Hydropower, mining, infrastructure to drive Laos economic recovery: PM

VIENTIANE (Vientiane Times/ANN): Mega hydropower and mining projects are set to be implemented to drive the economic recovery in 2021 after the severe impacts from Covid-19, Prime Minister Thongloun Sisoulith told the National Assembly (NA) on Tuesday (Oct 27).

Large investment projects to be implemented along the nearly-finished Laos-China railway and Vientiane-Vangvieng expressway are additional important drivers as well as the development of industrial parks and dry ports.

The railway, linking the Lao capital of Vientiane with the Chinese border, is on track for completion by the end of 2021. The Vientiane-Vangvieng expressway is expected to open for public use in December this year.

Addressing the ongoing 10th ordinary session of the NA’s 8th legislature, the PM said the abovementioned projects are opportunities for economic recovery next year.

“All (the aforesaid) will be a turning point for economic recovery in line with the defined direction, ” PM Thongloun said.

Severe impacts caused by the Covid-19 pandemic have exacerbated the already fragile Lao economy, which has suffered an accumulated debt burden after years of budget deficits.

Elaborating the 2021 socio-economic development plan, the PM said the government will push for implementation of the aforesaid mega projects to ensure they proceed according to plan. They also included coal-fired power projects, solar power and wind power projects whose markets are available.

The government will encourage production and service businesses along the Laos-China railway and Vientiane-Vangvieng expressway as part of industrial promotion, particularly the processing industry.

PM Thongloun pledged to do all what the cabinet can to mitigate Covid-19 impacts on the economy, while imposing necessary measures to prevent the virus.

Action will be taken to better facilitate goods transport including cross-border shipments.

The government is committed to working harder to improve the business environment to attract more domestic and foreign investment, while ensuring financial and currency policy is conducive for socio-economic development.

Deposits in commercial banks are expected to reach 61 per cent of gross domestic product (GDP) and banking credits forecasted to reach 50 per cent of the GDP. Action is pledged to control non-performing loans to not exceed three percent.

PM Thongloun pledged to work toward enabling more people and businesses, especially small and medium enterprises to more easily access financial services.

The cabinet will strive to ensure that money circulation growth (M2) will not exceed 20 per cent year-on-year, fluctuation (weak and strong) of Lao kip exchange against US dollar not exceed 5 per cent year-on-year. The whole-year averaged inflation rate would be controlled at 5-7 per cent, while foreign reserves are to cover import expenses for at least three months.

The premier pledged more policies to encourage Lao people to take vacations around the country (Lao visit Laos) in addition to policies already imposed to offset the absence of foreign tourists. Promotions will also encourage private investment in developing tourism sites, services and related infrastructure.

The government pledged to continue reforming state enterprises to make them operate effectively through various forms as well as selling some stakes or whole businesses.

The following are also among measures of the 2021 socio-economic development plan, which is being debated before approval by the NA’s session.

> Promote agricultural production to ensure food security and lessen imports,

> Maximise revenue collection,

> Modernise revenue collection system,

> Retrieve money from overvalued state investment projects,

> Continue inspection on remaining state investment projects,

> Prioritise state investment projects in accordance with available budget, and encourage private investment into public infrastructure in the forms of build-operate-transfer (BOT) and public private partnership,

> Continue to repay public debt,

> Strengthen the government’s domestic bond market.