Laos needs US$3.7 billion to maintain growth
Laos needs US$3.7 billion to maintain growth
Laos needs to inject some 30 trillion kip (US$3.7 billion) into the economy this year in an effort to keep the economy growing at a rate of at least 8 percent, according to a senior official.
Office Head at the Ministry of Planning and Investment, Dr Kikeo Chanthaboury told Vientiane Times yesterday that “We need this amount of money to inject into our economy this fiscal year as one of the measures to secure GDP growth at 8.3 percent as planned.”
He said that it was possible for the government to achieve the investment target this year as the ministry's estimation is based on the real investment climate in the country, saying that private investment would be one of the major driving forces.
“We have a number of mega investment projects under construction such as Hongsa lignite power plant project and Xayaboury hydropower plant project. Each of those projects are worth billions of dollars,” he said.
According to a prime ministerial decree on the implementation of the national socio-economic development plan for the 2013/2014 fiscal year, Laos needs to mobilise investment funds of 30,100 billion kip this fiscal year in order to secure GDP growth of 8.3 percent.
To inject US$3.7 billion into the economy this fiscal year, the government will require additional funding from both foreign investors and development partners.
The government itself will contribute 3,300 billion kip (US$412.5 million), accounting for 10.96 percent of the total investment funds. Meanwhile it is expected that development partners expect to contribute US$600 million, accounting for 15.95 percent of the investment funds.
According to planning estimates, local and foreign investment is expected to contribute US$2.1 billion, accounting for 54.41 percent of the funding required while bank credit is expected to contribute 5,623 billion kip (US$702 million), accounting for 18.68 percent of the investment funds.
Officials said that the world and regional economic outlook will play a significant role in determining whether Laos can achieve its investment target, noting that the country still relies heavily on foreign aid and foreign investment to secure GDP growth.
“If the world economy does not recover, it will be difficult for us to attract new investment as investors will not invest. We hope that the world economy will be better than last year so as we can get more foreign investment,” said one of the planning officials.
Economists said that one of the measures which the Lao government should take to secure its investment target was to improve the business and investment climate, which would attract more local and foreign investment.
They said it will be impossible for the government to secure high GDP growth without the participation of the private sector, noting that the government can only provide 10 percent of the total investment funds and that the rest will have to come from private investment and aid from development partners.
The government has been aware of the situation, the economists said, however they stressed that it needs to take serious action to improve the business and investment climate.
Despite the introduction of the one stop service last year, businesspeople are still complaining about delays when it comes to granting investment permits.
They also complained about a number of other processes which they have to go through before receiving the green light from authorities to commence their business operations.
vientiane times
