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Informal and Illegal Movement in the Upper Greater Mekong Subregion

Lynn Thiesmeyer

Chapter 1. The Death of Sustainable Economies and the Birth of “Illegal” Economies

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1Clusters of smaller markets nested within larger ones are created by, demand, and absorb workers who have either lost or suffered reduced livelihoods and at the same time gained new forms of access to instruments or channels offering other options. The diversity of markets for both labour and goods is a diversification that arises within the co-existence of multiple economies in developing regions (see Thiesmeyer 2005): a global capital, labour, and export economy, a national industrialisation and skill-training economy, a provincial-level agricultural economy, and a district / local level subsistence economy co-exist in China and the rest of the region, and feed into each other in ways that exhibit or necessitate complex understandings and behaviours on the part of their workers and those who transport their primary, secondary, and tertiary products.

2Within these overlapping economies, it can be an advantage or a disadvantage to be situated between the larger-scale global or national production processes and the very localised rural producers and consumers. It is these advantages and disadvantages that every actor along the global-to-local continuum must seek to manipulate. It is important to note that these are not risks and risk management, but actual disadvantages (damages) and advantages (comparative) in relation to the others along the scale. For a small enterprise engaged in making and selling agricultural inputs, the global capital and (whether advanced or simple) technologies for production are positioned above, while the impoverished or jobless agriculturalist is below, in a value chain with little profit margin.

3The frameworks of material culture within which local workers frame their movement are diverse. However, the common features that this research shares with others is movement as a continuity rather than a rupture; movement overland through geographical territories rather than by air or ship; and the deeply-rooted right, and valuation, of movement in and of itself as an inherited life. The conclusions that can be drawn in this particular research are that for local rural dwellers life does not advance without movement. This notion of advancement may include types of financial, non-financial, social, and psychological benefit or advancement that are believed to accrue from movement. But in this context “advancement” is mainly what it literally states: going forward. For example, time may be known to pass but without advancement if there is no change of scene or routine. Temporality in this context is best measured by movement and a series of activities rather than the repetition of the same activities in the same spot.

4Advancement for local rural people in this research consists of advancing through a series of geographies, and also a series of jobs, carrying possessions and goods with them each time. These movements may or may not be diverse. Going several times through the same conduit to the same destination and back is still felt as advancement. Moreover, the eventual return to “home”—all the movement in this study is temporary—becomes another advancement, because it is not the same as having stayed home nor is it the same as having gone out and come back only once in life. These movements are circulations that are routine. As a framework, then, instead of the developed-country notion of the U-turn among migrants, we might rather use the notion of a spiral. Each turn and return is a slightly different and advancing / rising movement, to a slightly different (because time has passed) destination or home.

5This kind of going forward does not lend itself well to our previous academic, political, or entrepreneurial notions of advancement and return. The major work on migration and informal trade often speaks in terms of dichotomies: of outward flows and U-turns back home, of push and pull factors, of sending and receiving countries, and of the movement of labour and goods to a richer country in order to send remittances or profit back to a poorer one. It also speaks in terms of nation-states. For our context of cross-border rurally-based movement, however, local ideas of movement are fundamental to an understanding of why illegal trade and trafficking continue to be difficult to prosecute.

6The first appraisal in northern Laos was made in March 2008. The preliminary survey for the final research was done during March 2009, including an appraisal of the Thai–Lao–China (Yunnan) border areas, their markets and businesses, and their products. The main research was completed during August and September of the same year. The surveyed areas were Mandalay and north central Shan State in Myanmar; Sipsongpanna area from Jinghong southwards to the China-Lao border at Mohan; and northern Laos, from the Lao-China border at Boten to Luang Nam Tha and Muang Sing in Luang Nam Tha Province and Na Mo in Oudomxay Province. Although the time period of eighteen months was not long enough to qualify as a longitudinal survey, it did show the extremely rapid changes brought about by the extension of Asian Highway No. 3 through northern Laos.

7During the survey, the author was accompanied by an environmental chemist who sampled soil, air, and water in the rural areas on both sides of the Lao border. Further, all brands, types, and, where known, ingredients of the agricultural chemicals informally traded across the border were recorded both visually, as photographs of the product labels, and in text form.

8The respondents surveyed fell into four categories: 1) agricultural landowners and plantation owners; 2) local government officials, academic specialists, and NGO researchers; 3) local farmers and smallholders who purchase and use trafficked items; and 4) local traders in town and village markets, who obtain and transport goods across borders. There were eighty-two respondents in all.

Main and Secondary Roads in the Golden Quadrangle Area

Main and Secondary Roads in the Golden Quadrangle Area

1 - Site 1: Lashio, Shan State, Myanmar

9The Myanmar rapid survey was undertaken to provide a comparison to the fuller survey of southern China and northern Laos. Myanmar’s Shan State borders both China and Laos and offers terrain, livelihoods, and trade issues similar to those of the China-Lao border. Interviews with border officials, plantation owners, farmers, and rural dwellers produced a majority opinion that illegal or informal, hazardous goods were brought in from China and Thailand because they were much cheaper. For farmers wishing to use agricultural chemicals, the very low prices of trafficked chemicals were a great attraction.

10Mandalay is the largest town near southern Shan State to which local farmers can go to buy goods, and it is connected by Asian Highway No. 3 West to the Chinese border and through Keng Tung or Myawaddy to the Thai border. Agricultural shop-owners and their patrons discussed the rising demand for such products despite the lack of knowledge of their ingredients, level of toxicity, or method for use. Similar, but presumably safer, nationally-certified products sold in the same shops were three times higher in price. The major places of origin for such chemicals were China, Thailand, and Japan. Subsequently, users on two plantations mentioned not only cost, but the availability of imported, cheaper, and perhaps illegally toxic products. A discussion of the potential health and environmental impacts of such products gained rapt attention, with the listeners providing assurance that although the environmental dangers were somewhat known, the health impacts were not. Further on, an agricultural expert from Japan in Shan State explained that there has been little observable run-off or soil degradation due to chemicals in northern Shan up to the present, but that the increasing imports of such chemicals along Asian Highway No. 3 West from China, and the shrinking land area held by Shan farmers, which now averages less than 1.5 hectares per household, has rapidly boosted the use of such chemicals, without any instruction on amounts or number of times for use. He predicted that within a year, the environmental effects would begin to show.

11The major town of Lashio in northern Shan State boasts numerous traditional and modern markets. As with other towns in the border areas of Myanmar and Laos, there is a market known to local people as the “Chinese market”. Comparisons of goods available in the “Chinese” and local-merchandise markets show a large array of legal, illegal, hazardous, and counterfeit goods, and Lashio was no exception. At the agricultural shops outside of Lashio town, the availability, composition (ingredients), and places of origin of informal and illegal agricultural goods were recorded. Here as well, lower prices, rising demand, and ignorance of safer use were mentioned by salespersons and by consumers. The points of origin of most of the hazardous chemicals were Yunnan Province in China and various places in Thailand. The chemicals contained in the pesticides, herbicides, and fertilisers were in several cases those declared unsafe according international standards or were in amounts or concentrations that were similarly unsafe. A twenty-eight-year-old Shan farmer who was interviewed was an exception to the trend of rising demand. His explanation for not using trafficked goods on his farm was that his family’s income is so small and irregular that they have never bought such goods.

  • 4 Interview with Mr. Bertilio Dominguez and Ms. Soi Lang Seng, WFP Lashio, 31 August 2009.

12The officials at the World Food Programme office in Lashio cited a survey they had performed in 2008 in the rural area of Kutkai, north of Lashio. This survey showed an 8-month-long rice or food gap every year.4 This can be related to a strong drive for labour migration and probably engagement in other, legal or illegal, forms of trade. The closest border with China, at Muse (Ruili on the China side) is approximately one hundred kilometres away and can be accessed in half a day by pickup truck or bus, making individual trade and trafficking quite easy.

2 - Site 2: Kunming and Xishuangbanna Regions, Yunnan Province, China

13Yunnan Province borders northern rural areas of Vietnam, Laos, and Myanmar, and geographically it is one of the conduits in the region for illegal, informal, and hazardous trade along with legal trade and contributions to the development of the neighbouring countries. Since the ASEAN Free Trade Zone Agreement in 1994 (the CAFTA), small firms that produce both licit and illicit goods locate themselves near these borders in order to participate in the export trade into Southeast Asia. With the recent progress towards ASEAN Economic Co-operation, this is an especially good area in which to locate for both import and export trade. However, the recession that began in 2008 has not allowed a commensurate improvement in production processes that would safeguard health and the environment, especially where small firms are working on a tiny margin. As a result, negative health and environmental impacts are not shrinking as quickly as regional governments would have liked.

14In Kunming, a program director for Family Health International (China) was interviewed to discuss chemically-impacted health concerns in Yunnan generally and Kunming in particular. He pointed out, first, the lack of knowledge about chemicals and their health impacts among the general public; and second, the lack of alternatives to chemicals. These were indications that were completely borne out, in detail, throughout the survey. In fact during the Myanmar survey immediately preceding arrival in China, local informants, including agriculture and food specialists, had directly stated that the limitations of rural health care capacity included lack of knowledge about the hazards of over-use of chemicals, especially imported chemicals that contained more highly toxic or even unknown ingredients. This phenomenon, occurring as it does throughout the border areas of the GMS, makes it nearly impossible to have adequate assessments of potential or existing health and environmental impacts of the hazardous and illegal goods imported and used. The lack of adequate knowledge and testing is thus the greatest stumbling block to reforming policies designed to control negative effects of border trade.

15Plantation agriculture for cash crop production is widespread throughout the uplands and lowlands of the Xishuangbanna area south of Jinghong. Our team of four researchers made observations and took samples from the plantation agricultural environment to assess the impact of the widespread use of chemicals. Despite the existence of several counter-initiatives, such as a rubber plantation that was run organically, chemical usage, where found, was at dangerous levels. These chemicals are not illegal imports because they are produced domestically; rather, they were surveyed as representative samples of the same or similar items being traded, informally or otherwise, to the Upper GMS. Two plantations with two different cash crops were visited.

16The first was a sugar cane plantation, where water samples from irrigation ponds showed clear effects of the run-off of toxic chemicals. The consequent algae bloom was visible throughout both irrigation ponds. Chemical usage had degraded the soil to the point where it was becoming sandy, requiring increasing use of chemicals to achieve productivity. The air contained the odour of the chemicals as well, meaning that the airborne particles would impact nearby residents as well as settle on nearby areas.

Chemically polluted Sugarcane plantation irrigation pond in Jinghong, China

Sampling sugarcane plantation's chemically polluted irrigation water

17The second observation site was a banana plantation where workers were observed using chemical fertilisers without physical safeguards. The plantation workers, two H’mong (Meo) minority males, were working without gloves or masks. Further, small children were playing in the empty bags that had contained the chemicals.

18Observable on these two sites were not only the extreme, and improper, use of the same chemicals that were informally trafficked into Myanmar and Laos. Also observable was the complete lack of proper safeguards for human users or consumers, or indeed any knowledge or implementation of the levels or frequency of safer use. The trade in agricultural chemicals is complex in this way: chemicals may be legal at certain amounts and frequencies of use, but the same chemicals may be illegal in greater concentrations or at higher frequencies of use. What was observed in all three countries was the lack of knowledge or safe handling that would have placed the production, trade, and use of these chemicals into the legal realm in terms of ASEAN environmental and public health safeguards. The level of use, concentration of hazardous ingredients, frequency of use, and lack of human or environmental protection in these cases would indicate a degree of illegality that could not only violate environmental and health regulations, but could result in actual harm. The dilemma here is of course the economic one. Even small firms and plantations in the region offer some, or often the only, employment opportunities to local, land-poor rural residents. Further, such firms produce and offer these hazardous goods for the local consumption activities by which the stability or growth of GDP is measured in each country. Rapidly or completely banning such production and trade could easily plunge the region into a deeper, and more dangerous, form of economic depression than exists at the present time. Rather, it is necessary to consider both the socio-economic causes of inappropriate trade and illegal goods production, as well as their socio-economic alternatives, in resource-poor areas.

From Jinghong and Mohan in China, to Boten and Luang Nam Tha in Laos

From Jinghong and Mohan in China, to Boten and Luang Nam Tha in Laos

Border crossing routes followed and observed between China and Laos, September 2009

19Asian Highway No. 3 East was directly observed by driving from Jinghong to the Lao border at Mohan, a trip of less than two hours on the new highway (though it would have taken an entire day on the old road). The highway curves between mountain plantations, some recently cleared in order to take advantage of increased volume and ease of trade along the highway. Large tracts of cleared mountain area for plantations of tea and rubber were visible.

20According to the driver’s explanation,

These plantations are government-distributed to every village and town, and re-distributed to households according to the households’ needs by dividing the land. [...] In general, depending on the seasons, there is a good deal of off-season or overtime employment, and the seasonal (on-season) farm household members will migrate here to work (on plantations).
As to the issue of goods leaving China through ports and borders, if goods are to be exported, they must first be registered in accordance with the receiving country and the tariffs. The preferred destination is Japan.
(Interview and translation Lee Tsuey-ping)

21The informant here is not a local farmer nor is he well-versed in local realities beyond what he has been told is the government policy. However, his remarks on the migration of rural workers, as well as on the “preferred destination” for goods, are illuminating. Workers may migrate to the area from within China but also from its nearby neighbours, and when they return home, they will carry with them, or traffick, the goods they have been able to acquire, legally or illegally. Again, the movement of goods is inseparable from the movement of people.

22Second, as he points out, the highest profit would be earned if goods could be produced at a standard that would guarantee their acceptance and sale in Japan. There are many plantations and factories in various parts of China that sub-contract to Japanese firms or importers. It is quite difficult for a foreign investor or importer both to monitor the entire supply chain and production process as well as to guarantee high productivity and cheap prices, two features that make China an attractive subcontractor to Japan. High volume and low wages and pricing inevitably result in some amount of substandard and perhaps illegal production or trade, as has been witnessed in recent incidents of some foodstuffs imported by Japan. However, the stricter environmental-impact standards of Japan could promote healthier and more legal types of production in subcontracted or outsourced locations throughout Asia. In the end, the standardisation of regulations for all products destined for export, whether informal or registered export, to all receiving countries, if achieved, could greatly reduce the potential harm of trade in illegal or hazardous substances.

23Following the survey in China, and after leaving the car and driver behind and passing out through the Chinese checkpoint at Mohan, the team walked five hundred metres downhill to the Laos immigration office and entered Laos on foot, like hundreds of local residents and traders do each day. No-one on either side of the border asked to inspect our baggage.

Japanese chemical product at Chinese Market in Luang Nam Tha, Laos. These pesticides were made by a joint venture between Japan and China. The main ingredient, thiophanate methyl, is known for its acute toxicity.

Border Routes and Border Crossings

Border Routes and Border Crossings

Map of northern Lao border crossings and trade routes with China, Myanmar, and Thailand

3 - Site 3: Northern Laos

24There were three research trips to northern Laos: one in March 2008, one in March 2009, and one in September 2010. The visit in March 2008 was a one-day examination of the differences between the “Chinese” market and the “Lao” market in Houay Xai, Bokeo Province. At the time, Asian Highway No. 3 East from China had not been completed down to Houay Xai, but there was an unpaved road connecting to the highway at Luang Nam Tha. The second survey was conducted in a brief period of three days and was in the nature of a rapid appraisal. The survey team consisted of the present author; one Thai Ph.D. candidate researching ASEAN migration; and one Thai undergraduate student whose background is Yunnanese and Lahu, who served as an interpreter of those languages. The March 2009 survey included Luang Nam Tha Province and was a detailed preparation for the full data collection conducted during the following August and September.

25In March 2008, the road leading to the Chinese market outside of Houay Xai was unpaved, and there were no electric lines along it or in the outlying villages. Visitors to the market could park vehicles in the mud around the makeshift outdoor shops. It would be nearly impossible to say which goods were legal or had been legally brought in from China. There was no food, but small electronics, mobile phones, housewares, agricultural chemicals and equipment, and clothing. Some of the electronics were obviously counterfeit, and some of the chemicals were beyond safe limits if measured according to international standards.

26In March 2009, much of the situation in Houay Xai remained unchanged, but there was more electricity on side roads towards the mountains (east), there were more buildings in shop areas, and more paved road surface going towards shops. The Chinese market outside of town still sat on an unpaved, unsurfaced tract of cleared land on a hill, and indoor toilets were still not universal. The space and land is Lao government land, leased exclusively to Chinese. The Chinese vendors were not only Han, but from various parts and groups of south and southwestern China (Yunnan, Guangdong, Guangxi, and elsewhere), as they mentioned in personal interviews. The Chinese spoken by them was not generally Yunnanese. According to observations and interviews with vendors and customers at the market, all the products are “mediated”, manufactured, or processed goods, the same as those observed during March 2008, and are transported by car or truck from China. Young Chinese vendors at a shop that offered what seemed to be counterfeit Chinese mobile phones were asked why they had left a rich country to come to work in a poor one. They replied that their place of origin was much poorer than the living standard they now had in Laos, and that they had previously not been able to find jobs. Further, they said that it was not their express design to come to Laos, but that a broker had picked them up in a large vehicle, provided documents for them to be brought across the border, and now kept those documents. As a result they had no idea how long they would be staying to work in Laos, but they had already been in Laos quite some time, as evidenced by the fact that they spoke Lao. Chinese yuan were accepted at the market but most customers paid in Lao kip or Thai baht. There were a substantial number of Thais who came across the Mekhong from Chiang Khong (a boat trip of less than five minutes) to shop at this market, especially for agricultural chemicals and equipment. Unlike the previous visit, all persons observed were wearing shoes. Shoes, in northern Laos, are normally an imported product.

27Prices in Houay Xai were, however, still extremely high for Laos, with the exception of those in the Lao market in town. These were indications that the remoteness of Houay Xai from major roads at the time, its reliance on spill-over tourism from Thailand, and its terrain making lowland agriculture impossible, necessitated domestic or cross-border imports of many goods. In terms of illegal trafficking, it was also noteworthy that Houay Xai was home to a recreational drug trade among the Western tourists.

28In March 2009 the road from Houay Xai to Luang Nam Tha was still unpaved for approximately half of the distance. The area closer to Houay Xai was simply unpaved; the areas closer to Luang Nam Tha were unpaved because the road surface was being re-graded to prepare for the highway construction. The shops and markets in Luang Nam Tha, the provincial capital, featured signs in Chinese, Lao, and sometimes in the Roman alphabet, though all observed customers were Lao at the time. The traditional outdoor market was again divided into Lao, selling agricultural and livestock products, and Chinese, selling manufactured or mediated goods. There was also a noticeable volume of goods from Vietnam, again of the packaged or processed food variety, for which it would be impossible to tell the legality of their contents or transport. Luang Nam Tha is accessible to the Vietnamese border at Ðiện Biên Phù over a distance of less than 200 kilometres on fair roads, in an area that has traditionally been a crossroads for Lao, Chinese, and Vietnamese trade.

29The Chinese and Lao markets are in the same block of the town sharing the same space. The shops sell agricultural machinery. There is less in the way of raw food, and more of prepared food and packaged items in the Chinese shops, which may be considered value-added. Some of these could be made in Laos without importing them, but they are not, or are not widely marketed.

30By September 2009, Luang Nam Tha had already changed and developed due to the approaching completion of Asian Highway No. 3 all the way from Boten to the Thai border at Houay Xai. There were more tourists and more attempts by shops, restaurants, and guest houses to provide a higher standard of hospitality and more items for sale. There were also more customers in the town market housing the Lao and Chinese markets, and more local meat for sale. Internet cafes had proliferated. For this survey we were joined by another researcher, Mr. Kinon Khounvisith, a young Ministry of Industry official who was on leave to pursue a master’s degree in development.

31A group interview with a family from Hunan Province of China, which is not close to the border, managing a shop in the Chinese market, revealed a number of facts about the demands of making a living in terms of the kinds of goods that vendors are willing to bring across the border. The family also described the condition of consumer demand and the supply side as well as their means of transporting the goods they sell. Two of the men drive a truck back and forth across the border to purchase, pick up, and deliver Chinese merchandise to the shop. The relevant portions of their interview are translated below.

Q1: Why did you choose to run a business here (in Laos)?
A: There are too many people running businesses in China. The competition decreases the profit and makes it hard for us to earn a living. Although it is tough here to run a business, it is still better than China.

Q2: How do you feel about running a business here?
A: There is no law here. The customs tax is higher and higher each year. And the customs tax is not the only tax you need to deal with. There are a lot of other taxes incurred. Therefore, the net profit is very low. In addition to that, there seems to be no standard for imposing taxes. Sometimes Customs will just confiscate our goods. You cannot do anything about it. And they will not allow you to take those goods back to China. They just confiscate the goods. And, when we pay the customs tax, we need to pay extra, to bribe the officials.

Q5: Is it hard to apply for a business licence here?
A: It is not too hard. You just need to pay a fee to the government. There are different kinds of licences and the division is very strict. For example, if you apply for a licence for running a business, you cannot do anything else (for example farming). If you apply for a farming licence for corn planting, you cannot plant other crops. If you want to do different things, you need to apply for different licences and pay a lot of fees. If you break the law and get caught, you will be fined a huge amount.
(Interview and translation Lee Tsuey-ping)

32The interviewed family then asserted that given these costs and risks, they would be willing to obtain, transport, and sell anything that customers would buy. Legality is, in such a context of hand-to-mouth survival, an important point only insofar as illegal goods would, if not properly concealed or bribed for, cause a further loss in penalty payments to be taken out of the business’s low profit margin.

33Boten is the major land border with China, and in March 2009 was along what was still the older Route 13, as Route 3 from China was still under construction. Boten itself consisted entirely of a large open (cleared) area of several hectares, mostly unpaved with flung-up concrete shop fronts, two casino-hotels, a Chinese apartment / residential hotel, and some shacks for living quarters for the Chinese workers. All signs were in Chinese. The area was designed to provide services and goods in Chinese for Chinese visiting the hotels and casinos, and perhaps also those stopping there during transport of goods and materials from China into Laos. The surrounding woods do not present an obstacle to individuals moving illegally. As in Houay Xai, the Chinese spoken in the shops was not always Yunnanese. The border crossing section of road and the immigration checkpoint on the Lao side were strictly controlled. There was a Lao checkpoint on the road near a large unpaved parking area. Farther up was the Chinese immigration building; and farther behind it, the Chinese town of Mohan. The vendors in Boten, like those in the Chinese market in Houay Xai, seem to be less-educated, less-skilled, and, in some cases, minority, workers brought from southern and southwestern parts of China, and there was visible prostitution by Chinese women. There was one observable instance of a Lao woman going to cross into China with a Chinese man at the border. At that time there were no Lao workers or itinerant vendors. The Lao village of Boten had been evacuated to an area several kilometres back down the road.

34The trucks bore both Lao and Chinese licence plates (mainly Chinese) and Chinese signage on the sides. Some smaller, canvas-covered light trucks bore the Shan script that is still used in parts of Xishuangbanna and the border trade with Myanmar. There was ample time to observe the goods and their means of transport at the Lao checkpoint. For large and heavyweight goods, Chinese transports into Laos were bringing road construction materials and building construction materials, including bricks. They were also bringing machinery, cheap furniture, and vehicles and vehicle parts. Significantly, there were also petroleum trucks coming into Laos and stopping along the highway as it was being built. Almost no gasoline stations were observed at the time on the border road to China, which would have made it very difficult for the Chinese road construction crews to transport needed materials back and forth, without Chinese petroleum being available along the way.

35Laos has virtually no industry, with the exception of some garment and wood factories near Vientiane. This makes it much easier for affordable, and perhaps substandard or illegal, goods from other countries to find willing markets and consumers in Laos. From Laos into China, there were trucks loaded with plantation crops and fruits, including oranges and watermelons, from Chinese-owned or managed plantations. In terms of lightweight goods, small manufactured items were being transported from China into Laos. These were housewares, apparel, toiletries, plastics, and ceramics including dishes. On an informal level, the local, and perhaps minority, Lao were carrying brushwood and firewood on their backs as they walked back into Laos from the China side, along the woods. This sort of wood might be considered “for personal use”, and therefore legal, but this begs the question of whether cutting wood in one country to carry into another is strictly legal. Again, however, to the local residents the woods themselves are part of the same community that existed before the modern border. No lightweight goods were observed being transported into China. Private cars bringing visitors to the casino all bore the number plate symbol for 伝 (Yunnan). As Boten is being developed as a tourism site for Chinese, for whom casino gambling is illegal within China, it is probable that some of the cars were rental cars offered to visitors from farther provinces of China who had flown in to Jinghong’s Gasa (Banna) Airport, the Chinese airport closest to the Lao border.

36There were numerous rapid changes observable in Boten during the full survey six months later. Asian Highway No. 3 was completed within Laos from Boten all the way to an area slightly northeast of Houay Xai. The area around the shops and casino at Boten was paved over, and there were quite a few more Chinese shops. The shops now bore Lao as well as Chinese signs, and some Lao workers and vendors were present.

37Upon arrival in September, through the China-Laos border, an interview took place just below the Boten border checkpoint with a car service operator, whose husband was on the staff of the immigration office, waiting to pick up passengers. She mentioned having personally witnessed trafficking of dangerous substances through this checkpoint. Subsequently, an interview with a Chinese convenience store manager in Boten revealed that she was born and grew up in Xishuangbanna of Yunnan. Portions of her interview are quoted below. She describes the pricing of the goods, the Lao customs tax, and the unknown legal status of her shop itself.

Q1: What do you think about the development of the nearby area surrounding this casino?
A: Actually, the price of the Chinese goods that I sell here cannot go higher than the price of the very same goods sold in China, due to market competition, and in addition to that, our buying costs for the Chinese goods that we sell here are higher because of the customs tax. However, the competition on the Laos side is still less than on the China side; therefore, we still make money.
However, there is no [consistent application of the] law in Laos. In other words, I don’t feel protected by laws [here]. It is very risky running a business here. For example, when we rented this building for running this store, we spent 20,000 RMB for the right to use this building. But by the way, if I wanted to transfer the right to use it at this point, the market price would go as high as 80,000 RMB. Anyway, no matter how much money you spent for the usage rights, if the company from which we rented this building wanted this building back, you wouldn’t be able to do anything about it. Even if the contract was not due yet, you would still need to return this building to them. You can’t do anything about it.

Q3: What is the building across the road that is now under construction?
A: That will be a jewellery shopping centre. The ground floor will be a jewellery store, and the upper levels will be a hotel. I expect to attract more business for my little store after the shopping centre and hotel across the street start to run their businesses.
(Interview and translation by Lee Tsuey-ping)

38In this interview we see that the Chinese shop manager does not personally know the owner of the land on which her shop sits, or the owner of the shop itself, and the Lao law is unclear about it. Presumably the owner is Chinese and has made a legal, quasi-legal, or informal arrangement with the Lao local government, after which the Lao government will not intervene. In such cases the shop managers will have to transport a high volume of goods in from China every day to recuperate their costs and maintain a hedge against the risk of losing the shop, but this would also accrue a large customs tax, payable on entry: Article 67 of the Lao PDR Customs Law states that “Duties and fines shall be immediately payable”. Whether such transport, or the accompanying goods in high volume, is legal, is again questionable. Further, she mentions the introduction of a jewellery shop. Neither southern China nor northern Laos is known for having developed a trade in local gemstones, though they exist. Rather, the Jinghong area shops all sell jewels that they claim to be from Myanmar. The gem trade in general is known to be prone to corruption, and the extraction of gemstones within Myanmar can be either legal or illegal depending on who is doing the extracting. A proper survey after the shop was in place would have to be made to try to determine the legality of the jewels, their purported quality and value, and the legality or otherwise of the manner in which they were originally obtained.

Muang Sing Border with China, unmarked, with uninspected cargo trucks coming from China side

39Muang Sing is on Route 17, a smaller state road, and situated on another land border with China. There is a village straddling the border. On the Lao side it is called Pangkhai when coming from the Muang Sing direction, and Pangthong when you are standing on the border; the village sits on the border on the left-hand (north) side of the road. Farther along on the China side is Muang Mán. Both sides of the road are thickly wooded and present no obstacle to individuals crossing. The Lao “village” consists mainly of immigration and border officials, and mainly men. There is a Lao Customs checkpoint on the left-hand side of the road.

Pangkhai Immigration Check Point, Laos to China, one small window only

40A few metres beyond it is a white line on the road, then a space, then another white line, which probably signifies the Chinese border. There was less strict control of this border; there were few people present to observe crossings or, particularly, personally carried goods and items.

Undemarcated border of Laos and China at Muang Sing district, Pangkhai village. Sign on left is in Lao territory. Sign on right is apparently in China. Researcher walked along road to take photograph of sign on right and was told she had crossed into China.

41Up the road is a Chinese electric power station which brings electric power to the Lao side, which was still not fully electrified at the time. For transport from Laos into China, trucks go to the weigh station and Customs House closer to the town of Muang Sing, receive documents, and simply have them stamped upon reaching the border. They then drive into China.

Unmarked cargo truck waiting to cross from Laos into China

42The goods observed going into Laos were again agricultural produce, and again from plantations owned or managed by Chinese, including watermelons, sugar cane, corn, some wood, and other fruit such as oranges. It is impossible to judge accurately which goods were legal or illegal, and why. From China, heavyweight goods were being trucked into Laos, including machinery, bricks, and vehicle parts.

43In the town of Muang Sing, the Lao markets and shops have products similar to those at the Lao markets in Houay Xai or Luang Nam Tha. The vendors and customers are primarily Lao. Some Vietnamese packaged goods and foods were observable in the Muang Sing shops. A respondent in town reported that the town average income is approximately U.S. $40 per month. On the main roads going into Luang Nam Tha and Muang Sing, Route 3, Route 13, and Route 17, there were tiny houses or huts, especially those right near the margin of the road, that were newly built. Many clusters of these houses had no temple and no school, indicative of the fact that they are not registered or traditional villages. The people in them are of diverse ethnic origins and have come down from upland areas to look for work, but by so doing have placed themselves in a precarious and destitute situation, from which the question of illegality in trade would be secondary to the question of survival.

44Na Mok is in Oudomxay Province, off Highway 13 from Luang Nam Tha and accessible from Route 3 in Luang Nam Tha to the border at Boten. It lies along a small mountain road leading north into Phongsaly, and to smaller border crossings that are used by Lao and Chinese. There were numerous Chinese settlers, second-generation Chinese, and Lao hilltribe townspeople in Na Mok, procuring, selling, and transporting goods of varying degrees of legality and illegality. Often, the Chinese who have permanently settled in the area make a living by transporting goods by truck from China on a regular basis. The first interview was with an older man of Chinese descent running a large variety shop with many kinds of inexpensive goods from China.

45The second interview was with a young mother managing a small goods shop on a side street in the outdoor market. She was also of Chinese descent but had grown up in Laos. In this remote and resource-poor area of the uplands, it becomes obvious how and why goods are illegally procured and brought in.

Q1: Where did you get this merchandise you sell in your store?
A: I drive my own car to get them from Mohan (China).

Q3: Who are your customers?
A: People from the neighbourhood come to this market. There are many different ethnic groups here. They all come here to buy goods.
(Interview and translation by Lee Tsuey-ping)

46The most extensive interview in Na Mok was a group interview with a family and neighbours from Hunan Province who run a restaurant. They were quite forthcoming about the illegality of certain forms of trade as well as the ways and means of transporting illegal items. There were four interviewees: two men and two women.

47One of the men did the most talking. He had a rice mill, and he was also selling different kinds of goods including motorcycle parts and clothing. His entire family was in Laos including two adult sons who run the business for him. His sons were educated in China and then came to Laos to help him run the business. When asked why he chose to sell motorcycle parts and clothing, he replied that he was a “profit-driven person”. He was willing to transport and sell whatever can make a profit. The interviewees described the customs process, and its seeming inconsistencies, as follows:

Q: Does China’s government offer any help for you when you run your business here?
A: Yes, more or less, China’s government does help. They will help to coordinate. For example, China and Laos had an agreement on the customs tax which is helpful for people running a business here. There are [however] six Customs checkpoints between China and Laos and they apply different standards of imposing customs tax. Mohan and Muang Sing apply much higher customs taxes than other Customs points. Some Customs are available only for Ban-Min people (residents of Xishuangbanna [Yunnanese Chinese]). It is much easier for them to cross the border.

48This man, and the other interviewees, then voluntarily provided the following information regarding timber smuggling from Laos into China:

Because China prohibits people to cut full-grown wood, if Chinese need high quality wood, they come across the border to Laos to buy wood. Lao people, often the hilltribe minority people, cut Lao wood and sell it to Chinese. This timber is then smuggled to China, Myanmar, and Thailand for furniture-making.
The wood cutter, the delivery or transport person, and furniture producer are all different people.
When they smuggle the wood, they use a big truck and pretend to deliver ordinary merchandise. However, the logs are all hidden at the bottom under the ordinary merchandise. Of course, the smuggler needs to bribe the Customs officers. The price of the wood along the supply chain can increase more than twice over.
The two [Chinese] security officers sitting behind us are here to buy high quality wood. They came here because they know that Lao wood is good.
(Interview and translation by Lee Tsuey-ping)

49In Laos, unauthorised logging is illegal and is punishable by a stiff fine. This portion of the interview, about illegal loggers, and the buyers, transporters, and processors of the logs, was extremely frank, and there was no attempt to indicate that the interviewees were themselves innocent of involvement in this trade: one man had previously said that he would do any business that would make a profit, and he here states that timber smuggling can produce profits of 100%. More significantly, the supply chain and the entire process of illegal trade, from illegal extraction to illegal purchase to illegal transport, is clearly delineated, with the implication that all parties involved know of its illegality. Further, in this description the illegal supply chain and transport are highly organised. The fact that each link in the chain is a separate person shows the forethought of means to avoid arrest or prosecution, as the ultimate responsibility will be hard to determine. Finally, the large profits that are to be made in this trade contrast sharply with the level of income, or lack of it, that other rural respondents had indicated. Whether such illegal trade and trafficking are to be called temptations, or simply rational means of survival, they are the mainstays of the border economy.

50Na Teuy Village is located along the road from Boten to Luang Nam Tha. It has expanded rapidly in size and infrastructure with the coming of Asian Highway No. 3. The interview conducted here, with an extended family of farmers (ten members, including eight adults consisting of four men and four women), showed that knowledge of the potential harm of illegally traded agricultural goods did not outweigh the livelihood necessity of using them. The researchers and respondents discussed the type or system of farming and its effect on the use of informally traded or illegal chemicals (they had shifted to contract farming with Charoen Pokphand [CP] of Thailand); the perceived changes since the penetration by Chinese, about which the informants mentioned positive changes such as the road, electricity, and improved transport to markets and health care; and their decision to use chemicals, whether those provided by CP or from elsewhere.

  • 5 Interview and translation by Lynn Thiesmeyer and Kinon Khounvisith

51The informants explained they realise that chemicals can be dangerous and have had many visitors, both Lao officials and foreign NGOs, tell them so. However, even with a large family, it is impossible to complete a day’s necessary farm work in one day, especially the weeding and pest removal. This was in explanation of the use of herbicides and pesticides. For the use of fertilisers, they explained that their conversion to contract farming with CP had finally provided a stable and sustainable income, but it also meant that they must guarantee a certain amount of production in return. For this, they felt that chemical fertilisers, and to a lesser extent the other chemicals, were needed5.

52Here the researchers felt two things. First, as these chemicals have been provided by CP itself, they have presumably been inspected and are less toxic than those for which the ingredients and their amounts are unknown; yet, the chief informant, the male head of household, implied that the herbicides were used on almost a daily basis. The harm of chemicals is not only in their illegality or their ingredients but in the amount and frequency of use. Further, his household is surrounded by other farmers who have not yet converted to contract farming and its presumably safer chemicals. They themselves may buy illegally produced and traded goods, and the runoff or air pollution from these chemicals can affect those who do not use them. Second, the chief informant was weary of visitors who seemed to want to tell him what he already knew—that chemicals are dangerous and that only the proper ones should be purchased and properly used—but without, themselves, knowing of the economic situations of families like his throughout the Golden Quadrangle; situations that prompt the taking of one sort of risk in order to avert another, more immediate risk.

  • 6 Interview and translation by Lynn Thiesmeyer and Kinon Khounvisith

53To obtain information on illegal and cross-border trade and its health and environmental impacts on Luang Nam Tha Province as a whole, we interviewed two local government officials. The deputy head of the Provincial Development Office mentioned positive and negative aspects of infrastructure development in this regard. On the general effects of Asian Highway No. 3 on this province he remarked, “Now it takes only a few hours from Boten to the Thai border at Chiang Khong; it used to take three days.” As a direct or indirect result of the highway construction, he pointed out that further infrastructure and roads are now also being provided by the Lao government, enabling local marketing of local products rather than total reliance on cross-border imports and the growth of employment in the service sector. As a negative outcome, he remarked that the issues of harmful substances in informal or illegal trade remain. In general, the Luang Nam Tha provincial government also tries to stop or reduce use of herbicides. However, he knew that there were still many private entities and individuals who import from China to sell to farmers; and that farmers themselves cross the border and buy such substances for “personal use”. In terms of the illegal cutting and cross-border sale and transport of timber, he regretted that despite the Anti-Logging Law, the practise has been difficult to stop6.

54The second key informant was an official of the Department of Agriculture and Forestry, who discussed policies on the importation and use of hazardous chemicals. He described the difficulty of inspecting the chemicals coming into northern Laos. Primarily, there is no laboratory or other facility for inspection of the contents of goods in the Luang Nam Tha area. Samples of suspicious materials can be sent to a laboratory for analysis in Vientiane, but only two or three at any one time. According to the information he provided, the import process for goods or materials that are for sale is as follows. The importing company must first register with the Government of Laos. The government then informs the Department of Agriculture, which must certify the product. If certified, the product will receive an official stamp.

  • 7 Interview and translation by Kinon Khounvisith

55He emphasised two kinds of agricultural chemicals that are subject to inspection: herbicides / pesticides and fertilizers / high-growth formulae. This official was of the opinion that currently, there is a high level of use of chemicals. However, the local government does promote lower and proper chemical use through means including weekly radio broadcasts every Saturday7.

56The new Asian Highway No. 3 entering from China has of course made more trade and movement possible, as it was intended to do. It has also re-spatialized nearly all of the Upper GMS.

New Asian Highway No. 3 from China to Laos for international trade

57The highway network has accelerated the pace of movement by making linkages among geographically distant areas take far less time, but it has also expanded these linkages to reach previously inaccessible areas, and to bring formerly loosely-related areas and groups into a closer relationship. The new, more frequent, and more rapid movement includes an increasing ramification (internal elaboration and complexity) in the spaces for the human carrying or transport of legal and illegal items to be procured, traded, and consumed.

Yunnanese truck with cargo driving to Lao border on new Asian Highway No. 3

58As a result, the space for human networks has been re-formulated. More broadly, the older political and mental constructs of Sipsongpanna and the Lanna States are beginning to take on a new physical as well as mental shape, a shape which conventional cadastral and political maps have yet to capture.

59Further, it is this new space for trade, the procurement of resources, and consumption of goods that is currently the most visible accomplishment of the modernisation of the regional economy. Chapter 2 discusses the new border economies and their constituents in the re-forming space of the Upper GMS.


4 Interview with Mr. Bertilio Dominguez and Ms. Soi Lang Seng, WFP Lashio, 31 August 2009.

5 Interview and translation by Lynn Thiesmeyer and Kinon Khounvisith

6 Interview and translation by Lynn Thiesmeyer and Kinon Khounvisith

7 Interview and translation by Kinon Khounvisith

Table des illustrations

Titre Area of Study
Fichier image/jpeg, 140k
Titre Main and Secondary Roads in the Golden Quadrangle Area
Fichier image/jpeg, 329k
Légende Chemically polluted Sugarcane plantation irrigation pond in Jinghong, China
Fichier image/jpeg, 57k
Légende Sampling sugarcane plantation's chemically polluted irrigation water
Fichier image/jpeg, 160k
Titre From Jinghong and Mohan in China, to Boten and Luang Nam Tha in Laos
Légende Border crossing routes followed and observed between China and Laos, September 2009
Fichier image/jpeg, 154k
Légende Japanese chemical product at Chinese Market in Luang Nam Tha, Laos. These pesticides were made by a joint venture between Japan and China. The main ingredient, thiophanate methyl, is known for its acute toxicity.
Fichier image/jpeg, 143k
Titre Border Routes and Border Crossings
Légende Map of northern Lao border crossings and trade routes with China, Myanmar, and Thailand
Fichier image/jpeg, 163k
Légende Muang Sing Border with China, unmarked, with uninspected cargo trucks coming from China side
Fichier image/jpeg, 116k
Légende Pangkhai Immigration Check Point, Laos to China, one small window only
Fichier image/jpeg, 87k
Légende Undemarcated border of Laos and China at Muang Sing district, Pangkhai village. Sign on left is in Lao territory. Sign on right is apparently in China. Researcher walked along road to take photograph of sign on right and was told she had crossed into China.
Fichier image/jpeg, 90k
Légende Unmarked cargo truck waiting to cross from Laos into China
Fichier image/jpeg, 99k
Légende New Asian Highway No. 3 from China to Laos for international trade
Fichier image/jpeg, 134k
Légende Yunnanese truck with cargo driving to Lao border on new Asian Highway No. 3
Fichier image/jpeg, 121k

© Institut de recherche sur l’Asie du Sud-Est contemporaine, 2010

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