Lao, République Démocratique Populaire
The Economic Outlook for Southeast Asia, China and India is a bi-annual publication on regional economic growth, development and regional integration in Emerging Asia. It focuses on the economic conditions of the Association of Southeast Asian Nations (ASEAN) member countries: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam. It also addresses relevant economic issues in China and India to fully reflect economic developments in the region.
The update of the Outlook comprises three main parts, each highlighting a particular dimension of recent economic developments in the region. The first part presents the regional economic monitor, depicting the economic outlook and macroeconomic challenges in the region. The second and third parts consist of special thematic chapters addressing major issues facing the region. The second chapter of this update focuses on the Covid-19 outbreak, discussing in particular the socio-economic impacts of the pandemic. An analysis of the quality of education in the region is discussed in the third chapter.
The SME Policy Index is a benchmarking tool for emerging economies to monitor and evaluate progress in policies that support small and medium-sized enterprises. The ASEAN SME Policy Index 2018 is a joint effort between the Economic Research Institute for ASEAN and East-Asia (ERIA), the Organisation for Economic Co-operation and Development (OECD) and the ASEAN Coordinating Committee on Micro, Small and Medium Enterprises (ACCMSME). The report is the outcome of work conducted by the ten ASEAN Member States (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam).
Divided into eight policy dimensions, it builds on the previous edition of the ASEAN SME Policy Index 2014. The current edition presents an updated methodology which makes this document a powerful tool to assess the strengths and weaknesses that exist in policy design, implementation, and monitoring and evaluation for SMEs, and allows for a benchmarking of the level to which the ASEAN Strategic Action Plan for SME Development (SAP SMED) 2016-2025 has been implemented. Its objective is to enhance the capacity of policy makers to identify policy areas for future reform, as well as implement reforms in accordance with international good practices.
The report provides a regional perspective on recent developments in SME-related policies in Southeast Asia as well as in individual ASEAN Member States. Based on this analysis the report provides a menu of concrete policy options for the region and for the individual countries.
This first OECD Investment Policy Review of Lao PDR uses the OECD Policy Framework for Investment to assess the investment climate in Lao PDR and discusses the challenges and opportunities faced by the Government of Lao PDR in its reform efforts. It includes chapters on trends in foreign investment and trade, the legal framework for investment, regulatory restrictions on foreign investment, corporate governance, investment promotion and facilitation, promoting and enabling responsible business conduct, infrastructure connectivity and the investment framework for green growth.
This edition of the Southeast Asian Economic Outlook examines medium-term growth prospects, recent macroeconomic policy challenges, and structural challenges including human capital, infrastructure and SME development. It also looks at economic disparities “between” and “within” countries in the region. It provides coverage for Brunei, Cambodia, China, India, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Viet Nam.
While solid growth is forecast to continue until 2017, countries must address structural issues in order to sustain this favourable outlook. Narrowing development gaps presents one of the region’s most important challenges.
This chapter provides a development diagnostic of Lao People’s Democratic Republic (Lao PDR), focusing on the “prosperity”, “people” and “planet” pillars of the United Nations’ (UN’s) Sustainable Development Goals (SDGs). It examines the impressive economic advancements fuelled by investments, commodity exports and tourism, juxtaposed with the challenges of stagnant structural transformation and unequal distribution of opportunities. Emphasising the need for a vibrant private sector in fostering employment and productivity across diverse sectors, this chapter underscores the necessity of stimulating broader-based economic growth. Under the “people” pillar of the SDGs, it highlights the imperative of prioritising human capital development and stresses the need to bolster funding capacity. Addressing environmental concerns, this chapter underscores the urgency of preserving Lao PDR’s natural wealth amid escalating environmental pressures, particularly air pollution and carbon emissions. Finally, it explores the nation’s increasing vulnerability to climate change, highlighting the need to develop integrated approaches to sustainable development.
This chapter examines trends in investment and investment policies in Lao People’s Democratic Republic (Lao PDR) through a sustainability lens and provides recommendations on how to attract more sustainable investment to the country. Lao PDR experienced an impressive increase in foreign direct investment (FDI) inflows between 2006 and 2017, which has been one of the main drivers of economic growth. However, the country would benefit from FDI that generates more positive spillovers to the local economy and is more conscious of the environment and local communities. Attracting more sustainable investment – which advances environmental and social goals – first and foremost requires improving the overall enabling environment for investment in the country. It would also be important for Lao PDR to integrate environmental and social considerations into investment policies and strengthen the implementation of social and environmental safeguards for investment projects.
Lao People’s Democratic Republic (Lao PDR) faces significant macroeconomic vulnerabilities that have been intensified by global events such as the COVID‑19 pandemic and escalating food and energy prices. Consequently, the country grapples with pronounced fiscal and liquidity pressures and is currently in debt distress. Given these circumstances, Lao PDR’s previous debt-driven infrastructure growth model is no longer viable. To effectively pursue its ambitious sustainable development agenda, the country must address its debt issues and the fragmented governance of its financing framework. Tackling these challenges is fundamental to build the type of sound environment required to harness additional and innovative resources in support of Lao PDR’s development goals. This necessitates efforts to boost tax revenues, diversify investments and develop the domestic financial sector. Given Lao PDR’s current financial constraints, sustained international support is essential to safeguard investments in key development areas, such as healthcare and education. In parallel, designing preventive strategies is crucial to ensuring long-term financial stability and avoiding future debt issues.
Lao People’s Democratic Republic (Lao PDR) faces the significant challenge of raising its tax-to-gross domestic product (GDP) ratio, which remains too low despite substantial growth in per capita incomes. As a result, and without reform, Lao PDR will miss its 2025 tax revenue target. While tax policy cannot be examined in isolation from the country’s challenging macroeconomic setting, Lao PDR needs to change its approach to designing, administering and evaluating the tax system. This requires reconsidering many tax design features, such as overly generous investment tax incentives. There is also a lack of tax policy coherence across the enacted policies, and overall tax compliance remains low. In the future, the tax system should play a larger role in promoting formalisation. High-quality tax policy analysis will also be necessary in order to enact tax reforms and raise sufficient tax revenues while also promoting sustainable economic development.
[18] ASEAN (2023), ASEAN Stats Data Portal, https://data.aseanstats.org/indicator/ASE.TRP.ROD.A.002 (accessed on 20 March 2024).
Lao People’s Democratic Republic (Lao PDR) has the potential to unlock green and climate financing using environment statistics. Mechanisms such as green bonds, debt-for-nature swaps and carbon credits require robust monitoring and reporting mechanisms and strict transparency and verification processes, of which environment statistics are the cornerstone. This chapter analyses the state of play of Lao PDR’s environment statistics system for responding to the data demands of climate financing mechanisms. The key findings reveal that supportive legislation prioritises environment statistics, and establishing the Department of Environment and Stability Statistics (DoES) in the Lao Statistics Bureau (LSB) will help to create a robust institutional framework. Overall, environment statistics underpin Lao PDR’s 9th National Socio-Economic Development Plan (NSEDP) and its associated Financing Strategy. Despite progress, persistent information gaps, co‑ordination challenges between data producers and users, and poor data sharing hinder effective climate financing in Lao PDR. This chapter recommends prioritising data demands, implementing harmonised data templates for improved data sharing, and enhancing capacity development across the National Statistical System (NSS) beyond individual ministries.
Lao People’s Democratic Republic (Lao PDR) has made significant headway on its development path, combining high economic growth with poverty reduction. Sustained economic growth of more than 7% annually between 2000 and 2019 was led by booming commodity exports and substantial inflows of external financing, notably from large investment projects in hydropower, mining and transport. Many Laotians experienced significant improvements in their well-being. Poverty declined as household income increased, and many important development gains in education and health were achieved.
Economic growth is important, but it is just one aspect of development. Policy makers are required to reconcile economic, social and environmental objectives in order to ensure that their country’s development path is sustainable and that the lives of its citizens improve. At the same time, achieving these economic, social and environmental objectives requires strategies for reform that factor in any complementarities or trade-offs across policies that may be needed. It requires the mobilisation of financial resources from various sources and directing these resources towards activities that promote sustainability across different sectors.
Lao People’s Democratic Republic (Lao PDR) has made significant headway on its development path over the past three decades. The country’s sustained economic growth has been led by booming commodity exports and substantial inflows of external financing. Many Laotians have seen significant improvements in their well-being. Poverty has declined as household income has increased, and many important development goals in education and health have been achieved. In the face of macroeconomic challenges, a shift from commodity-driven growth to a more inclusive prosperity paradigm that emphasises the creation of broad-based opportunities, human capital development and green sustainability can unlock Lao PDR’s future development. This overview summarises the report and presents priorities for overcoming the country’s current fiscal constraints and finding ways to fund this shift. Recommendations address strengthening Lao PDR’s sustainable finance, revenue generation and tax reform, investment promotion, and data capacity in order to tap into green finance mechanisms.
Regulatory reform in Lao PDR in recent years has been accelerated by the country’s accession to the World Trade Organization in 2013 and by ongoing regulatory developments in the Association of Southeast Asian Nations (ASEAN) Economic Community. Lao PDR has already adopted a number of good regulatory practices, including mandatory regulatory impact assessments and stakeholder engagement in the development of new regulations. The government also recognises the importance of reviewing existing regulations on a regular basis, as stipulated in its regulatory impact assessment (RIA) guidelines. In order to align Lao’s regulatory processes with regional single market objectives and to facilitate greater Lao participation in global value chains, a significant amount of new regulations is expected to be developed in the coming years. This offers opportunities for Lao PDR to introduce regulatory policies and processes that complement or comply with regional and international standards.
Lao PDR has focused its SME policy on improving the legal and regulatory environment to support SME development. It has been developing targeted SME policies since the early 2000s and benefits from a relatively good institutional framework and a dedicated fund for SME development. It is increasingly interested in policies to enhance SME productivity and integration into GVCs, but these areas currently lack sufficient funding.