Category: Business

The economy of the Lao PDR is forecast to grow 3.4% this year and 3.7% next year thanks to the country’s investments to boost exports, according to the Asian Development Outlook (ADO) 2022 released by the Asian Development Bank (ADB) on Apr 6.

Sound management of the country’s finances will be key to the recovery, which remains fragile and faces headwinds including the ongoing coronavirus disease (COVID-19) pandemic, high inflation, and the impacts of the Russian invasion of Ukraine.

“The Lao PDR’s economy in 2021 gradually recovered from its worst performance in decades, but new virus variants and rising inflation could derail the momentum,” said ADB Country Director for the Lao PDR Sonomi Tanaka. “The government will need to remain vigilant by fully vaccinating as many people as possible and bolstering transparency in public financial management to restore market confidence and attract resilient, sustainable investments.”

A second COVID-19 wave in April 2021 forced the government to impose a series of lockdowns, which disrupted economic activity in domestic services, including hotels, restaurants, and transportation.

To spur recovery in domestic markets, including tourism, the government in January 2022 relaxed COVID-19 control measures and speeded up vaccination. It aims to have 80% of the population fully vaccinated by the end of 2022, compared with 50% as of December 2021.

Industrial and agricultural exports contributed to last year’s economic recovery. Favorable weather allowed many hydropower plants to operate at full capacity and maximize energy production for exports.

Agricultural exports rose across most categories, partly to meet robust demand from the People’s Republic of China. Growth in exports will likely continue this year and next, thanks to anticipated investment inflows to support the development of wind, solar, and other low-carbon electricity for the export markets.

Rising oil prices and the depreciation of the kip, which led to 5.3% inflation in December 2021, may push the country’s average rate of inflation to 5.8% in 2022 and 5.0% in 2023. Inflation will add to the country’s debt distress, which is already at high risk.

The report urges the government to boost transparency in the management of external public debt, which will help open doors for the Lao PDR to access sustainable development finance.

The ADO 2022 says the country has made solid progress toward achieving its nationally determined contributions under the Paris Agreement, aimed to achieve net-zero emission, especially in the areas of hydropower development and the expansion of household electrification.

The country’s policy commitments on forestry, transportation, and renewable energy, however, were “not on track.” To correct that, the government has taken steps to secure international investment, though it must first make progress in addressing gaps in climate policy and institutional frameworks, as well as increasing project preparedness.

Source: Lao News Agency

The government has authorized two companies Nana Shin Sole Proprietorship and Big Brother 456 Co., Ltd to conduct a feasibility study into the development of a new highway connecting Vientiane with the northern province of Huaphan.

If economically possible, the highway, expected to be carried out as a Build-Operate-Transfer (BOT) project, will address transport constraints as it currently takes more than 10 hours to travel from Vientiane to Huaphan. Meanwhile air travel is yet to provide an affordable option.

The road construction will be shared among several subcontractors to ensure the project is completed within five years as planned.

Nana Sin President Nanthalay Xaysena said “The construction will be our own responsibility. It will be carried out in cooperation with Big Brother 456 as a BOT project over a concessional period of 50 years.”

“If it is fully built, the road will greatly facilitate transport and boost development in provinces located along the corridor including Huaphanh.”

Source: Lao News Agency

A signing ceremony for the Exchange of Notes for “Economic and Social Development Programme” was held on Apr 1 at the Ministry of Foreign Affairs in Vientiane.

The documents were signed and exchanged by Ambassador of Japan Kobayashi Kenichi, and Deputy Minister of Foreign Affairs Phoxay Khaykhamphithoune under witness by representatives from the line ministries.

The Government of Japan will provide grant aid of US$5 million for the programme which is focused on providing National Regulatory Authority (NRA) and Lao National Unexploded Ordinance Programme (UXO Lao) with equipment necessary for training for future UXO clearance personnel and UXO clearance activity respectively.

There are approximately 80 million unexploded ordnances in the Lao PDR. more than 40 years after the end of Indochina War. These have been threatening people’s lives and forcing people out of safe lands which are necessary for social-economic development. The Government of the Lao PDR considers further accelerating UXO clearance and reducing the number of casualties of UXO accidents as a priority of the 9th National Socio-Economic Development Plan (NSEDP).

In connection with Sustainable Development Goals (SDGs), the Lao PDR has been recognized as a model country faced with struggling with UXO and landmines, with setting its unique 18th goal ‘Lives Safe from UXO’.

Japan has provided long-standing supports for UXO clearance in the Lao PDR amounting more than 66 million US dollars over 20 years. Some of them include supports for UXO clearance activity and Mine Risk Education (MRE) in collaboration with Japanese and International Non-Governmental Organizations (NGO). JICA is also providing UXO Lao with a technical cooperation project, which aims to develop an effective plan for UXO clearance activities and build their capacities for appropriate monitoring for the activities.

Accelerating UXO clearance is also one of the priority areas for Japan in the “strategic partnership” with the Lao PDR.

In March this year, Japanese Prime Minister Kishida Fumio and his Lao counterpart Phankham Viphavanh mutually confirmed that both countries would work closely to further expand and develop the partnership in accordance with the “Action Plan for Advancement of Strategic Partnership between the Lao PDR. and Japan” which includes accelerating UXO clearance through mutual cooperation.

“I strongly realized the importance of UXO clearance through several occasions such as the field visit in Xiang Khuang where UXO clearance is operated by the Japanese NGO and UXO Lao, and the visit to the UXO Visitor Centre in Luang Prabang, seeing life-threatening clearance activities and the tragedy of UXO accidents.

Next Monday, the 4th of April, is the International Day for UXO/Mine Awareness and Assistance in Mine Action. We hope that this support will boost UXO clearance activities in the Lao PDR. As a strategic partner of the Lao PDR, Japan will continue to provide assistance tailored to the needs of the Lao PDR,” said Ambassador Kobayashi at the ceremony.

Source: Lao News Agency

Newly built Yodngeum Power Mix Fuel factory in Yodngeum village, Pek district, Xieng Khuang province is expected to produce 100 million litres of oil on an annual basis.

Minister of Industry and Commerce Khampheng Xaysompheng visited the factory last week.

Commenced in September 2021, the construction of the over 30-billion-kip factory is now fully completed and the factory is expected to begin its production soon, according to Vice President of Yodngeum Power Mix Fuel Processing Factory Uthan Tailithi.

With a storage capacity of 2.4 million litres of oil, the factory can process 100 million litres of petroleum products per year by mixing finished diesel with semi finished oil and some chemical in ratios of 60%, 39% and 1% respectively.

The company will also import gasoline to supply in the province and neighboring provinces through the Lao State Fuel Enterprise.

Source: Lao News Agency

The Ministry of Industry and Commerce has said it will adjust oil prices earlier by announcing oil price adjustment 5-7 days after the world market announces its oil price change rather than currently 15 days.

“As for the issue, relevant authorities will attach importance to seeking solutions including reducing the national road management fund, and adjusting revenue and taxation rates according to fluctuating oil prices to ensure oil prices are adjusted step by step and in a systematic manner,” said Minister of Industry and Commerce Khampheng Xaysompheng.

Oil prices in Laos are determined by fluctuating prices in the world market which has kept rising since the beginning of 2022.

Oil prices have been adjusted six times since the beginning of 2022 with the latest one announced on Mar 10. The current oil prices place premium petrol at 18,640 kip per litre, regular petrol at 16,380 kip, and diesel 14,510 kip per litre.

The oil production limit by the Organization of the Petroleum Exporting Countries (OPEC), economic conflicts among world powers, and Russia-Ukraine conflict have led to a rise in oil prices in the world market with diesel reaching to 150 – 180 US$/barrel, the highest rate in a decade.

“In a meeting held last month, OPEC members agreed to increase oil production by 400,000 barrels per day,” said Minister Khampheng. “However, if economic and military conflicts remain, oil prices will continue to rise.”

Source: Lao News Agency

March 12 marks the 100th day of the launch of the Laos-China Railway with over 1.2 million tons of freight, including 200,000 tons of transit goods, transported by the railway.

Thirteen provinces and cities in China have operated over 360 international freight trains exporting goods to Laos, Myanmar, Cambodia, Thailand, Vietnam, Malaysia, Singapore, and Bangladesh.

In the meantime, over 1.8 million people have been transported by the Laos-China Railway.

“After the launch of the Laos-China Railway, the cost of transport between Vientiane and Kunming of China will be reduced by 40% to 50%. Meanwhile, the cost of transport in Laos will be reduced by 20% to 40%,” said Li Hong Qing, Deputy Director, Kunming East Railway Station, China Railway Kunming Group.

With the effectiveness of the Regional Comprehensive Economic Partnership – RCEP (1 January 2022), goods and passengers transported by the rail will rise constantly, according to Li Hong Qing.

Source: Lao News Agency