The Lao People’s Democratic Republic (Lao PDR) is primarily an agricultural economy, with this sector contributing 51 per cent of the GDP. Approximately 1.9 million individuals are involved in agricultural work. Recently the Lao PDR conducted a major agricultural census which provides an excellent overview of the basic nature of Laos’ agricultural system.
Given its subsistence nature, Laos’ agriculture has not played a major role in the country’s foreign trade.
The major export products from Laos’ agricultural sector are:
- Timber (this is currently frozen due to anti-logging initiative by the Government);
- Plywood; and
- Crops & vegetables
The major agricultural imports are:
- Condensed milk; and
- Long-grain rice.
To boost and attract investment to support the FDI growth in Laos, the Lao government is improving regulations to suit investor focus, especially for businesses that contribute for social sustainability development.
Recently, the Government of Lao PDR organised a joint meeting between Laos Chamber of Commerce and Australian Chamber of Commerce in Sydney during the ASEAN on 18th of March 2018 to enhance the business cooperation for both countries. The main focus was on the agricultural industry and provided useful information to Australians on how to invest in Laos as well as how keen the Lao government was in supporting the business and investor. The event was attended by the Laos Prime Minister, ThongLoun Sisoulith and the Australian Foreign and Trade Minister, Julie Bishop.
(Australia’s current foreign direct investment in Laos is USD 135 million, ranking it 15 out of the 53 foreign countries invested in Laos.)
The 414 kilometre railway will link Boten, the northern Lao town bordering southwest China’s Yunnan Province, and Vientiane – capital of Laos will also help to boost Laos’ economy on exporting agricultural products.
Laos is mineral resource rich. More than 500 mineral deposits have been identified including gold, copper, zinc and lead. During 2012, the mining and quarrying sector’s contribution to GDP was 7 per cent.
- Gold – 500 tons;
- Copper – 8 million tons; and
- Zinc – 2 million tons.
The mining sector accounts for 12 per cent of government revenues and 10 per cent of national income with 80 per cent of foreign direct investment.
Hydropower and Energy
Laos’ geography and water resources are behind a government strategy to become the “Battery of ASEAN”.
A number of investors have already come in – mostly either in joint ventures or jointly with the Laos government – to fulfil the demand of the economic growth.
ASEAN has signed a memorandum of understanding (MOU) with neighbouring countries which states Laos will supply electricity for them. The Thai and Malaysian governments agreed to purchase electricity from Laos in an ASEAN Energy Ministers meeting which was held in Manila, Philippines. The initial phase will supply 100 megawatts of energy to Malaysia via a transformation channel in Thailand from 1st August 2018.
On the energy side, the development of energy in Lao PDR has been rapidly increasing in parallel with the domestic demand. Additionally, the Lao government has supported and encouraged privates to invest in the energy sector. They promote sustainable renewable energy, improve laws and regulations and provide incentives to the investors who produce clean and green energy.
From our perspective at ANZ and looking at the bright future of the industries above, it seems the consumer and the markets are more ready in Laos than we first thought.
Vignarsone (Nick) Mounalard is Implementation Manager ANZ, Laos