A market on the Lao-Thai border. Photo: Wikimedia Commons

The Ministry of Industry and Commerce chairs the Trade & Private Sector Working Group. Germany and the European Union are Co-Chairs.

The private sector, both domestic and foreign, and including small and medium-sized enterprises (SMEs), is playing an increasing role in Lao PDR’s economy, which is one of the fastest growing in South East Asia year on year.

The Government is aiming for an annual GDP growth rate of eight percent from 2015 to 2020, on the basis of total investments made each year of around 30 percent of GDP. More than half of the investments are expected be mobilized from the private sector. The private sector’s role is set to grow as the Government works to achieve its goal of graduating from Least Developed Country status by 2020.

Over the past few years Lao PDR has become a better place to do business for both domestic and foreign firms. A number of new regulations consistent with WTO and ASEAN principles were introduced to improve predictability and transparency in regulatory environment.

Vision and Priorities

The sector’s 2030 vision is “a more diversified economy with creative, productive, and competitive enterprises through creating a conducive environment for enterprises”.

The three strategic pillars to achieve this during 2016-2020 are:

1. Enhancing competitiveness of Lao enterprises, especially SMEs in domestic, regional, and international markets, by improving access to business development services and support to remove bottlenecks;
2. Continued improvements to an enabling environment for business, including reducing costs through trade facilitation, simplifying regulations, improving access to finance and skilled labour;
3. Further deepening of our economic integration under the WTO and the ASEAN framework, including enhancing market access for Lao products and services through fulfilling multilateral and bilateral commitments and improving the regulatory and legal environment.

Lessons and Challenges

• Despite significant improvements, gaps remain between policy and implementation in the business environment, leading to missed potential;
• We will need fuller implementation of recent legal reforms, especially in a post WTO accession environment;
• As trade and investment flows become increasingly driven by the natural resource sectors, substantial efforts will need to be made to ensure that growth in the more labour-intensive non natural resource sectors is not hindered. We believe we can use Lao PDR’s existing comparative advantage in natural resources to develop other parts of the economy through the efficient use of revenues to develop skilled labor and to promote export industries with proven potential.

Support Needed

Under each of the three strategic pillars of the next sector five year plan, specific measures and policy interventions are proposed. Initial estimate indicates that a total budget of about 60 Million US Dollars will be required. The Sector Working Group expects to mobilize about 70 percent of this from development partners in the form of Official Development Assistance, and the remaining 30 percent will financed through the public investment programme.

Read more – “A bigger role business in development – Report on the pre-consultation with the Private Sector”.

SWG Secretariat Contacts

• Mr. Sengphanomchone Inthasane, Director, DPC, Tel: 021 453982 / 020 9725 5780
• Mr. Christian Olk, First Secretary, Head of Development Cooperation, Tel: 020 7812 2834