Laos to reduce economic overreliance on natural resources
VIENTIANE (Vientiane Times/ANN) - The government has announced it will reduce the nation’s overreliance on natural resources as it seeks to grow the economy despite the recent slowdown.
Speaking at the National Assembly session recently, Lao Prime Minister Thoungloun Sisoulith said although the Lao economy grew at 6.5 percent this year, it relied too much on the energy and mining sector.
In addition, external loans for infrastructure projects that will likely result in low economic returns will be limited.
The move should contribute to minimising the country’s debt distress. However, the government vowed to boost commercial productivity and promote processing industries.
Mr Thoungloun acknowledged that Laos has huge potential to develop and gain more benefits from the tourism industry and transit services, but the development of these sectors has not progressed as anticipated.
National Assembly members have called for the government to address the problems of producers, farmers and entrepreneurs to boost the country’s exports and minimise imports.
Member for the capital, Mr Bounthong Phommachanh told the NA’s ongoing session this week that farmers were abandoning their land due to the high cost of production and the government sectors needed to take into account policies and mechanisms to assist producers to overcome these challenges.
NA members also said all sectors need to have thorough plans to assist farmers with technical know-how, marketing and access to finance. Stronger cooperation is necessary between the Ministry of Industry and Commerce and the Ministry of Agriculture and Forestry to boost the export sector.
Member for Xieng Khuang province, Mr Vilaysouk Phimmasone said many small and medium enterprises (SMEs) found it difficult to access finance while others are still charged high interest rates on loans.
Critics expressed concerns about further slow economic growth in the short-term if the government fails to boost the production sector.
The Lao economy is vulnerable to external impacts. The nation has suffered from a chronic budget deficit, rising debts, falling currency reserves and financial leaks. Although the government has imposed numerous measures to address these issues, the problems remain.
The government declared that it would impose stronger measures to address unlawful trade, corruption and illegal logging while concentrating on improving the investment climate to attract more private capital into the country.
At the moment, Lao economic growth relies too much on the excavation of natural resources, which is considered an unsustainable source for long-term growth.
According to the World Bank’s recent report, natural resource wealth is beneficial as it raises average incomes, but the benefits to the population and local communities, in particular, are not automatic and can only be achieved if appropriate policies are adopted.
Ensuring the population benefits from the exploitation of natural resources requires adequate institutional structures across the entire value chain.