SPONSORED SECTION | - 1 LAOS THE GREAT LEAP FORWARD

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WITH MUCH PRIDE, THE LAO PEOPLE’S DEMOCRATIC REPUBLIC (PDR) LAST YEAR CELEBRATED FORTY YEARS OF INDEPENDENCE. Over the course of four decades Lao PDR (Laos) has remodeled itself. From a country torn by civil war, it has changed into a stable and peaceful nation with big ambitions. Lao PDR today is counted among the world’s fastest growing economies and is set on a course of full regional and international integration.

For the past two decades, the Lao PDR’s gross domestic product (GDP) has grown at an average annual rate of more than 7 percent. This has transformed the country from a largely agrarian society into a mobile, upward-oriented economy. The country completed the transition in 2011 from low-income economy to lower- middle income economy, followed by admission to the World Trade Organization (WTO) in 2013. And in 2014, the services sector eventually overtook agriculture as the country’s largest contributor to GDP. Much Thongloun Sisoulith, Prime Minister of the Lao PDR progress has also been made in achieving the Lao PDR developing into an upper-middle income country’s Millennium Development Goals (MDGs), set country by 2030, with Gross National Income (GNI) per by the United Nations. The Lao PDR has come close capita projected at five times the size of what it is today. to meeting its targets, particularly in terms of poverty “Our medium-term national development vision reduction and improvement of health and education. or Vision 2030 is to develop a more sustainable and “The achievements over the past forty years equitable modern economy,” explains Khemmani represent a leap in progress for the Lao people,” Pholsena, Minister of Industry and Commerce. “In says Prime Minister Thongloun Sisoulith. Lao PDR’s order to make contributions to achieving both 2020 government is committed to moving the nation up to the and 2030 development visions, our trade and private level of developing country. Prime Minister Sisoulith sector development strategy aims to promote a explains, “The Lao PDR is focusing all its efforts on diversified economy.” poverty reduction, infrastructure development, and Although the economy is growing fast, it is largely building an economic foundation for industrialization based on the exploitation of the country’s natural and modernization, in order to graduate the country resources. Laos trades mostly in agriculture and from the ‘least developed country’ status.” forestry products, minerals - including gold, copper, The government’s 8th National Socio-Economic zinc and lead - and in electricity generated from Development Plan (NSEDP) sets targets for annual GDP hydropower. Mining and electric power exports growth of no less than 7.5 percent over the next five currently account for more than two thirds of total years. It also makes a commitment to more sustainable exports. Economic diversification is therefore high on growth and improved access to education, which are the government’s agenda. “We adopted a development crucial factors for the country’s future competitiveness. strategy to promote diversification, built on three At the current pace of development, Lao PDR is likely pillars: enhancing enterprise competitiveness, creating to outgrow its ‘least developed country’ status by 2020. a business-friendly environment, and deepening Moreover, the government’s fifteen-year vision foresees economic integration,” says Minister Pholsena. The country is also likely to become more attractiveThe country is also likely to become more The Lao PDR already works closely with the U.S. Establishment of the AEC is not without challengesEstablishment of the “The visit by President Obama Barack President by visit “The chapter new a open will PDR Lao the to two our between relationship the in countries.” Lao PDR Thongloun Sisoulith, Prime Minister of the program and is considering increasing its funding to U.S.the year, this efforts. Earlier de-mining with help announced it was launching a $6 million nutritional program addressed at school children. who was a signatory to the agreement, hopes that “thewho was a signatory to the agreement, hopes visit could provide important stimulus to boost bilateral trade and investment cooperation between our two countries.” in the framework of the regional Lower Mekong Initiative (LMI), which the U.S. has been funding for years. Prime Minister Sisoulith says, “These projects have contributed significantly to the socio-economic development of the Mekong countries including the Lao PDR.” Separately, the U.S. funds an education that are currently missing in Laos, while private while Laos, in missing currently are that agriculture,sector investments in sectors such as to lead tomanufacturing and services are expected more jobs. for the Lao PDR. Companies and sectors have to facefor the Lao PDR. Companies the community, especially ascompetition from within the most sensitive goods areimport tariffs on even But the benefits are expected tophased out by 2018. costs. “Laos will see lower-costseriously outweigh the remainingimports coming into its economy when most duringimport tariffs are eliminated in actual terms will help2015-18,” explains Minister Pholsena. “This importedimprove the efficiency of firms that use materials and benefit consumers of imports.” servicesfor foreign investment and for professional Meetings (SOM) Leader, adds: “We want to create aMeetings (SOM) Leader, iswhich market a base, market and production single alsobut world Asian the within only not integrated fully in the global economy.”

Trade between the U.S. and the Lao PDR is stilland the between the U.S. Trade The first ever visit of a sitting U.S. President toThe first ever visit of a sitting U.S. President Alounkeo Kittikhoun, Minister to the PrimeAlounkeo Kittikhoun, Minister to the The country’s dedication is reflected in Lao PDR’sThe country’s dedication

Framework Agreement earlier this year, opening the door to more trade and investment. Minister Pholsena, five-fold in the past ten years to $70 million, while agricultural trade grew eight-fold to $8 million. The two countries signed a historic Trade and Investment limited, but it is growing. The Office of the U.S. Trade Representative reports that trade in goods grew and bilateral exchanges at all levels,” says Prime Minister Sisoulith. “The visit by President Barack Obama to the Lao PDR will open a new chapter in the relationship between our two countries.” relations. “The leaders of our two countries will haverelations. “The leaders of our two countries the opportunity to exchange views comprehensively, covering a number of areas such as trade, investment the ASEAN Summit in Vientiane in September this year. the ASEAN Summit in Vientiane in September for Lao-U.S.the Lao PDR will be a historic event the United States earlier this year - the very first of itsthe United States earlier this year - the very between thekind - confirmed a strategic partnership to attendU.S. and ASEAN. President Obama is expected The U.S. is also seeking greater engagement with theThe U.S. is also seeking greater engagement inheld Summit Leaders U.S.-ASEAN special A region. among member states.” OfficialsMinister’s Office, and Laos’ ASEAN Senior into reality,” says Prime Minister Sisoulith. ”We willinto reality,” says Prime Minister Sisoulith. connectivity,continue the integration process, enhance gapand redouble efforts to narrow the development than 600 million people. “The Lao PDR will be thethan 600 million people. “The Lao PDR memberfirst country, in cooperation with the ASEAN Vision 2025states, to turn the ASEAN Community Community (AEC) is becoming a reality. The AEC willCommunity (AEC) is ASEAN’sgradually abolish all trade barriers between of moreten member states to create a free market current chairmanship of the Association of Southeastcurrent chairmanship The association has entered aAsian Nations (ASEAN). when the ASEAN Economichistoric moment in time, Sayakane Sisouvong, Ambassador to the UK, Ireland andSayakane Sisouvong, have a long-term vision of LaosIceland, describes: “We in this part of the world.”becoming [the] Switzerland The country’s location in the very heart of SoutheastThe country’s location as opportunity clear a presents region high-growth Asia’s built mutually beneficial relations with all neighboring countries to ensure a regional environment to ensure a regional countries with all neighboring beneficial relations built mutually “This . Prime Minister and trust,” says former stability, equality, of peace, development.” for socio-economic is the foundation Regional integration is a principal element of the Lao PDR’s development strategy. “The Lao PDR has strategy. Lao PDR’s development element of the integration is a principal Regional ASEAN – Turning Vision into Reality into Vision – Turning ASEAN The U.S. Dimension

SPONSORED SECTION | LAOS - 2 SPONSORED SECTION | LAOS - 3 For Vice Chair Khattiya, the economic zones economic the Khattiya, Chair Vice For The government is hoping to spread this this The government is hoping to spread of number a introduced has PDR Lao The “The SEZs have the objective to attract domestic domestic attract to objective have the “The SEZs SEZs, twelve of total a operates currently Laos growth and development. growth and having to go to several offices.” have contributed to raising Lao PDR’s profile as an investment destination. “SEZs in Laos have attracted many world-class companies such as Aeroworks, others, whichand Mascot Toyota, Nikon, Essilor, have been exporting their products ‘Made in Laos’ by received well are products Those globally. the global markets and have thus contributed to increased confidence of investors.” to significant improvements in infrastructure, both to significant improvements in infrastructure, has and areas, surrounding in and zones the inside created about 15,000 jobs. SEZs to success across the country, with more many be constructed over the next ten years, strategy in remote and rural areas. “The SEZ throughout envisions the establishment of 25 SEZs explains the country by 2020,” says Khatthiya and that “in addition to industry and manufacturing, trade, and the strategic plan focuses on tourism, are located services, and on logistics for SEZs that in border areas.” foreign and domestic in order to drive measures incentive investment in the SEZs. It offers attractive tax exemption for equipment packages, including construction and raw materials for infrastructural added tax and lower income tax and lower value zones. In compared to investments outside the investors addition, the administrative process for that has been greatly simplified. Khattiya explains “in each and every zone there is a One-Stop Service office (OSS) with the authority to take decisions regarding investment in the zone. Investors can get their business license directly from the OSS without and foreign investments; create a strong foundation a strong foundation investments; create and foreign to GDP growth, contribute for industrialization; increase and creation; and job transfer, technology Khatthiya, Bouatha says revenue,” government of the National Committee Standing Vice Chair Zones (NCSEZ). “Ultimately for Special Economic from Least goal of graduating our is to attain this (LDC) status by 2020.” Developed Country More hectares. 12,000 about of area total a covering domestic firms have invested in than 260 foreign and divided between the service the SEZs, with activities trade. Real invested capital sector, industry, and led has This billion. $1.2 than exceeds more already

Accordingly, the government is pushing for more “Lao PDR’s ability to attract inward investment Chinese companies manage a number of mininga manage companies Chinese Most foreign investments currently originateMost foreign investments An estimated $27 billion - equivalent to 30 percent ofAn estimated $27 billion The government invests in the establishment of to boost economic zones (SEZs) and specific special environment for doing business.” Laos’ Special Economic Zones a comparative advantage. Since most key export markets are opened for Lao products, our focus will be on developing supply capacity and improving the role in the region. Minister Pholsena explains, “We will make extra efforts to promote other manufacturing industries, especially agro-processing industries, tourism and other service sectors where Laos has energy and mining sector.” diversity and for investments to strengthen Lao PDR’s that “investment is almost entirely resource-seeking 80rather than efficiency-seeking and an estimated goes to thepercent of foreign direct investment (FDI) compares favorably with regional competitors andcompetitors regional with favorably compares saysthe LDC (least-developed countries) average,” factto the points also she however Minister Pholsena, railroad project linking southern to Bangkoksouthern linking railroad project through Laos. capital, including shopping complexes and hotels.and complexes shopping including capital, oflaunch and construction the financed also China last year andLao PDR’s first communications satellite a $6 billionit now cooperates with the Lao PDR on and agriculture projects and are responsible for someand agriculture projects and are responsible the country’sof the biggest real estate developments in Minister Sisoulith. “Our cooperation has increasedMinister Sisoulith. “Our cooperation has exchange,significantly in the areas of people-to-people trade, development assistance, and investment.” important investment partners. “Since 2009 the 2009 “Since partners. investment important China PR and PDR Lao the between relationship says Primehas grown into a strategic partnership,” contribution - about 55 percent – is to come fromcome to is – percent 55 about - contribution foreign investors. private domestic and and remainfrom China, although national GDP - is required to implement the plan. A mixnational GDP - is required loans, and private investments isof state investments, The biggestfunding. necessary expected to provide the industry by an average of 9.3 percent, and growth in and of 9.3 percent, average an industry by of 8.9 percent. services by an average 8thNational Socio-Economic Development Plan. This Socio-Economic Development 8thNational and forestry sector in the agriculture includes growth in annually, growth of 3.2 percent by an average The government counts on growth across sectors counts on growth The government of the five-year the ambitious targets to achieve Time for Investment for Time