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Laos needs investments of US$2.9b to meet GDP target
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| Pha That Luang | Laos will have to mobilise state and private investment funding of about 23,775 billion kip (US$2.9 billion) to secure GDP growth of more than 8.5 percent next fiscal year.
The Ministry of Planning and Investment says that for investments to amount to 34 percent of GDP as planned, the government needs to acquire about 12,743 billion kip (about US$1.5 billion) in outside funding.
Banks will need to provide about 2,853 billion kip (about US$356 million) in credit to businesses in Laos for investment, while the government has to acquire public investment funding amounting to 8,179 billion kip (about US$1 billion).
Based on the investment forecast, 54 percent of funding is expected to come from the private sector, 12 percent from banks, 10 percent from government revenue, and 24 percent from foreign assistance. The data also shows that the government now considers private investment as the engine of growth.
The ministry says that to secure private investment funding of US$1.5 billion next fiscal year, the government has to streamline the investment approval process, such as offering a one-stop service. It must also do more to attract investment in sectors that have the most potential, such as mining and hydropower.
The government will also need to disseminate laws, decrees, regulations and manuals on investment to local officials so they can follow the guidelines and deliver the best services to investors. The government will also have to clarify the scale of investment projects that can be approved by central and local authorities.
More special economic zones are required, to offer more investment incentives.
According to a prime ministerial decree on special and specific economic zones, zone developers have the right to offer tax incentives to businesses setting up in these zones. Zone administrators may also import vehicles and fuel duty free. The National Assembly has approved the decree, which will ensure effective enforcement of the legal document.
Over the past years, the government has tried to create favourable conditions to boost private investment, such as amending the investment promotion law. The law now offers tax breaks and land use rights as investment incentives, especially in the non resource sector.
The law also offers more incentives for investment in the education and health sectors. The government is accelerating negotiations for Lao membership in the WTO and has made a strong commitment to train up workers so they have the necessary job skills to meet the needs of business operators.
vientiane times
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