Emerging economy & strategic gateway to ASEAN markets

I. AT THE HEART OF REGIONAL INTEGRATION

Lao PDR is at the heart of ASEAN, one of the most dynamic regions in the world. It has strong bilateral trade and investment ties with key economies in the region and beyond, leveraging on the
establishment of the ASEAN Economic Committee (AEC), as well as ASEAN’s trade and investment partners. China: 65% of total FDI inflows in 2016; second largest trade partner, Thailand: 14% of FDI in 2016; largest trade partner, Vietnam: 2% of FDI in 2016; third largest trade partner

Lao PDR has the strategic geographic advantage of being land-linked, bordering key ASEAN markets including Thailand, Vietnam, Cambodia, and Myanmar. It also borders China in the north
and is a key node in the One Belt, One Road Initiative.

To date, Lao PDR has bilateral investment treaties with 27 countries and has been a member of the World Trade Organisation (WTO) since 2013.

II. OUTSTANDING PROGRESS IN THE LASTT 20 YEARS

Lao PDR is eligible to graduate from Least Developed Country (LDC) status and is on track for full graduation by 2024. Lao’s positive growth trajectory thus far has been due to its continued focus on realising its strategic reform agenda that was introduced by the Government to drive inclusive, sustained economic growth; develop human assets; and protect its natural resources. Lao PDR has enjoyed remarkable GDP growth per capita, averaging 5.65% from 1996 to 2016, with similarly impressive GNI per capita growth averaging 6.57% from 2013 to 2016.

III. A DYNAMIC AND RESILIENT ECONOMY

Lao PDR is a dynamic economy, with GDP averaging between 7.8 and 8% in the last 10 years. Its resilience and increasing competitive environment have created attractive investing opportunities. Sound planning underpins Lao PDR’s economic growth. Short, medium and long-term planning are key elements of this, with the 8th National Socio-Economic Development Plan (NSEDP) 2016-2020 guiding policy priorities across government in line with the country’s economic and development transformation targets. As a result of its effective reform agenda, the International Monetary Fund (IMF) signalled its confidence in the Lao economy by projecting 6.8% real GDP growth for 2018, the second highest in Southeast Asia (after Myanmar and Cambodia with 6.9%).

GDP averaging
7.8 and 8%
in the last 10 years

GDP growth in 2018
6.8%, The 2nd
Highest in Southeast
Asia

Strengthening
established ties with
core export markets
in the region

Leveraging on the
country’s 12
Special Economic
Zones

Meanwhile, diversification is supported by investment flows into various sectors and contributions to GDP are becoming increasingly service-driven. Between 1988 to 2018, Lao PDR continued to see FDIs focused around the energy sector (30%), mining (22%), construction (11%), agriculture (10%) and services (9%). However, as of 2016, non-resource-based industries accounted for substantial shares of investment such as include services (11%), handicrafts (8%), hotel & restaurant (4%), construction (4%), banking and trading (3%), and telecommunications (3%).
Additionally, in 2016, the services sector contributed 38.9% of GDP, outpacing the growth of industry at 28.8% and agriculture at 23.3%.

The government is leveraging on the country’s 12 Special Economic Zones (SEZs). Some including the Savan Seno SEZ have shown great success in promoting EODB, including services for start-up, aftercare, logistics and linkage with key neighbouring markets promoting value chain advancement and backward linkages to the local economy.

Loading...