WHY LAOS

Why Laos

Aside from being a member of the World Trade Organisation (WTO) since 2013, it also has:

  • unilateral trade agreements with 39 nations,
  • bilateral investment treaties with 28 nations, and
  • General Special Preferences (GSP) privileges with 42 countries. 

Lao PDR: Redefining Future Growth 

Lao PDR continues to demonstrate resilient, sustainable and inclusive economic growth, bucking the global downturn and is well on its way towards graduating from Least Developed Country status by 2024.

Backed by outstanding progress in the last 20 years, Lao PDR is in prime position to emerge as an economic and strategic investment gateway to the ASEAN market, largely due to the 8th National Socio-Economic Development Plan (NSEDP) 2016-2020 guiding policy priorities across government to achieve the country’s economic and development transformation targets.

Driving a Dynamic and Resilient Economy

With a GDP that has more than doubled since 2010 and projected growth to reach US$27 billion by 2022, Lao PDR is fast cementing its position as one of the fastest growing economies in this part of the world, leveraging on its strategic position as a prime spot for cross-border investments and exports to neighbouring countries. 

 

Source: World Bank National Accounts

The Lao PDR economy continues to be experience dynamic growth and resilience to withstand global pressures, largely due to the following factors:

  • strong governance and transparency framework with enhanced sectorial cooperation;
  • business-friendly policies and thriving ecosystems that have opened up opportunities for foreign and local investors;
  • large infrastructure investments; and
  • efficient management of natural resources.

Shaping a Trade and Investment Destination of Choice

Lao PDR is gearing up to transform into an upper middle-income economy through its Vision 2030.Vision 2020 aims to quadruple per capita GDP and GNI while simultaneously increasing foreign direct investments (FDI) by shifting to new areas of comparative advantage and creating enabling environments for foreign and domestic partnerships.

 

Source: ASEAN Stats Database

 

Lao PDR enjoyed an exponential growth in FDI of 6.9% between 2010 and 2015, reaching over US$1.1 billion in 2015. Looking ahead, to attract quality Foreign Direct Investment (FDIs), Lao PDR has also taken progressive steps to diversify its economic base as a means for sustained and robust growth, from electricity generation, agriculture and mining sectors, which took up close to 65% of total FDI in 2015, to more into less-resource intensive sectors and higher value-added industries.

Source: Investment Promotion Department, MPI


Source: Indonesia – Investment Coordinating Board (BKPM) Statistics, Laos- Investment promotion department, Ministry of planning and investment, Myanmar – Directorate of Investment and Company, Thailand – Bank of Thailand, Vietnam – General Statistics Office of Vietnam

 

Strengthening Reforms in Governance and Transparency

To create a pro-business environment, Lao PDR has taken a whole-of-government, multi-sectoral approach to introduce strong policies with clearly defined provisions and institutionalised mechanisms that are aligned throughout ministries and local governments.

Some of the key efforts carried out to liberalise the economy and open up the private sector include:

  • Vision 2030
  • 8th five-year National Socio-Economic Development Plan (NSEDP) 2016-2020
  • Investment Promotion Law (Amended IPL, 2016)
  • Public Debt Management Law
  • Strategy of Agriculture 2025
  • National Organic Agriculture Strategy of Lao PDR
  • New Commercial Bank Law
  • Capital Adequacy Plan
  • Prime Minister’s Decree on Improving EODB.

Accelerating Growth via Special Economic Zones

Lao PDR has established 12 Special Economic Zones (SEZs) to create new opportunities and drive stronger growth. We aim to have 25 SEZs throughout the country by 2020.

Key roles of the SEZs:

  • Create clusters/new emerging industries, boost new innovations and stimulate consumption, in line with economic globalisation and regional integration;
  • Attract local and foreign direct investments;
  • Establish a robust infrastructure network to support operations and export;
  • Provide strong supply chain linkages and access to neighbouring markets; and
  • Develop talent to support businesses.

Since the introduction of the first SEZ in 2003, the SEZs have brought in actual investments of up to US$1.83 billion, contributed US$20,327,060 in government revenue and increased the value of exports by US$815,491,201. Accumulated investments in Lao PDR’s SEZs increased by 30% from US$1.2 billion in 2015 to US$1.8 billion in 2017.

As at 31 December 2018, there were almost 400 foreign and domestic companies registered in the service sector, industry and trade. More than half are from China (181 businesses), Thailand (28) and Japan (30), representing companies like Aeroworks, Essilor, Nikon, Toyota, and Mascot among others.

Improving Efficiency via One-Stop-Service (OSS) Centres

The government has set up One-Stop-Service (OSS) centres within SEZs to provide investors access to comprehensive support and centralised information on investing in Lao PDR.  For instance, the Savan Seno OSS Centre which benefits from the Prime Minister’s Decree 177 has set the standard in providing on-site approvals for permits, licenses as well as facilitates other investment procedures.

Backed by tailored policies and frameworks, the OSS centres are managed by highly-skilled workforce that are trained to inform investors of opportunities as well as provide efficient and seamless end-to-end investor services.
 

Key service offerings at OSS Centres:

  • Address investor queries and assist in identifying the best investment platform;
  • Provide latest information on promotions, policy and regulatory changes;
  • Conduct transactions relating to enterprise and business license applications;
  • Fast-track application processes and facilitate business-related barriers;
  • Centralised comprehensive information on incentives and tax reforms; and
  • Provide aftercare services.

Leveraging on Distinct Advantages

Lao PDR’s engine of growth has been powered by its vast reserve of natural resources, namely   agriculture, forestry, minerals (gold, copper, zinc and lead), electricity generated from hydropower and tourism.

Sector

Details

 Hydropower

  • Major exporter of electricity as two thirds of electricity generated in Lao PDR is exported to Thailand, Vietnam and Cambodia, where demand continues to rise.
  • Known as the Battery of ASEAN, Lao PDR aims to cater to domestic and regional demand (distribute electricity to neighbouring countries, set up stations, control centres and build skilled team).
  • Key landmark projects include NT2 and the EDL-GE Projects.

 Agriculture

  • Availability of a high ratio of land for agriculture and agriculture forestry
  • Government promotes contract farming and Organic farm.

 Manufacturing

  • Aims to be a manufacturing base given its close proximity to other countries and low production cost
  • Promote the setting up of manufacturing bases at SEZs that have attractive incentives

 Tourism

  • A key economic driver, tourism contributed around US$2 billion or 13.7% of GDP in 2017. This is expected to rise to US$3.3 billion by 2028.
  • Key tourist attractions are the Mekong River, the UNESCO World Heritage sites at Luang Prabang, Vat Phou, and the Xiangkhoang Plateau. Listed as World’s No.1 in tourism, as follows:
  • Top of “Places to Go” list in 2008 by New York times;
  • “The best city in the world to visit” by the Wanderlust, a leading British travel magazine;
  • “Top City” Award in 2006-2012 (except in 2009 being in top 10);
  • “World Best Tourist Destination” in 2013 by the European Council on Tourism and Trade.
  • “Wanderlust Travel Awards” in 2015 Lao PDR is top 10 while Luang Prabang is No.1
  • New areas of growth: Ecotourism, cultural tourism and agro-tourism.

 

 

Shaping inclusive and sustainable growth

  • Lao PDR is also creating future-oriented education and training programmes that will ensure young people are equipped with the right skill sets and knowledge to support growth, seize opportunities in the job market and reduce poverty.
  • In driving the country’s socio-economic transformation agenda, it has already achieved poverty-related Millennium Development Goals (MDG) by halving its poverty rate by 2015.
  • Recognising the importance of building a solid foundation for future generations, Lao PDR has also undertaken the Health Sector Strategy 2020, National Nutrition Strategy (2015 – 2023) and Plan of Action (2016 – 2020) to improve healthcare, and is gearing up to implement universal health coverage with support from development partners.

Driving Sustainable Practices

  • Recognising the importance of sustainable use of natural resources, the government is currently exploring policies to protect natural resources, it introduced the National Environment Strategy 2020 to protect forests and ecosystems, manage water resources and protect land use to preserve biodiversity.
  • Plans have been established to encourage reforestation, the classification of land management (at macro and micro levels), sustainable mine management and harness hydropower for renewable electricity as well as better manage water resources.

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Laos at a Glance 

 

Name

Lao People's Democratic Republic (Lao PDR)

 GDP

 152,425 billion Kips  (2018)

 GDP Growth

 7.9% per annum on average, (2012=7.93% and 2013=7.6%,  2018=6.5%

 GDP per Capita

 US$ 573 in 2005-2006 up to US$ 1,069 in 2009-2010 and 2,599 US$ in 2018 

 Population

 6.6 Million (2008), 6.901 Million (2017) 

 Density

 25 people per sq km

 Land Boundaries

 5,083 km

 Borders

 Myanmar 235 km, Cambodia 541 km, China 423km, Thailand 1,754 km, Vietnam 2,130 km

 Languages

 Lao (official), French, English, Various ethnic languages

 Surface Area

 Total: 236,800 sq km, Land: 230,800 sq km, Water: 6,000 sq km

 Climate

 Tropical monsoon, Rainy season (May to October), Dry season (October to April)

 Religion

 Buddhists (65%), Animist (32.9%), Christians (1.3%), Unspecified 0.8% (1995 census)  

 Time Zone

 UTC+7

 Currency

 Kip (LAK)

 Exchange Rates

 Stable exchange rate average 1 Dollar: 8,700 Kips (2019)

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Last update: 22 August 2019.