War, Recovery, and Reinvention
Issue 13 — Key Developments Across Cambodia, Laos, Myanmar, and Thailand
Editor’s Note
by Mattia Peroni, Lead Editor - Mekong Belt Desk
This week’s stories from the Mekong Belt show a region on the path of recovery, but struggling with the challenges that threaten it. Laos shows signs of an economic rebound, with inflation finally easing, but as families are still buckling under high costs and U.S. tariffs squeeze its exports, economic recovery will depend on sustained reforms and outward-looking policies. Across the border in Myanmar, the bombing of the Gokteik Bridge is a warning that even if peace comes, a country stripped of its infrastructure may have nothing left to recover. In Cambodia, where the border clash with Thailand is still an open wound, reconciliation feels distant as Sweden’s fighter jet deal with Bangkok raises fears of renewed tensions. On the brighter side, Thailand bets on innovation with TouristDigiPay, a digital payments experiment meant to revive tourism. However, higher rewards come with higher risks, and sceptics warn that the scheme could expose the economy to instability if not regulated properly.
Lao PDR 🇱🇦
Laos’ Fragile Recovery Amid Rising Costs and Tariff Pressures
by Thongsavanh Souvannasane, in Vientiane
Laos is showing early signs of recovery after years of economic instability, with inflation slowing down significantly. Official data indicates inflation decreased to 5% in August 2025, representing a dramatic reduction from the peak of 31.23% recorded in 2023.
Nevertheless, current inflation levels remain elevated compared to pre-pandemic rates of around 3%, and household financial pressures persist. The Consumer Price Index registered at 254.5 in August, reflecting moderate monthly increases relative to the substantial surges observed in previous years.
Despite macroeconomic improvements, essential expenditures continue to present challenges for households.
Laos’ Ministry of Finance reported in August that the costs of housing, utilities, and fuel increased by 15.3%, while educational expenses rose 7.6 %, concurrent with the commencement of the academic year. These cost pressures compel families to make difficult allocations among fundamental necessities, including food, healthcare, and education.
The educational sector faces particular strain, as evidenced by enrollment patterns at the National University of Laos, the nation’s largest higher education institution. Student registrations have declined substantially from approximately 15,000 in 2016-2017 to 5,457 in 2024. Although over 6,200 candidates participated in entrance examinations for the 2025-2026 academic year, escalating costs pose risks to educational accessibility and require immediate policy intervention.
The economic recovery also faces novel complications from external trade pressures.
On 1 August, the United States imposed a 40% reciprocal tariff on Lao imports, as part of President Donald Trump’s “Liberation Day” tariff agenda. Though reduced from an initial 48%, the measure threatens exports of Lao goods such as wood furniture, textiles, electronics, and speciality coffee. This tariff could drive US buyers toward cheaper markets, undermining Laos’ fragile recovery.
In response to these challenges, the government implemented administrative reforms, restructuring the cabinet in June 2025 by replacing several ministries to enhance operational efficiency and coordination. Government revenue up to August 2025 totalled approximately USD 2.16 billion, reaching 69% of annual targets. Moreover, foreign reserves maintained coverage equivalent to 4.94 months of imports.
The ASEAN+3 Macroeconomic Research Office noted that macroeconomic conditions are improving, supported by monetary tightening, fiscal consolidation, and foreign exchange reforms. Growth is projected at 4.4% in 2025 and 4.2% in 2026, driven by electricity generation and the services sector.
Laos now stands at a decisive moment. Inflation has eased, governance has been restructured, and growth prospects are improving. Yet, high living costs, external tariffs, and education challenges underscore the risks ahead. Sustained reforms and inclusive policies will be essential to ensure that economic gains translate into real improvements for Lao households, especially children, in the coming years.
Thongsavanh is a journalist from Laos with a background in English-language media. He graduated from the Lao-American Institute with a Diploma of the Arts in English and contributes to independent news platforms. His reporting focuses on environmental issues, socio-economic development, and geopolitics.
Myanmar 🇲🇲
Myanmar Military and TNLA Exchange Blame Over Gokteik Bridge Destruction
by Pann Ei Thwel, in Mandalay
Myanmar’s historic Gokteik Bridge was bombed on August 24. While Myanmar military spokesperson Zaw Min Tun accused the Ta’aung National Liberation Army (TNLA) of destroying the bridge, the armed group denied responsibility, claiming instead that the junta’s airstrikes on TNLA bases were responsible for the hit. The blast struck a critical joint where the steel frame meets a support brick wall. According to resident reports, by August 29, the military had hastily restored the damaged section to maintain its supply line.
Towering 102 meters above a gorge, the Gokteik Bridge is Myanmar’s tallest bridge and, at the time of its inauguration, the world’s highest railway trestle. Built during British colonial rule, it connected Mandalay with the northern Shan States and became an icon of engineering, as well as a tourist attraction. Railway services, however, had already been suspended for more than four years, after staff joined the Civil Disobedience Movement in protest against the coup.
The incident quickly resonated among locals, who expressed sorrow over the bridge’s destruction. “I feel sad to see our heritage destroyed. The bridge was not in use. Why would they destroy it?” one resident lamented.
The bombing occurred amid heavy clashes in Nawnghkio and Kyaukme. Although the junta claimed to have captured Nawnghkio last month, clashes persist in TNLA-held areas, proving that the region is still not under Myanmar military control. On August 20, the military also bombed Naungpein village, burning houses and killing more than ten people, including children. The intense fighting in nearby villages has thus far led to the displacement of more than 2,000 people.
The bombing of the Gokteik Bridge stands as a prime example of how Myanmar’s civil war has not only caused suffering and misery among civilians but also destroyed critical infrastructure, deepening the country’s economic decline. As the conflict stretches into its fourth year, the list of destroyed clinics, schools, and villages continues to grow, pushing the country deeper into collapse and critically hampering recovery prospects. On top of the damages caused by the conflict, the devastating earthquake in March added to the toll, destroying infrastructure, including cultural sites, worth approximately US$11 billion.
The destruction of the Gokteik Bridge not only signifies the loss of a historic landmark—it is another reminder that in Myanmar, heritage, homes, and the country’s own future remain vulnerable to a war with no end in sight. Until genuine peace is achieved, countless lives will remain at risk of falling victim to the relentless conflict, and generations to come will inherit the scars of a country stripped of its infrastructure, economy, and cultural legacy.
Pann Ei is an undergraduate student at Parami University, majoring in Philosophy, Politics, and Economics. Following an internship with the CSIS Southeast Asia Program, she developed a strong interest in policy research, with a particular focus on politics and education. She currently works as a research assistant at the Center for Research, Policy and Innovation (CRPI), where she focuses on political institutions and regime types across Southeast Asia.
Cambodia 🇰🇭
Phnom Penh Criticizes Sweden-Thailand Defense Deal Over Human Rights Concerns
by Malai Yatt, in Phnom Penh
Thailand and Sweden have strengthened their defense cooperation with a new fighter jet deal. On August 25, the Royal Thai Air Force's commander visited Sweden to sign an agreement for the purchase of four new Gripen fighter jets, in a ceremony attended by senior officials from both countries.
According to the post by the Swedish Embassy in Bangkok, the purchase of these jets, along with a related business deal, is expected to not only improve Thailand's defense capabilities but also create new opportunities for both countries in business, technology, and education. Sweden has long been a supplier of advanced military technology to Thailand, and both governments framed the agreement as part of a shared commitment to stability and cooperation.
But not everyone is convinced. On August 28, the Cambodian Human Rights Committee (CHRC) wrote to the Swedish Institute for Human Rights, expressing concern over the potential consequences of the agreement. Specifically, the CHRC warned that the deal contradicts Sweden’s long-standing commitment to human rights and peace. Moreover, likely concerned that the fighter jets could eventually be deployed against Cambodia if recent border clashes were to reignite, the Cambodian government also urged the Swedish government to conduct a human rights risk assessment and reconsider the sale in support of a peaceful resolution of the border dispute.
The timing of the deal has also raised eyebrows among Cambodian analysts. Kevin Nauen, Dean of the Faculty of Social Sciences and International Relations at Pannasastra University, told The ASEAN Frontier that approving the purchase so soon after a Cambodia–Thailand border conflict is troubling, as it gives the impression that Sweden is supplying weapons into a region riddled with tension.
In this context, Nauen underlined that international principles prevent arms transfers where there is a clear risk of human rights abuses, or if the sale could be reasonably foreseen to make tensions worse. However, Sweden's own domestic law allows for some flexibility. According to Nauen, the Inspectorate of Strategic Products (ISP), the agency in charge of these sales, can approve a deal if the government believes it's in Sweden’s best interest.
Stockholm says the jet sale will strengthen its relationship with Thailand and give it a stronger presence in the area, and that the sale of just four jets, along with training, gives the country a certain degree of control over how the planes are used. Even so, critics warn the sale could tarnish Sweden’s image if fighting reignites and the jets are used against Cambodia, as noted by Nauen.
For now, Sweden insists that the deal complies with all regulations and assessments. But in Cambodia, officials and civil society groups remain uneasy, viewing it not merely as a gesture aimed at increased stability but as a potential spark for renewed tension. Ultimately, how Sweden balances its strategic interests with its human rights principles will determine whether this deal is seen as pragmatic diplomacy or a damaging contradiction.
Malai is a reporter at Kiripost, where she has worked for over two years, driven by a strong commitment to amplifying the voices of underserved communities. Her reporting focuses on economic and foreign affairs.
Thailand 🇹🇭
Wallets Without Borders
by Paranut Juntree, in Bangkok
Imagine walking through Bangkok’s busy street markets, drawn by the scent of sizzling grilled skewers. You pull out your phone, scan a QR code, and pay instantly—not in baht, but with Bitcoin. Yet the vendor still sees baht in their account, just like any other sale. This is the promise of TouristDigiPay, the world’s first scheme that allows foreign visitors to convert cryptocurrency seamlessly into local currency.
Launched recently as an 18-month pilot, TouristDigiPay could redefine tourism in Thailand and position the country to pioneer digital payment innovation in ASEAN. But can this bold experiment truly deliver on its promise, or will it expose new challenges along the way?
Tourism remains the backbone of Thailand’s economy. However, the sector has faced a steady decline in recent years. In the first five months of 2025, international arrivals in Thailand fell by 3% compared to the previous year. This decline stands in stark contrast to the broader Asia-Pacific region, where visitor numbers grew by 12%. Rising prices have weakened Thailand’s reputation for affordability, while scams and conflicts have damaged the country’s reputation as a safe tourist destination. Policymakers are now betting on TouristDigiPay to restore momentum.
The scheme allows visitors to easily convert cryptocurrency into baht through licensed digital asset providers, and spend it using QR codes via a regulated e-wallet. On paper, this model suits Thailand well, where many SMEs do not accept credit cards but widely use QR code–based payments, making it difficult for short-stay foreign visitors to spend. The government expects TouristDigiPay to boost tourist spending by 10%, which could translate into as much as USD 5 billion in additional economic activity. For now, transaction caps are in place to limit risk, but officials hint that success could pave the way for expansion into real estate and other sectors, potentially reshaping not only how foreign money flows into the Thai economy, but also Thailand’s role as a regional pioneer in digital assets and fintech.
However, not everyone is convinced TouristDigiPay will work as intended. Scholars have argued that even crypto-savvy tourists may have little interest in this “cumbersome” scheme, given that many already use apps like MetaMask or Trust Wallet to pay directly. Moreover, a deeper concern is the risk of fraud and money laundering through non-KYC (Know Your Customer) wallets, which make transactions difficult to trace. Skeptics suggest that Thailand, like digital hubs such as Singapore or Dubai have done already, should focus on blockchain analytics to monitor suspicious flows and strengthen consumer protection. They also warned that TouristDigiPay could undermine the central bank’s capacity to maintain monetary control. Ultimately, whether or not TouristDigiPay is adopted, digital asset transactions continue to expand with little regulatory oversight, raising broader questions for Thailand’s financial system.
At this stage, TouristDigiPay is both a gamble and a promise. It could place Thailand at the forefront of digital finance in ASEAN, or it could expose the economy to volatility, fraud, and weakened monetary control, bringing risks greater than rewards.
Paranut has a background in advocacy, with experience in policy research, communications, and civic engagement across both the NGO and government sectors. As Thailand’s Youth Delegate to the United Nations, he represented Thai youth in global dialogues on migration, education, and human rights, championing inclusive policymaking. He holds a degree in political science with a specialization in international relations.
Editorial Deadline 29/08/2025 11:59 PM (UTC +8)
