Laos eyes private investment to bolster growth
Laos eyes private investment to bolster growth
The Lao government is aiming to boost private investment as part of efforts to sustain the country's strong economic growth, according to a senior official from the Ministry of Planning and Investment.
Deputy Minister of Planning and Investment Mr Somchit Inthamith said last week the government was having difficulty securing funding for state investment projects, which could result in a slowdown in economic growth.
To maintain strong economic growth, he said the government is continuing to improve the business and investment climate, making it easier for local and foreign businesses to invest and operate in Laos. More private investment would help to subsidise the reduction in investment by the government.
The government has put a stop to the practice of allowing private companies to put up the capital for state investment projects and being reimbursed by the government at a later date. This was done after it was learned that an increase in public debt could lead to an economic crisis.
The suspension of such projects is expected to have a negative impact on economic growth, which the government had hoped would be at least 8 percent annually.
A report from the World Bank earlier this month forecast that economic growth would slow to 7.2 percent this year after reaching at least 8 percent over the past two years. The natural resource sector is expected to provide a smaller direct contribution to growth in 2014.
Mr Somchit said the government would continue to improve its one-stop investment service, making it easier for businesses to seek and obtain investment permission.
Companies that want to invest in the ‘open' business category will no longer need to obtain permission but need only register their business with the sectors concerned under the Ministry of Industry and Commerce.
Mr Somchit also said the government had encouraged the relevant sectors, especially in the provinces, to draw up an ‘investment calling list'. This would enable potential investors to identify what kind of projects the government supported.
Although investors can see Laos' potential in the mining, hydropower, agriculture and tourism sectors, they face problems in setting up operations in Laos because of a lack of information on these projects.
Investors also have to spend a lot of money to conduct feasibility studies, which is a further deterrent to doing business in Laos.
Mr Somchit said that with support from development partners, the government was working to improve the education sector so that it could supply a skilled labour force to meet the needs of private investors. The government acknowledges that the shortage of skilled labour will discourage foreign investment.
Laos is expecting investment to increase when the Asean Economic Community comes into being at the end of 2015. The grouping is expected to turn the region into a single market and production base, which it is hoped will attract investors from Europe and the US.
vientiane times
