PREMIER'S VISIT A GOOD THING FOR LAOS

The Memorandum of Understanding for the purchase of electricity from Nam
Theun 2-which is expected to be followed up by a fully-fledged power
purchase agreement towards the end of this year-followed years of wrangling
during which Laos understandably tried to secure the highest possible price
for what will become the country's main foreign exchanger earner.

A basic agreement reached a month ago on the price of 4.2 US cents per
kilowatt hour for the annual delivery of 5,354 gigawatt hours for 25 years
starting from the year 2006, enabled the heads of the two countries'
electricity generating authorities to sign the MOU in Vientiane on May 26.

The preliminary move showed that Laos, which would be hard put to find a
better buyer than Thailand, had woken up to the realities of the free
market economy.

At the same time, Thailand, which would not be hard put to tap other
sources of energy to fuel its industries, showed it was serious about
economic co-operation with Laos.

Energy is one of six sectors covered in a framework for economic
co-operation which the two countries are now fine-tuning, after agreeing on
the principle of forging such a plan early last month.

Prime Minister Chuan Leekpai's presence at the signing of the MOU was
important as he had initiated during his first government in 1993 the move
to buy 1,500 megawatts of electricity from Laos, a quantity the Chavalit
Yongchaiyudh government doubled under an MOU signed in 1996.

Nam Theun 2 is the biggest of a total of eight power projects through which
Laos is to supply the 3,000 MW of electricity that Thailand needs.

Two have already gone onstream. Nam Theun 2 is among three due to start
doing so in December 2006.

Hongsa Lignite, the site which Prime Minister Chuan visited during his
three-day visit, is among three other projects due to go onstream in March
2008.

The year-end signing of the full purchase agreement for power from Nam
Theun 2 would clear the final hurdle for construction of the dam, as
environmental impact studies have already been approved.

The billion-dollar project is drawing investments from the Laotian
government mainly with soft loans from the World Bank, Transfield of
Australia, Elecricite de France and Italian-Thai.

Prime Minister Chuan's visit to Laos also saw progress in the battle
against drugs, not least because it was Laos' Prime Minister Sisavath
Keobounphanh who raised the question first.

Deputy Prime Minister Banyat Bantadtan subsequently suggested that the two
sides launch a joint patrol against drugs along their common border.

At the initiative of the United Nations Drugs Control Programme, a move is
afoot for Thailand to train Laos in controlling opium-producing areas.

The seizure of 398,000 methamphetamine pills from a truck in the northern
Laotian province of Luang Namtha, and the claim by three Laotian nationals
arrested with the haul on May 15 that the drug had come from Thai
traffickers, should leave no doubt in the minds of concerned authorities
that heightened co-operation is required at every possible level.

With work close to finish on the framework for economic co-operation and
the cultural agreement, Thai-Lao relations are entering a new stage of
maturity.

The financial crisis of the past three years has taught all affected
countries that inter-dependence is a fact of life. The political leadership
in Thailand and Laos, whose people have been hurt economically and
socially, should allow no delay in projects that would help solve these
problems.