Lao Statistics Bureau, Results of Population and Housing Census 2015 (English Version). Vientiane. population and housing census 2015 english version Lao Statistics Bureau, forthcoming: Results of population projections Markussen, T., Tarp, F., Van Den Broeck, K., The Forgotten Property Rights: Evidence on Land Use Rights in Vietnam. World Development. 39 (5), Molland, S., Migration and Mobility in Laos, in: Bouté, V., Pholsena, V. (Eds.), Changing Lives in Laos: Society, Politics and Culture in a Post Socialist State. NUS Press, Singapore, pp MPI, th Five Year National Socio Economic Development Plan ( ). Ministry of Planning and Investment pdf 33 P age

38 Prime Minister s Office, Decree on Special Economic Zone and Specific Economic Zone in the Lao PDR, 443/PM. PTI, JICA, Vientiane Capital Urban Development Master Plan Proposal. Public Works and Transport Institute Lao PDR and Japan International Cooperation Agency. Rafiqui, P.S., Gentile, M., Vientiane. Cities 26 (1), Sharifi, A., Chiba, Y., Okamoto, K., Yokoyama, S., Murayama, A., Can master planning control and regulate urban growth in Vientiane, Laos? Landsc. Urban Plan. 131, UN in Lao PDR, Country Analysis Report: Lao PDR. The United Nations in Lao PDR, Vientiane. UN Habitat, ESCAP, The State of Asian and Pacific Cities 2015: Urban transformations Shifting from quantity to quality. United Nations Human Settlements Programme, The United Nations Economic and Social Commission for Asia and the Pacific. VCG, The Urban Master Plan of Vientiane Capital Towards 2030 (update 2017). Cabinet of Vientiane, Vientiane City Government, Vientiane. Vongpraseuth, T., Choi, C.G., Globalization, foreign direct investment, and urban growth management: Policies and conflicts in Vientiane, Laos. Land Use Policy 42, World Bank, UN Population Divisions, Urban population (% of total) [WWW Document]. World Bank Data. Barney, K., Power, Progress and Impoverishment: Plantations, Hydropower, Ecological Change and Community Transformation in Hinboun District, Lao PDR (YCAR Papers No. 1), Political Ecology series. York Centre for Asian Research, CIFOR. Bird, K., Voluntary Migration in Lao People s Democratic Republic (No. 3), Policy Brief. Overseas Development Institute. assets/publicationsopinion files/3379.pdf Bouté, V., Reaching the Cities: New Forms of Network and Social Differentiation in Northern Laos, in: Bouté, V., Pholsena, V. (Eds.), Changing Lives in Laos: Society, Politics and Culture in a Post Socialist State. NUS Press, Singapore, pp Chantavanich, S., Middleton, C., Michiko, I. (Eds.), On the Move: Critical Migration Themes in ASEAN. International Organization on Migration (IOM) and the Asia Research Center on Migration (ARCM), Institute of Asian Studies, Chulalongkorn University., Bangkok. Évrard, O., Baird, I.G., The Political Ecology of Upland/Lowland Relationships in Laos since 1975, in: Bouté, V., Pholsena, V. (Eds.), Changing Lives in Laos: Society, Politics and Culture in a Post Socialist State. NUS Press, Singapore, pp Hirsch, P., Scurrah, N., The Political Economy of Land Governance in Lao PDR. Mekong Region Land Governance. DR.pdf 34 P age

39 Kim, A.M., Talking Back: The Role of Narrative in Vietnam s Recent Land Compensation Changes. Urban Studies. 48 (3), LADLF, L.A.D.L.F., Sam Sang in Practice: Early Lessons from Pilot Implementation. Adam Smith International, Australian Aid, Vientiane. Lao Statistics Bureau, Results of Population and Housing Census 2015 (English Version). Vientiane. population and housing census 2015 english version Markussen, T., Tarp, F., Van Den Broeck, K., The Forgotten Property Rights: Evidence on Land Use Rights in Vietnam. World Development. 39 (5), Molland, S., Migration and Mobility in Laos, in: Bouté, V., Pholsena, V. (Eds.), Changing Lives in Laos: Society, Politics and Culture in a Post Socialist State. NUS Press, Singapore, pp MPI, th Five Year National Socio Economic Development Plan ( ). Ministry of Planning and Investment pdf Prime Minister s Office, Decree on Special Economic Zone and Specific Economic Zone in the Lao PDR, 443/PM. PTI, JICA, Vientiane Capital Urban Development Master Plan Proposal. Public Works and Transport Institute Lao PDR and Japan International Cooperation Agency. Rafiqui, P.S., Gentile, M., Vientiane. Cities 26 (1), Sharifi, A., Chiba, Y., Okamoto, K., Yokoyama, S., Murayama, A., Can master planning control and regulate urban growth in Vientiane, Laos? Landsc. Urban Plan. 131, UN in Lao PDR, Country Analysis Report: Lao PDR. The United Nations in Lao PDR, Vientiane. UN Habitat, ESCAP, The State of Asian and Pacific Cities 2015: Urban transformations Shifting from quantity to quality. United Nations Human Settlements Programme, The United Nations Economic and Social Commission for Asia and the Pacific. VCG, The Urban Master Plan of Vientiane Capital Towards 2030 (update 2017). Cabinet of Vientiane, Vientiane City Government, Vientiane. Vongpraseuth, T., Choi, C.G., Globalization, foreign direct investment, and urban growth management: Policies and conflicts in Vientiane, Laos. Land Use Policy 42, World Bank, UN Population Divisions, Urban population (% of total) [WWW Document]. World Bank Data P age

40 Annexes Annex 1: Definition of towns and urban areas used in the Lao PDR There is no standardized definition of towns or urban areas used in the Lao PDR. The following provides a short overview of some of the official references to definitions of towns and urban areas. Article 3 of the Law on Urban Planning (1999) defines three levels of towns in the Lao PDR: City (towns under the control of the central government); Provincial capitals (towns under the control of the provincial government); District towns (towns under the control of the district authorities). The revised version of this law, approved by the NA in December 2017, distinguishes further as follows: Vientiane Capital City; Main metropolitan areas (Luang Prabang, Pakse, and Savannakhet towns); Municipality/ main district / center of the province; Center of district; Center of large villages or village groups (kum ban). According to the Law on Local Administration (2003), there are provinces or cities (= urban province ) at the provincial level, and districts and municipalities (= urban district, main district of a province capital) at the district level. The head of the city is the mayor (Art. 2), and the head of the municipality is the chief of municipality (Art. 3.). The city is defined as a local administrative territory comprising larger urban communities and several municipalities (Art. 6). It is the center of political, economic, cultural and social services and activities that influence the socio economic development of the country. The criteria for the creation of a city are: 1. Occupy a large urban area that is the center of economic, political and socio cultural activities, [and of] tourism, services, commerce, communications, transport and foreign affairs; 2. Make a significant contribution to the socio economic development of the country; 3. Have a population of at least eighty thousand; [and] 4. Have a developed infrastructure and public facilities. (Art. 12.) According to that law, a municipality is a local administrative territory the same level as a district, which is in an urban area (i.e., essentially an urban district). It is the place where the offices of the provincial or city administration are located, or some other urban area that meets the rater unspecific criteria provided in that law, such as high population density and socio economic, political, cultural and public service development. A municipality comprises several villages. The urban centers of other districts can be established as a municipality if they meet the following criteria: 36 P age

41 1. Population of at least 10,000 people; 2. A developed economic, social, and cultural area and a developed infrastructure system; [and] 3. An ability to generate revenue to respond to necessary expenditures. (Art. 38). In essence the laws provide only very loose definitions on what constitutes a town. The definition of the extent of a town rests with the relevant authorities at the respective administrative level, in the form of urban development plans. For most Lao towns there is an urban development plan, although e.g. in the case of Vientiane city, the urban development plan of 2012 has not been approved yet, meaning that the one of 2002 is the valid basis for respective urban planning, although the realities of on going urban development has rendered much of it obsolete. In the absence of any official delineation of a town, the definition of urban areas used in the Lao PDR are not of much help for urban planning or analysis either: The national Population and Housing Census records a) whether a village is part of a municipality of a district or a province, and b) classifies villages as urban if any three of the following criteria are met: village is part of a province or district municipality; >70% of households use electricity; >70% of households use piped water; village is accessible by road all year around; village has permanent all day market. This definition is clearly not equal to belonging to a town or a city, but rather refers to the degree of access to certain services/ public infrastructure (which is similar to the inverse measure used to identify poor villages). Further, the municipality as defined in the census does not appear to follow the definition stated in the above mentioned law on local administration, and can be composed of a number of rather dispersed rural villages, and has therefore little in common with a typical urban area. Indeed, a closer look at the distribution of villages marked as belonging to a municipality reveals surprisingly many such villages in remote countryside areas without any urban characteristics. There are several other limitation to those definitions mentioned above for any of them to be useful as a basis for analysis or planning or urban spaces: Defining a town area based on the district boundaries does not reflect realities of urban space in the Lao PDR. The town area of Vientiane, for instance, does not match the extent of the three, four, or five central district, or the urban areas of e.g. Luang Prabang or Savannakhet are much smaller than the respective districts in which they are located. Finally, a village with e.g. a market, good road access, and a good connection to the national electricity grid can very well have all the characteristics of a typical rural village and clearly not being part of any urban space. 37 P age

42 Annex 2: Delineation of urban areas of a town Town areas were delineated along the contiguous built up areas around towns using recent satellite imagery (turquois line), and the population of all villages (yellow dots) within such an area were aggregated as the town s population. 38 P age

43 Annex 3: Size and type of largest towns in the Lao PDR Towns in red are provincial capitals, towns in blue are district capitals, orange towns are large agglomerations near main

44 Annex 4: Main town categories in the Lao PDR 40 P age

45 Annex 5: Map of nighttime light emission in Southeast Asia White areas: Nighttime light emission in 2012 Pink areas: Increase of nighttime light emission between 2012 and 2016 Source: NASA 2013 & P age

46 Annex 6: Map of location, size and administrative type of towns 42 P a g e

47 Annex 7: Distribution and growth of urban populations 43 P age

48 44 P age

49 Annex 8: Characteristics of migrants in the Lao PDR 45 P age

50 46 P age

51 Annex 9: Annual labor growth rate in manufacturing in the Lao PDR: 47 P age

52 Annex 10: Annual labor productivity growth rate in manufacturing in the Lao PDR: 48 P age

53 Annex 11: Incidence and density of poverty 49 P age

54 Annex 12: Maps of poverty and inequality in the four biggest towns 50 P age

55 51 P age

56 Annex 13: Distribution and growth of urban poor population 52 P age

57 53 P age

58 Annex 14: Gini index of inequality by town type Annex 15: Projected population size of 15 largest towns in P age

59 Annex 16: Planned major transit corridors in Southeast Asia Source: eoc.org 55 P age

60 Annex 17: Location of SDC funded project activities 56 P age