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Laos sees surge in non-resource exports
Laos has seen a remarkable increase in the export of non resource products, giving a positive signal that the country is on track for sustainable economic growth.
According to the World Bank's Lao PDR Economic Monitor December 2011 Update, the export value of non resource products such as garments, wood and timber products, and agriculture and agro-processing sectors reached US$820 million in 2011, a 21 percent increase over the previous year.
Garment exports grew by a little more than 15 percent in 2011, following a gradual shift of production towards higher value-added products and reform of the Generalised System of Preference Rule of Origin offered by the EU effective from January 2011.
Exports of wood and wood products are also expected to rebound due to increased demand from neighbouring countries. However, agriculture exports, primarily coffee, maize and non-rice crops and vegetables, were expected to grow at a slower pace by 15 percent following the recent typhoons and flooding.
Investment in the non resource sector also saw rapid increase in Laos in 2011 thanks to an improved business and investment climate.
The government has amended a number of laws including the Investment Promotion Law, Tax, and Customs Law to improve the business climate as part of requirements for membership in the World Trade Organisation, which it hopes to join at the end of this year. This would be a major boost to Laos' efforts to attract foreign direct investment and spur economic growth.
Laos has also launched a one-stop registration service for local and foreign investors, making it easier to obtain an investment permit.
To address the short supply of skilled workers, the government has decided to increase funding for education development.
The World Bank's report says that despite the increase in non resource investment and export value, it will take time for Laos to address the large trade deficit in the non resource sector.
Non-fuel, non-resource imports grew faster than exports at 25.1 percent this year, fueled by capital imports in the non-resource sector including the purchase of two Airbus aircraft and consumer goods. Fuel and gas imports were growing quickly at 43 percent this year, driven by increased demand. The import of consumer goods was estimated to have grown by 28 percent in 2011, the report indicated.
The increase in non resource investment and export value is a positive sign for Laos as the government is trying its best to diversify its economic base, which is now built mainly on the resource sector (mainly mining and hydropower), and these resources will one day be exhausted.
Resource exports were on track to grow by 27.4 percent reaching US$1.8 billion in 2011. This was higher than expected, primarily driven by electricity, due to oputput from the Nam Theun 2 dam and the start of construction of the Nam Ngum 2 dam, along with mining exports associated with a rise in the value of copper and gold.
The construction of the Hongsa lignite power plant and four other smaller hydropower projects, as well as gold and silver production expansion by Phu Bia, were seen driving up capital goods imports by about 38 percent in 2011, largely financed from FDIs in the sector.
vientiane times
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