AEC driving Lao economic growth but at slower pace
AEC driving Lao economic growth but at slower pace
The Asean Economic Community (AEC) is driving growth of the business sector in Laos which is helping to generate job opportunities for local people.
However, the pace of business and economic growth has not been as high as that reported in previous years, according to a leading economist.
A senior economist at the National Economic Research Institute, Dr Leeber Leebouapao, told Vientiane Times this week that investors were not actively coming to Laos to run businesses as they did in previous years.
�Many of them mainly come to run businesses in urban areas where facilities are available. Many entrepreneurs are reluctant to operate businesses in remote areas due to a lack of infrastructure and essential facilities,� Dr Leeber said.
In Vientiane, the service sector is growing quite fast, with the establishment of new hotels, restaurants, convenience stores, shopping centres, banking and other businesses.
Many people have moved to the capital from the provinces, sparking demand for goods and services and other facilities.
But Dr Leeber said prices in Laos remain high despite rising competition.
�Many people thought product prices would drop after the establishment of the AEC, but they were wrong because while the government stopped collecting tariffs it has been collecting more taxes instead,� he said.
Economists say the government needs to build more facilities and infrastructure, particularly roads, to connect with remote regions to drive economic activity in rural areas.
Meanwhile, the International Monetary Fund (IMF) has recommended that Laos undertake more reforms aimed at diversifying the economy, boosting private sector activity, and improving the business climate.
�Trade integration and improvements in education and health infrastructure were encouraged. Enhancing financial deepening and financial access by small and medium-d enterprises would also support macro stability and growth,� IMF Executive Directors said.
The AEC is designed to facilitate the free flow of goods, services, investment capital and skilled labour within the Asean region to create a single market of 600 million people.
Without tariff barriers, the 10 Asean nations are becoming a single production base and attracting trade, investment and tourists from the rest of the world. Businesses operating in one Asean nation can export to the rest of the group.
Laos has experienced rapid growth based on capital intensive investments in the energy sector. As one of the least developed countries in Asia, Laos has a population of 6.5 million people and economic growth of 6.9 percent last year, with a total GDP value of 108.709 trillion kip (US$13.27 billion).
Experts say the AEC will encourage Lao people to produce more goods on a commercial basis rather than just for their families. Commercial production will help to improve their living standards and enable Laos to rise above Least Developed Country status by 2020.
