Chinese and Vietnamese New Year to provide spending boost
Chinese and Vietnamese New Year to provide spending boost
Millions of US dollars are expected to circulate in Laos during Chinese and Vietnamese New Year, which this year runs from February 19-21, due to rising demand notably in the food and transport categories.
A senior economist from the National Economic Research Institute, Dr Leeber Leebouapao told Vientiane Times yesterday that the event will contribute to boosting spending and purchasing power in Laos particularly in areas where Chinese and Vietnamese communities live.
“I forecast that about US$60 million is to be circulated this month as a result of the New Year,” he said.
What he was concerned was that the rising demand during the New Year could lead to short supply in some regions which could result in traders raising their prices or importing more products from other countries to meet the demand.
Dr Leeber said one of the main challenges for Laos is low purchasing power as about 20 percent of the population still live under the poverty line.
This has hindered Laos in its efforts to attract investment in the production sector but many entrepreneurs investing here aim to export their products to other countries with the advent of Asean Economic Community.
“People here keep their money and spend a lot during festivals or New Year which is generally good for the country's economy,” he said. “The products to be sold well will be food items while businesses related to transport will also be in high demand as many Chinese and Vietnamese will go home to celebrate.”
The country's economic slowdown and the revenue shortfall is forcing the government to rein in expenditure while the halting of a 760,000 kip monthly living allowance for state employees have all affected purchasing power in the country.
Laos is not only a home for foreign visitors but a place where foreign workers are headed to. In Vientiane alone, about 7,500 workers both legal and illegal have been documented, mainly Chinese and Vietnamese. That's why not only Lao New Year is celebrated here but also the New Year of other countries.
Between 2001 and 2010, economic growth was reported at an average of 7.1 percent annually, rising to 8.2 percent annually between 2011 and 2013 but is expected to slow down to only 7.5 percent for 2014-15 triggered by the government's budgetary tensions, natural disasters and external impacts.
Laos is one of the least developed countries in Southeast Asia but the government has a policy to move the country towards a basic level of industrialisation and modernisation by 2020.
The government has formulated a number of policies and projects to facilitate private sector business and sustain economic growth.
The Ministry of Planning and Investment reported that the government needed 247 trillion kip (more than US$30.6 billion) over the five years from 2016-20 to boost economic growth to at least 8 percent annually in order to ensure that Laos can graduate from the UN's list of Least Developed Countries by 2020.
