Surprise Cabinet Reshuffle in Laos

by Ma Nguyen Tong

18-1-2003

Lao President Khamtay Sip-handone carried out a surprise cabinet reshuffle with changes to his economic team in a bid to improve the fragile economy. The National Assembly approved his proposal on January 15, 2003 to promote Chansy Phosikham, formerly the governor of the state bank, as the new finance minister replacing Soukan Mahalath, who was reassigned as the governor of northern Xieng Khuang province. During Soukan's tenure as finance minister, a post he had held since April 2002, the country's currency - the kip - fluctuated, depreciating from 215 per baht to 250 per baht, before stabilising at 250. He told the Penguin Star that during that difficult time anti-government groups had manipulated the currency to discredit his government.

New Finance Minister Chansy attended a short training course on economic management in Vietnam in the late autumn of 2002.

Soukan was regarded as the right man for the provincial governor's job, rather than being the national economic tsar, since he has a military background. Xieng Khuang is home to Hmong anti-government insurgents.

In Laos, a provincial governor is authorised to command armed forces and is more powerful than a minister. Swapping positions between a ministerial and governor's portfolio is normal.

The January 15 reshuffle also brought old-guard Onneua Phommachanh, who was governor of the southern Champassak province for more than a decade, to sit in the capital as the minister of industry and handicrafts. Replacing Onneua as governor of Champassak was Thongvang Sihachak, the former governor of Saravan, who left the position to his deputy, Phosay Saipanya. As an indication of the usual nepotism that harks back to a more feudalistic era, both new governors were related to President Khamtay, who was born in Champassak.

Soulivong Daravong, formerly industry minister, replaced Phoumi Thipphavone as the minister of commerce, while the latter became the state bank governor.

Analysts in Vientiane foresaw no dramatic change in Lao economic management since the reshuffle was actually just a rotation within the old power-holders, rather than an injection of new blood into the system. However, the country's economy made promising progress in 2002 as gross domestic product grew 5.8 per cent. GDP was expected to expand by 6 per cent in 2003, according to the Asian Development Bank.