Vientiane, 31 May 2006 - The government and private sector in Lao PDR took an unprecedented step today in developing the Lao economy. In the first Lao Business Forum, government leaders discussed the important role of the private sector in economic development and business leaders presented progress on the issues they have been discussing with government.
The half-day meeting was organized by the International Finance Corporation’s Mekong Private Sector Development Facility (IFC-MPDF), in collaboration with the Committee for Planning and Investment (CPI) and the Lao National Chamber of Commerce and Industry (LNCCI). The Deputy Prime Minister and President of CPI, H.E. Dr. Thongloun Sisoulith, opened the meeting by listing five years’ of socio-economic achievements – average growth of 6.3% in GDP, 3.5% in agriculture, 11.3% in industry, and 5.5% in exports. “Over ten years, the percentage of people living in poverty has fallen from 46% of the population in 1992-93 to 33.5% in 2002-03. We expect that the poverty rate will fall further to between 23% and 15% by 2110.”
Dr. Sisoulith praised the private sector for contributing to socio-economic development and stressed the government’s commitment to improving the Lao economy by further improving the business enabling environment. “This will ensure that we have good foundations for a competitive market economy. This includes reducing regulatory and administrative barriers to business entry and, with private sector help, continuing to improve laws and regulations.”
To ensure that Lao PDR graduates from Least Developed Country status by 2020, His Excellency called for high levels of domestic and foreign investment to ensure that annual GDP continues to grow at 7% until 2020. “The Lao Business Forum is a valuable tool for identifying key constraints to private enterprise and resolving these in transparent and collaborative dialogue with government.”
Dr. Sisoulith concluded with thanks to IFC-MPDF for initiating the Forum, and providing on going financial support and technical assistance. As Secretariat to the Forum, IFC-MPDF has helped the government to establish and facilitate the dialogue mechanism, and conduct research for three private sector working groups on tourism, manufacturing, and trade & services.
Mr. Warrick Smith, Senior Regional Manager of IFC, who manages IFC’s East Asia technical assistance projects, including IFC-MPDF, congratulated the Lao government on reforms that will benefit not only businesses but also the country overall. “As officials well know, it is often difficult to balance the varying interests of different parts of the population, but I believe that while reforms may bring with them many challenges, the spirit of cooperation and open-mindedness demonstrated by the government signals a promising future for Lao PDR.”
Mr. Smith also told Forum participants of the success IFC has had in similar forums in Vietnam and Cambodia. “In both countries, public-private forums have led to significant improvements in the investment climate and also contributed to building trust between the government and the private sector.”
In his speech, Mr. Kissana Vongsay, President of the Lao National Chamber of Commerce and Industry, stressed the receptiveness and hard work of government staff in addressing private sector concerns. “Although we are still in the early stages of identifying issues and resolving them, an atmosphere of trust and transparency has already been created that is crucial for private sector/government cooperation.” Mr. Vongsay also praised the private sector for the many hours they have devoted to the LBF in last year.
Mr. Houmpheng Souralay, Director General of Department of Domestic and Foreign Investment stated that the approach IFC-MPDF has taken in helping to establish the Forum should make it an effective and constructive dialogue mechanism. “Its structure, the roles of its participants and its method of tracking results are all clearly defined. The Private Sector Working Groups, the Inter-ministerial Team, and the public forums held twice a year after today, all encourage relevant input from a wide range of stakeholders. Also, the concise and regularly-updated Progress Matrix for each working group makes it easy to track progress on all issues.”
Mr. Souralay explained the Forum process, beginning with recruitment of members for the three private sector working groups and a fourth on energy and mining that will be launched next month. “In the last year, the PWSGs and their subgroups have met many times. Most important were their meetings with the Inter-ministerial Team in January this year that identified priority issues for both the private sector and government. “Of the 18 issues and recommendations selected during the IMT-WG meetings in January, four have been resolved, nine are in various stages of progress towards resolution and five were put forward for consideration in today’s first Forum.”
Issues that were resolved in the months leading up to the Forum are as follows. First, on the proposed time-consuming requirement that accommodation providers collect a one dollar tourist tax, the government has agreed instead to collect this tax itself at border points. Second, the government has agreed to the private sector request to increase the length of tourist visas granted on arrival from 15 to 30 days. Third, on the need to get approval for each shipment that is subject to the 1% import duty, the government has agreed that importers now only need DDFI approval once a year. Fourth, on the issue of noisy speed boats that disturb tranquility on the Mekong near Luang Prabang, the government has agreed to enforce noise regulations.
During the Forum, the government also announced decisions on several pending issues. These were cancellation of the requirement that all imported goods must go through the Thanaleng Warehouse, which was both time consuming and expensive. The requirement for warehouse inspections and surcharges however, still applies to most goods imported over the Friendship Bridge or the Nateuy crossing in Luang Namtha Province. Regarding the too-low weight limits for trucks carrying goods on Lao roads, the government has agreed that trucks coming into the country can maintain their loads as originally packed when going through the customs’ warehouse and no transshipment will be required if the packing and documentation is up to international standards. The government is also considering raising the weight limit on trucks traveling on roads built for higher weights. Regarding private sector concerns about aviation policy, the government has purchased two additional planes to expand flights and seats within the country. To increase international flights into Lao PDR, the government has promised to consult with the private sector before making any decision about a joint venture with a foreign carrier.
In concluding his speech, Mr. Souralay stressed the need for greater private sector participation. “Let me assure you that the government can and will play a major role in improving the business environment and culture in Lao PDR, but we cannot do it alone. More of you should become involved in the Working Groups or their sub-groups. These are the driving force for the LBF and we need you to participate actively, voice your concerns and help us implement your recommendations.”
