Laos Urged to Use Its Natural Advantages

Vientiane: Laos is facing significant economic challenges but has the potential to develop sustainably and more equitably, according to a new World Bank report.
 
The latest Laos Country Economic Memorandum, Linking Laos, Unlocking Policies, analyzes economic performance over the last 20 years and draws lessons from inside and outside Laos to recommend how the country might best use its natural advantages. 
 
The report was launched today with a panel discussion featuring representatives from government, the private sector and academia.

The report finds that following rapid growth in the early 2000s, Laos has become limited by an economic model dependent on capital-intensive resource industries such as mining and hydropower. 
 
While these sectors have generated economic growth, the benefits have not been widely shared — for example through job creation. 
 
While poverty has decreased, it has done so more slowly than in other fast-growing economies, and growth has come at an environmental cost.
 
"The government has already started moving towards a new model by encouraging investment in export-oriented special economic zones, and by improving environmental protection," said Sebastian Eckardt, World Bank Manager for Macro Economics and Fiscal Management in East Asia and Pacific Region, in a press release on Tuesday.
 
"However, lack of progress on reform implementation is limiting the country’s potential. While substantial investments are being made in railway and road infrastructure, reforms to improve transport, logistics, and the overall business environment are needed to ensure these investments help the country benefit from new trade opportunities and diversify from natural resources," Eckart added.
 
Laos has considerable "natural capital", such as forests, biodiversity, minerals, and water. 
 
It also has one of the youngest populations in the region, with potential for a substantial demographic dividend in coming decades. 
 
Its geographic location, neighboring some of the world’s fastest growing economies, is another significant asset, providing demand for Lao exports, cheap sources of imports, and opportunities for investment and connection with global supply chains, right at the country’s doorstep. 
 
These can all help Laos to grow and diversify its economy.
 
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