Laos Update: May 3, 2018

Laos Update | May 3, 2018
Authors: Matt Solomon, Ella Duangkaew, Kevin Rutigliano
 
LOOKING AHEAD
 
 

June 29, 2018: Second Lao Digital Forum: The Bank of Lao PDR is partnering with the U.S. Embassy in Vientiane to hold the second Lao Digital Forum on June 29, following the first Forum held on January 26. The purpose of this forum will be to raise awareness of financial technologies among key policymakers in Laos, and discuss the optimal policy environment needed to help Laos increase prosperity and financial inclusion, promote microenterprises and SMEs, deepen its economic integration into the ASEAN Economic Community, and create a level playing field that allows open competition and innovation in fintech. Representatives from the Ministry of Posts and Telecommunications, the Ministry of Industry and Commerce, and the Ministry of Finance, as well as leading representatives of the Lao business community are expected to attend the forum. The Embassy is seeking participation and sponsorship from the U.S. private sector. Sponsorship of the forum would include participation in either Davos-style panel discussions or breakout sessions with policymakers, and an opportunity to engage with Laos’ top leadership on issues related to fintech. If you are interested in sponsoring and/or participating in the forum, please contact Ella Duangkaew at eduangkaew@usasean.org.

August 23-24, 2018: Laos Business Mission: Please save the date for the Council's annual Business Mission to Laos, taking place in Vientiane. Please contact Ella Duangkaew at eduangkaew@usasean.org with any questions.

 
THE COUNCIL'S TAKE
 
 
ADB Projects 7% Growth for 2019

On April 11, the Asian Development Bank issued a report that stated that the Laos economy will continue to have strong growth in 2018 and 2019. The report estimates that the Laos economy will grow by 6.8% in 2018 and by 7% in 2019, primarily supported by large infrastructure projects and an expansion of the service sector. In addition, new hydropower facilities are expected to be operational in 2019, which will allow Laos to export more electricity.

These projections suggest that Laos will continue the strong growth rate seen in 2016 and 2017, which were at 7% and 6.8%, respectively. ADB Country Director to Laos Yasushi Negishi stated that Laos maintained consistent growth despite the Government’s ban on logging exports, tighter credit conditions, low international mineral prices, and lower tourist arrivals, because of an expansion in the service industry. Negishi explained that the Government of Laos needs to further enhance its efforts to develop its workforce with the skill sets to respond to changes labor market demands, in order to enable more inclusive economic growth within the country.

Special Economic Zones Continue to Drive Growth in Laos

Investment in Lao Special Economic Zones (SEZs) has continued to grow, due to the proliferation of the zones and increases in tax incentives. Currently, there are 12 special economic zones in Laos, with 71 new investments in 2017 alone. This was an increase of 30 companies compared to 2016.  Registered capital of total investments in 2017 totaled approximately USD$92 million. Over the past several years, the Government of Laos has prioritized the development of SEZs, aiming to attract investment from the private sector in Laos and overseas to generate more domestic jobs and boost socioeconomic development. Since 2002 investments have totaled USD$2 billion.

To set up a business in a SEZ, companies need to apply for a license with the Secretariat to National Committee for Special Economic Zones (NCSEZ), where applications are reviewed on a case-by-case basis with the approval of the Government. Benefits of investing or setting up businesses in the zones include tax exemptions for importing equipment and raw materials for infrastructure construction, and reductions in income tax and value added tax.

 
IN THIS UPDATE
 
 
Regional Affairs
Lao PM to attend Singapore summit
Lao, Thai governments open centre to help Lao workers in Thailand
Labour Minister Receives New Australian Ambassador
PM Meets With Vietnamese Counterpart In Siem Reap

National Affairs
E-visa set to go online year-end, early 2019
PM outlines agenda to drive growth

Defense & Security
Vietnam Hands Over Simulation Training Centre To Laos

Economics
Businesses urged to comply with May 1 minimum wage increase
Special/Specific Economic Zones: Laos' Top Incubator of Economic Growth
ADB: GDP Growth to Reach 6.8% in 2018 and Increase to 7.0% in 2019

Financial Services
SMEs to access finance via Laos-China cooperation scheme

Food & Agriculture
World Bank to upgrade Lao agriculture
Foreign Companies Invest In Chemical-free Rice Farming In Vientiane
Chinese firms to develop clean agriculture in Laos
IFAD boosting smart agriculture in Laos

Health & Life Sciences
ADB approves US$30 million grant to expand healthcare coverage in Laos
Laos-China strengthen cooperation on medicinal plants

Infrastructure
Deputy PM advises Vangvieng officials on tourism development
High petrol prices fuel public transport changes
Major upgrade slated for Sangthong-Paklai road
ADB to assist infrastructure development in Vangvieng
Chinese Company Invests US$ 1 Billion In Building Vientiane-Vangvieng Highway
PM assesses development in Savannakhet province
 
ARTICLE CLIPS
 
 
Regional Affairs

Lao PM to attend Singapore summit Vientiane Times 24th Apr 2018
Lao Prime Minister Thongloun Sisoulith, his spouse and a high-level delegation are scheduled to attend the 32nd Asean Summit to be held in Singapore on April 27-28. The PM’s presence at the summit is at the invitation of Singaporean PM Lee Hsien Loong, the Lao Ministry of Foreign Affairs has announced. This will be the first Asean Summit in 2018 as Singapore takes over the rotating chairmanship of the regional bloc.

Lao, Thai governments open centre to help Lao workers in Thailand Vientiane Times 23rd Apr 2018
The Lao and Thai governments have opened a centre in Thailand to help Lao workers there holding purple cards (work permits) to ensure they are fully legal and are registered with the authorities. The newly opened ‘Post-Arrival and Reintegration Centre for Migrant Workers’ in Thailand’s Mukdahan province will be used for selecting, checking and training foreign workers before they will be allowed to seek jobs in Thailand thus preventing them from falling victim to human trafficking, officials said.

Labour Minister Receives New Australian Ambassador KPL: Lao News Agency 23rd Apr 2018
(KPL) Minister of Labour and Social Welfare Khampheng Xaysompheng received on Apr 19 ​a courtesy call from new Australian ambassador to Laos Jean-Bernard Carrasco. Minister Khampheng Xaysompheng appreciated Jean-Bernard Carrasco upon his appointment to the post as a significant contribution to enhancing the cooperation and relations between Laos and Australia especially on labour and social welfare.

PM Meets With Vietnamese Counterpart In Siem Reap KPL: Lao News Agency 11th Apr 2018
(KPL) Prime Minister Thongloun Sisoulith held a bilateral meeting with Vietnamese Prime Minister Nguyen Xuan Phuc on the sidelines of the 3rd Mekong River Commission Summit in Siem Reap, Cambodia, on Wednesday. At the meeting, both sides highgly valued the results of the succesfuly held 40th meeting of the Laos-Vietnam Inter-Governmental Committee in February as they signed at the meeting 12 key agreements. These included agreement on joint investment to develop quaysides 1, 2, 3 at Vung Ang Port and an MoU on the development of a hydropower project in Luang Prabang by Vietnam’s PVP and Laos’ PT Sole Co., Ltd.

National Affairs

E-visa set to go online year-end, early 2019 Vientiane Time 27th Apr 2018
Electronic visa (E-visa) services are set to be offered at the end of this year or early next year in a move to attract more foreign tourists to take vacations in Laos. Authorities in charge are accelerating procedures and related works preparing for the launch of the online E-visa service, a senior official of the Consular Department, Ministry of Foreign Affairs told Vientiane Times yesterday.

PM outlines agenda to drive growth Vientiane Times 25th Apr 2018
Prime Minister Thongloun Sisoulith has told relevant bodies to carry out studies to establish appropriate bank loan interest rates favourable for boosting business operations and investment. The premier made the suggestion at the two-day government monthly meeting for April that ended on Tuesday in Vientiane. The relevant departments were told to create conditions to enable businesses to access financial sources more easily.

Defense & Security

Vietnam Hands Over Simulation Training Centre To Laos KPL: Lao News Agency 24th Apr 2018
(VNA/KPL) The Vietnamese Defence Ministry on Apr 20 handed over a simulation training centre to the Ministry of National Defence as a gift of the Vietnamese ministry’s Technical Application and Production Ltd. (TECAPRO). The centre include emulating systems for training on handgun, AK, B41 and 12.7mm guns, aiming to develop reaction and skills of trainees before they go on live ammunition practice on training ground, thus enhancing efficiency and safety of training in drill-ground.

Economics

Businesses urged to comply with May 1 minimum wage increase Vientiane Times 1st May 2018
All businesses and factories in Laos are required to increase the minimum wage from the present 900,000 kip to 1.1 million kip a month as of May 1 in a bid to improve workers’ standard of living. This was the message at a press conference on Monday to announce the minimum wage increase, which was attended by representatives of the Lao Federation of Trade Unions (LFTU), Ministry of Labour and Social Welfare, and the Lao National Chamber of Commerce and Industry.

Special/Specific Economic Zones: Laos' Top Incubator of Economic Growth The Laotian Times 29th Apr 2018
Throughout Laos’ economic expansion history, a number of initiatives have been launched to improve the investment climate in the country. One of those successful initiatives is the Special/Specific Economic Zone or SEZ. Since the first was set up in 2002, there are now 12 active special and specific economic zones nationwide. About 377 companies from Laos and overseas have thus far invested in the zones which cover an area of 19,612 hectares with a total registered capital of US$8 billion, of which US$1.8 billion has already been spent, according to a government report.

ADB: GDP Growth to Reach 6.8% in 2018 and Increase to 7.0% in 2019 The Laotian Times 19th Apr 2018
Laos’ economic growth is likely to be sustained this year and accelerate in 2019, while inflation will edge up, says a new Asian Development Bank (ADB) report dated Apr 11th, 2018. In ADB’s flagship annual economic publication, Asian Development Outlook (AOD) 2018, the bank forecasts GDP growth for Laos to reach 6.8% in 2018 and increase to 7.0% in 2019. “Despite the government’s ban on logging exports, tighter credit conditions, subdued international mineral prices, and lower tourist arrivals, the Lao PDR maintains its growth momentum supported by mega infrastructure development projects, increased electricity generation and expanding in service sector,” said Yasushi Negishi, Country Director Lao PDR Resident Mission.

Financial Services

SMEs to access finance via Laos-China cooperation scheme Vientiane Times 10th Apr 2018
Small and medium enterprises (SME) are set to enjoy easier access to finance thanks to a new financial cooperation scheme between Laos and China. Under the scheme, Lao SMEs can access low-interest loans from a total pot of more than 2,487 billion kip (US$300 million), Chinese ambassador to Laos Wang Wentian told Lao and Chinese reporters in a recent interview at his embassy.

Food & Agriculture

World Bank to upgrade Lao agriculture Vientiane Times 30th Apr 2018
The World Bank has approved an assistance project to help Laos upgrade its agricultural productivity and produce crops for commercial purposes. The bank’s Board of Executive Directors approved the Lao PDR Agriculture Competitiveness Project last week as part of efforts to help the country increase agricultural productivity. The US$25 million project will support 28,000 farming households in 224 rural villages to improve their yields and product quality, and to increase labour productivity and crop sales, according to a statement from the bank.

Foreign Companies Invest In Chemical-free Rice Farming In Vientiane KPL: Lao News Agency 24th Apr 2018
(KPL) Three foreign companies have joined hands to invest in a chemical-free rice farming project in Sangthong district, Vientiane. An agreement on the joint venture project was signed last Friday between representatives of the three companies including Cui Can E-commerce of China and QLV Agrotech Co., Ltd., and Amethyst Tong Cai Investment Fund Management Co., Ltd, China.

Chinese firms to develop clean agriculture in Laos Xinhua 19th Apr 2018
The Lao Ministry of Agriculture and Forestry, in cooperation with China's Hunan Jinye Zhongwang Technology Co., Ltd and Xuanye (Lao) Co., Ltd, will establish a model organic and bio-fertilizer processing factory for clean agriculture (CA) development in Laos, local daily Vientiane Times reported on Friday. A Memorandum of Understanding (MOU) was signed here on Wednesday by Director-General of the Agriculture Department of Lao Ministry of Agriculture and Forestry Vilaysouk Khennavong, Hunan Jinye Zhongwang Vice President Huang Jian and Xuanye (Lao) President Xu Guowu. The ceremony was attended by Lao Deputy Minister of Agriculture and Forestry Bounkhouang Khambounheuang and Economic and Commercial Counsellor of Chinese Embassy to Laos Wang Qihui along with the government officials from relevant sectors and representatives of the companies.

IFAD boosting smart agriculture in Laos Vientiane Times 10th Apr 2018
The International Fund for Agricultural Development (IFAD) will continue to work with the government and partners through the provision of finance for innovative, adapted approaches and technologies relating to climate-smart agriculture. This was the message at an annual country portfolio review meeting of IFAD-funded programmes in Laos which took place recently in Vangvieng district, Vientiane province.

Health & Life Sciences

ADB approves US$30 million grant to expand healthcare coverage in Laos Vientiane Times 24th Apr 2018
The Asian Development Bank (ADB)’s Board of Directors has approved a US$30 million policy-based grant to help the Lao government expand healthcare coverage and improve health services in the country, the bank said on its website on Monday. The grant, which funds the second sub-programme of the Health Sector Governance Programme, is in line with the government’s Health Sector Reform Strategy, which aims to achieve universal health coverage by 2025.

Laos-China strengthen cooperation on medicinal plants Vientiane Times 22nd Apr 2018
Laos and China have agreed to further cooperation in the health sector to strengthen coordination and mutual support in implementing a traditional medicinal plants project. A cooperation agreement was signed recently in Vientiane by Deputy Director of Institute of Traditional Medicine under the Ministry of Health, Dr Kosonh Sosoulithanh and Executive Vice President of the China Academy of Chinese Medical Sciences, Mr Huang Luqi. At the signing ceremony, Minister of Health, Assoc Prof. Dr Bounkong Syhavong said the bilateral cooperation will help Laos to uphold its traditional medicine and enhance medical services for local patients.

Infrastructure

Deputy PM advises Vangvieng officials on tourism development Vientiane Times 1st May 2018
Vientiane provincial authorities should ensure that visitor attractions are safe and clean, as well as addressing any environmental issues, especially pollution, Deputy Prime Minister Dr Sonexay Siphandone advised local officials during a recent visit to Vangvieng district. Dr Sonexay focused on tourism issues in the province and encouraged authorities to cooperate with industry and commercial departments to avoid industrial or business expansion at the expense of tourism, making Vangvieng a district that was dedicated to tourism

High petrol prices fuel public transport changes Vientiane Times 30th Apr 2018
Vientiane State Bus Enterprise will raise the price of bus tickets across Vientiane due to constant price hikes in petrol, an official said on Friday. The Director of the Vientiane State Bus Enterprise, Mr Khamphoune Temerath told Vientiane Times on Friday that the some bus tickets that service Vientiane will be raised, with the new price implemented on May 01. The changes to the ticket pricing structure have come about due to the steady increases of price for petrol and diesel, with examples being April where the price of petrol jumped on at least two occasions.

Major upgrade slated for Sangthong-Paklai road Vientiane Times 23rd Apr 2018
Construction of the 104.89 km road upgrade linking Vientiane’s rural Sangthong district to Paklai district in Xayaboury province is expected to start in October. The road runs along the Mekong River from Namsang Bridge in Namsang village, Sangthong district, Vientiane, and then to Khokkhaodor Mountain in Xanakham district, Vientiane province and Paklai Bridge in Paklai district, in Xayaboury province, Project Director Mr Artnada Boulom told Vientiane Times yesterday.

ADB to assist infrastructure development in Vangvieng Vientiane Times 22nd Apr 2018
Asian Development Bank has agreed to assist infrastructure development in Vientiane province’s Vangvieng district, a top tourist destination in Laos.  Deputy Head of Vangvieng district office for Information, Culture and Tourism, Mr Phouvieng Sykaysone told Vientiane Times on Friday that improvements to infrastructure and facilities are aimed at attracting more tourists to the district. “The ADB has agreed to provide US$20 million to finance a number of infrastructure projects in the district, particularly road access to tourism sites,” Mr Phouvieng said.  

Chinese Company Invests US$ 1 Billion In Building Vientiane-Vangvieng Highway KPL: Lao News Agency 11th Apr 2018
(KPL) Apr 4 witnessed the signing of a concessional agreement on the construction of the Vientiane-Boten Highway. Worth US$ 7.5 billion, the highway will be the first of its kind in the Lao PDR. Signatories to the document were President of Yunnan Construction and Investment Holding Group Xen Wenxan and Minister of Planning and Investment Souphanh Keomixay. The signing ceremony was witnessed by Vientiane Mayor Sinlavong Khoutphaythoune, Minister of Public Works and Transport Bounchanh Sinthavong, trade attaché of the Chinese embassy in Vientiane Wang Si Hui, and invited guests and relevant officials.

PM assesses development in Savannakhet province Vientiane Times 11th Apr 2018
Prime Minister Thongloun Sisoulith has stressed for Savannakhet province authorities to enhance their management of government development projects and to create favourable conditions for private investment. Mr Thongloun made the remarks when meeting with leaders and core officials on his visit to the province on Monday, with the province Governor Mr Santiphab Phomvihane in attendance. He advised the authorities to be more prudent in managing government investment, saying that only very necessary projects, which bring real long-term benefit to the people, be selected.