Investment surges in non-resource sector
Investment surges in non-resource sector
Investment in non-resource sectors of the Lao economy has begun to rise, spurring new hopes that the country can sustain its economic growth over the longer term, according to a report from Ministry of Planning and Investment.
The report on the implementation of the National Socio-Economic Development Plan for 2013/2014 shows that local and foreign investors gained approval to invest US$2.6 billion in sectors other than resource concessions, making general business the top investment sector in Laos.
Investment in the concession sector including electricity generation and mining was seen to represent only about 14 percent of the total investment value over the period, reflecting a rapid increase of interest among businesspeople in non-resource sectors such as hotels, restaurants, banks and real estate projects.
Over the past decades, most local and foreign businesses sought to invest in the resource sector such as mining and hydropower while investment in the non-resource sector such as hotels, restaurants, construction, banking, trade and the garment industry remained low.
From 2001 to 2009, foreign investment in electricity generation accounted for 34 percent of total investment while mining accounted for 26 percent. Investment in the service sector accounted for only 12 percent and investment in hotels and restaurants accounted for only 2 percent.
Director General of the Lao National Economic Research Institute Dr Leeber Leebouapao was not surprised to see the rapid surge of investment in general businesses thanks to improved government policies aiming to boost investment in the non-resource sector and the improved business climate in the country.
“Enterprises find it easier to open businesses thanks to the new government policy on business reintegration,” he said. “Businesspeople who want invest in general businesses can request business operation licences from the Ministry of Industry and Commerce.”
By comparison, people who want to invest in concession projects such as land concessions, mining and electricity concession projects need to seek investment permission from the government via the Ministry of Planning and Investment according to the revised Investment Promotion Law.
Dr Leeber was among the senior economists in Laos to note that the rapid surge of investment in the non-resource sector is putting the country on the right track to sustain economic growth, as investment in the resource sector such as mining is not sustainable over the longer term.
Current mining projects are expected be exhausted by 2030. The mining industry has played a significant role to drive economic growth in Laos over the past years but the nation's mineral resources will eventually be e xhausted.
Dr Leeber said the government should continue to improve the business climate so it can attract more investment in the non-resource sector allowing the country to sustain economic growth once the natural resources are depleted.
Other economists said Laos would be able to attract more foreign investment after the establishment of the Asean Economic Community (AEC)in 2015.
With the inception of the AEC, the region will become a single market and one production base, allowing the free flow of goods, capital and labour resources.
vientiane times
