Regional Economic Integration and Inclusive Growth in Lao Peoples

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How Economic Integration
Can Promote Inclusive Growth
Lao PDR's Experience
12 November 2014
Leeber Leebouapao(Ph.D)
Director Genral
National Economic Research Institute(NERI)
Ministry of Planning and Investment
Lao PDR
E-mail: [email protected]
Points of Discussion
 Lao PDR’s National Economic Development
Strategy
and Economic Integration Policy Framework
 Recent Macroeconomic Performance
 Poverty Incidences and Policy
 Opportunities and Challenges of Lao PDR’s
Economic Integration ( AEC by and after 2015 )
 Policy Recommendation
Lao National Socio-Economic
Development Policy/Strategy
and Economic Integration Policy
Framework
Economic Integration Policy Framework
 1975-1986: Socialist or Centrally Planned
Economy
 1986: NEM
Shifting from centrally planned
economy to a market oriented economy
( Price liberalization, fiscal reform, SOE
reform, banking reform, government
employee reform, more open economy )
 1997: Member of ASEAN
2008: AFTA
 2012: Member of WTO
 2015: Member of AC(APSC, AEC, ASCC)
The National Social-Economic
Development Policy/Strategy
Key Targets of NSEDP/S:
Vision 2020
 Target:
To graduate from the status of LDC
by 2020
 VII Five Year NSEDP(2011-2015)
 To achieve MDG’s
 To join AEC by 2015
 GDP growth: more than 8% per
year
The National Social-Economic
Development Policy/Strategy(Cont.)
Industrialization Strategy:
 Electricity Industry
 Agro-processing Industry
 Mining Industry
 Tourism Industry
 Construction Material Production Industry
The National Social-Economic
Development Policy/Strategy(Cont.)
Land-Linked Strategy
Connectivity
8
North-South Corridor-B
The
Geographic
Focus
Mukdahan
Quang Tri
East-West Corridor
Beantey
Meanchey
Sa Keo
Savannakhet
Tay Ninh
Svay Rieng
9
Recent Macro Economic Performance
GDP growth (%)
GDP Growth
8.40
8.20
8.32
8.20
8.09
8.03
7.97
8.00
7.89
7.80
7.80
7.57
7.60
7.40
7.20
7.00
2005-06
2006-07
Source: Lao Bureau Statistics
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
GDP Growth by Sectors (%)
9.66
14.45
7.42
8.05
5.16
2.95
2.79
3.14
2.00
2.98
4.00
2.03
6.00
3.05
4.87
8.00
7.12
6.87
9.21
6.61
7.11
10.00
9.74
14.00
9.54
8.97
13.28
16.00
15.18
16.60
18.00
12.00
17.72
20.00
2008-09
2009-10
2010-11
2011-12
2012-13
0.00
2005-06
2006-07
2007-08
Services
Source: Lao Bureau Statistics
Industries
Agriculture
Contributions and GDP growth
(%)
9.0
8.0
6.8
6.8
7.0
6.3 6.4
6.0
0.3 0.3
5.0
5.0
4.0
1.0
0.0
3.6
3.5
4.1
3.5 3.7
1.0
0.2
0.3 0.5
Services
3.0
2.7 2.0 2.7
Industry
4.1 3.9
3.6
3.9
1.9
2.7
1.8
1.3
1.40
3.7
1.4
1.4
0.6
Taxes on
products and
Import duties,
net
3.60
3.2
4.0
7.6
8.1 8.3 8.0
7.9
0.7
0.7 0.6
0.3 0.8
1.4
3.0
2.0
1.1
0.6 0.8
1.9
0.6
8.2 8.0
7.8
0.5 0.7
2.12
2.4
Agriculture
1.6
1.0 0.9 0.9 0.8 0.85
GDP
Source: Lao Bureau Statistics
GDP per capita in US$
Inflation (%)
15.5
10.5
Source: Lao Bureau Statistics
6.4
2011
2013
4.3
0.0
2008
2007
2006
2005
2004
2003
2002
4.5
6.1
7.5
2012
7.6
7.2 6.8
2010
7.8
2009
10.7
2001
18
16
14
12
10
8
6
4
2
0
The Current Status of the Lao
Foreign Trade
Main ExportingFY 1999Markets
FY 20042004
2009
FY 20092012
1
Thailand
46%
38%
56%
2
Australia
6%
10%
18%
3
Viet Nam
7%
12%
8%
4
China
3%
5%
4%
5
United Kingdom
1%
7%
1%
6
Japan
1%
1%
2%
7
Germany
3%
4%
2%
8
Switzerland
3%
5%
2%
9
Netherland
1%
1%
1%
10
Italy
2%
1%
1%
Top 9 Export Items from Laos
No.
Export Items
FY1999-2004
FY2004-2009
FY2009-2012
1
Minerals
61.77 (16%)
495.57 (50%)
1,048.52 (59%)
2
Electricity
94.93 (25%)
127.93 (13%)
289.00 (16%)
3
Garment
96.14 (26%)
152.53 (16%)
167.30 (9%)
4
Agriculture and live
animals
82.49 ( 22%)
88.51 (9%)
119.24 (7%)
5
Other Industrial goods
10.77 (3%)
69.57 (7%)
113.62 (6%)
6
Wood & wood products
73.13 (19%)
69.32 (7%)
37.11 (2%)
7
Diamond
18.83 (2%)
12.74 (1%)
8
Forestry Products
8.67 (2%)
5.09 (1%)
1.01 (0%)
9
Handicraft
5.23 (1%)
1.03 (0%)
0.40 (0%)
Unit: million USD (share to total)
0
Main Import Markets
FY 1999FY 20042004
2009
FY 20092012
1
Thailand
26%
64%
52%
2
China
5%
9%
12%
3
Viet Nam
4%
12%
8%
4
France
0%
0%
4%
5
Japan
0%
2%
3%
6
South Korea
0%
0%
1%
7
Belgium
0%
2%
2%
8
Germany
1%
0%
0%
9
Denmark
0%
1%
0%
10
Taiwan
0%
1%
0%
Top 10 Import Items to Laos
No.
1
Import Items
Capital goods (ODA, Loan projects,
FDI)
2
Fuel and Gas
93 (17%)
206 (21%)
333 (20%)
3
Vehicles and space parts
25 (5%)
75 (8%)
107 (6%)
4
Food stuff
19 (3%)
24 (2%)
92 (5%)
5
Luxury goods
3 (1%)
9 (1%)
71 (4%)
6
Clothing and daily use commodities
14 (3%)
22 (2%)
54 (3%)
7
Agriculture Inputs
16 (3%)
17 (2%)
48 (3%)
8
Electricity
7 (1%)
21 (2%)
47 (3%)
9
Eletricit Appliances
4 (1%)
10 (1%)
38 (2%)
10
Construction materials
27 (5%)
27 (3%)
32 (2%)
Unit: million USD (share to total)
FY1999-2004
FY2004-2009
FY2009-2012
179 (33%)
319 (32%)
700 (42%)
Top 10 Import Items to Laos( FY 2009-2010)
3%
2%
2%
Capital goods (ODA, Loan
projects, FDI)
Fuel and Gas
3%
3%
4%
Vehicles and space parts
Food stuff
5%
42%
Luxury goods
Clothing and daily use
commodities
Agriculture Inputs
6%
Electricity
Eletricit Appliances
20%
Construction materials
Top 9 Export from Laos (FY 2009-2010)
2%
1% 0%
0%
Minerals
6%
Electricity
7%
Garment
Agriculture and live animals
9%
Other Industrial goods
Wood & wood products
Diamond
59%
Forestry Products
16%
Handicraft
Foreign Direct Investment (Mill USD)
FDI by Sector (%)
100.00
2.75
5.10
4.84
4.28
1.65
3.90
5.80
10.42
17.13
18.91
15.84
18.85
14.50
80.00
4.29
8.53
9.07
17.62
5.06
0.73
47.05
0.69
26.60
13.88
23.36
24.46
37.40
60.00
53.72
85.54
85.61
56.17
89.78
72.80
40.00
31.71
31.54
52.65
65.81
23.55
52.88
20.00
0.00
18.21
15.94
21.41
21.24
1.94
2.12
4.43
0.00
2000
14.28
2001
5.13
0.13
0.97
4.04
6.17
2002
2003
2004
7.51
1.39
0.45
2.73
2005
2006
Agriculture
Mining
Services
Manufacture
10.14
8.40
2007
2008
8.93
2009
2010
2011
Electricity Generation
FDI by Country (%)
100%
5.37
90%
23.34
33.92
80%
42.95
43.03
46.16
9.53
7.95
3.37
6.05
26.35
42.71
47.25
21.34
9.54
70%
36.46
66.08
70.81
60%
27.06
4.77
50%
11.54
39.24
28.02
22.60
40%
46.57
1.19
30%
51.06
64.66
47.03
36.71
20%
50.64
11.23
18.10
26.09
28.12
12.42
5.58
6.64
2000
2001
5.17
2002
6.00
16.05
15.63
2007
2008
11.17
4.47
2.03
2003
41.22
5.54
10%
0%
11.22
2004
Vietnam
2005
2006
China
2009
2010
2011
FDI by Sectors (Million US Dollars)
2001 2002 2003 2004 2005 2006 2007
6 1,065 1,777 361
Electricity Generation 360 1,295 86
9
2
24 596 94
12 181
Mining
1
10
49
12
13
32
58
Hotel & Restaurant
1
14
3
31
2
131
0
Construction
19
14
19
51
17
74 115
Agriculture
5
0
0
10
5
0
0
Banking
60
81
35
15 459 184
Industry & Handicraft 5
10
17
60
17
21 123 134
Services
3
5
6
9
6
0
25
Wood Industry
0
13
0
27
0
1
57
Telecom
3
8
140 19
8
86
14
Trading
0
0
0
0
0
0
0
Public Health
4
4
3
3
0
4
6
Garment
1
1
1
2
0
2
2
Consultancy
0
0
0
0
0
0
0
Education
421 1,442 471 819 1,245 2,700 1,137
Total
Sector
Source: Ministry of Planning and investment
2008
640
24
29
67
102
32
78
157
43
21
13
0
5
4
0
1,216
2009
218
1,055
44
27
290
84
290
199
77
14
17
0
1
7
0
2,322
2010
457
269
126
81
551
12
325
551
24
1
75
8
1
14
5
2,499
2011
25
1,757
24
257
609
106
361
234
4
45
32
50
8
7
2
3,520
2012
1,232
418
48
0
126
0
1
16
15
1
0
0
0
0
0
1,857
2013
1,086
1,009
110
100
70
70
5
0
0
0
0
0
0
0
0
2,450
FDI by Countries (Million US Dollars)
Country
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Vietnam
3
7
9
63
43
261
156
149 1,421 658 1,653 274
China
13
63
120
28
58
423
496
107
933
474
546
722 1,033
Thailand
1
6
96
57
451
655
93
375
909
44
155
171
260
Malaysia
2
5
71
3
3
3
53
0
11
5
2
23
98
Cambodia
2
0
0
0
0
0
0
0
8
0
0
0
83
Japan
1
0
3
5
4
402
6
1
4
12
14
15
60
Taiwan
0
1
0
4
1
7
1
4
1
1
0
0
18
South Korea
10
13
14
14
10
164
82
60
75
70
27
202
5
England
0
0
0
0
1
5
11
0
16
0
28
0
4
Russia
0
1
3
1
0
1
11
33
2
4
2
3
1
Others
18
37
110
334
395
416
63
227
69
31
130
38
395
Total
50
133
426
509
966
2337
972
956
Source: Ministry of Planning and investment
158
3449 1299 2557 1448 2115
Poverty Incidences and Poverty Reduction
Year
1992/93
1997/98
2002/03
2007/08
2012/13
Total population (Person ) 4,626,000 4,905,690 5,435,416 5,927,203 6,524,925
Number of poor people
below poverty line
(Person )
Percentage of poor people
below poverty line (%)
2,127,960 1,918,125 1,820,864 1,635,908 1,513,783
46
39.1
33.5
27.6
23.2
Key Poverty Reduction Policy
Rural Development Policy:
 Irrigation development
 Road infrastructure development
 Primary school buildings
 Primary health care services
Opportunities and Challenges
For Economic Integration ( AEC )
OPPORTUNITIES

34
North-South Corridor-B
The
Geographic
Focus
Mukdahan
Quang Tri
East-West Corridor
Beantey
Meanchey
Sa Keo
Savannakhet
Tay Ninh
Svay Rieng
35
Opportunities (Cont. )
 Better Market Access for Lao Export to
ASEAN Market
 More tourist from ASEAN countries
 Cheaper Import from ASEAN Market

More FDI to Lao PDR

Freer Skilled Labor Movement
CHALLENGES

Key Challenges in Joining AEC
 Increased competition for domestic
investors due to more cheaper imports

Increased competition for domestic
investors due to more competitive foreign
investors

Challenges of labor movements
( Social challenges )
 Make use of the opportunities and
maximize the benefit from joining AEC

Mitigate the negative impact and deal with
the challenges

Strengthen competitiveness

Inclusive growth and sustainability

Achieve MDG’s, LDC-Graduation, PostMDG’s and SDG’s
Thank You
for
Your Attention
Q&A
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