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Data Collection Survey on Economic Development of the Southern Region in Lao People’S Democratic Republic

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Data Collection Survey on Economic Development of the Southern Region in Lao People’S Democratic Republic Lao People’s Democratic Republic (Lao PDR) Data Collection Survey on Economic Development of the Southern Region in Lao People’s Democratic Republic Final Report Summary October 2012 Japan International Cooperation Agency (JICA) International Development Center of Japan, Inc. Kaihatsu Management Consulting, Inc. IC Net Limited Oriental Consultants Co., Ltd. ＬＡＯ JR 12-005 Lao People’s Democratic Republic (Lao PDR) Data Collection Survey on Economic Development of the Southern Region in Lao People’s Democratic Republic Final Report Summary October 2012 Japan International Cooperation Agency (JICA) International Development Center of Japan, Inc. Kaihatsu Management Consulting, Inc. IC Net Limited Oriental Consultants Co., Ltd. ＬＡＯ JR 12-005 N Major road Capital Railways Major cities Hanoi Hai Phong Port National boundary Ports LuangPhabang ChangMai Laos Vientiane Thakhek Udon Thani Savannakhet Hue Yangong Danang KonKaen Mawlamyine Thailand Ubon Ractathani Khorat Pakse Poipet Puleiku Shem Reup Bangkok Stung Treng Laem Chabang Port Cambodia PhnomPenh Phnom Penh Port Ho Chi MinhCity Shihanoukville Port Cai Mep Port 0 100 200 300 400 500km Study Area Data Collection Survey on Economic Development of the Southern Region in Lao People’s Democratic Republic Final Report Summary Table of Contents 1. Introduction ............................................................................................................... 1 1.1 Background of the study ........................................................................................... 1 1.2 Study objectives ........................................................................................................ 1 1.3 Study area ................................................................................................................. 2 1.4 Study schedule .......................................................................................................... 2 1.5 Composition of this report ......................................................................................... 3 2. Issues and Development Potentials .......................................................................... 5 2.1 Analytical framework ................................................................................................. 5 2.2 Socio-economic situation ........................................................................................ 10 2.3 Issues on economic development ........................................................................... 18 2.4 Potential for economic development ....................................................................... 23 3. Economic Development Strategy ............................................................................ 29 3.1 Development vision ................................................................................................. 29 3.2 Guiding principles of development strategy ............................................................ 43 3.3 Development Strategy and its stepwise implementation ......................................... 47 4. Economic Development program ............................................................................ 53 4.1 Programing of development strategy ...................................................................... 53 4.2 Rural and Community Development Based on “One-day Economic Areas” (component 1) ............................................................ 54 4.3 Developing global linkage (component 2) ............................................................... 55 4.4 Enhancing Support functions of cities (component 3) ............................................. 56 4.5 Implementation schedule of program ...................................................................... 57 5. Conclusion and Recommendation .......................................................................... 59 5.1 Conclusion .............................................................................................................. 59 5.2 Recommendation .................................................................................................... 60 i List of Figures Figure 1-1 Southern region of Lao PDR .......................................................................2 Figure 1-2 Study schedule ............................................................................................3 Figure 2-1 Classification of natural and agricultural characteristics ..............................6 Figure 2-2 Classification of land and economic activities ............................................. 7 Figure 2-3 Logistics flow of the 3 economic regions .....................................................9 Figure 2-4 Chains of economic issues outside of the Bolaven Plateau ...................... 19 Figure 2-5 Chains of economic issues at Bolaven Plateau .........................................21 Figure 3-1 Conceptual image of development vision: Developing, enhancing and networking “One-Day Economic Area” ......................................................30 Figure 3-2 Production of cabbage and Chinese cabbage to Thailand ........................ 34 Figure 3-3 Trading system of cabbage and Chinese cabbage to Thailand ................ 35 Figure 3-4 An example of supply of labor within “One-Day Economic Area” .............. 36 Figure 3-5 Production of cassava for export to Vietnam .............................................37 Figure 3-6 Flows of contract farming (pig and chicken) .............................................. 39 Figure 3-7 Plantation under the direct management of foreign companies ................ 41 Figure 3-8 Production by land-owning farmers and transportation and processing by traders ..................................................42 Figure 3-9 Matching of development issues and development strategies .................. 48 Figure 3-10 Step-wise development strategy ...............................................................49 Figure 3-11 Development of global linkage .................................................................. 51 Figure 4-1 Adopting “One-Day Economic Areas” to an economic development program ...............................................................53 Figure 4-2 Economic development program for the southern region .......................... 54 Figure 4-3 Project location under developing global linkage (component 2) .............. 56 Figure 4-4 NR13 Bypass and streets to be improved or developed ........................... 57 Figure 4-5 Road map for program implementation .....................................................58 ii List of Tables Table 2-1 National roads passing through the 5 southern provinces ............................. 8 Table 2-2 Matrix of economic region and land classification .......................................... 9 Table 2-3 Major economic activities in Savannakhet Economic Region ...................... 10 Table 2-4 Major economic activities in Champasak Economic Region ........................ 12 Table 2-5 Major economic activities in Attapeu Economic Region .............................. 16 Table 3-1 Export products, markets, and characteristics .............................................44 Table 3-2 Economic relationships between companies, traders, and farmers and possible government support ...................................................46 iii Abbreviations L'Agence Française de Développement ADF Association des Groupements de Producteurs AGPC de Café du Plateau des Bolovens Agricultural Promotion Bank APB Banque Pour Le Commerce Exterieur Lao BCEL Business Development Service BDS Chaoren Pokphand CP Department of Planning and Investment DPI Foreign Direct Investment FDI Gross Domestic Products GDP Deutsche Gesellschaft für Internationale GIZ Zusammenarbeit Generalized System of Preference GSP Japan International Cooperation Agency JICA Lao Peoples’ Democratic Republic Lao PDR Lao Development Bank LDB Lane Xang Minerals Limited LXML Letter of Credit L/C National Road NR Non Tiumber Forest Products NTFP One District One Products ODOP One-Day One-Day Economic Area(s) EA(s) Special Economic Zone SEZ Unexploded ordinance UXO iv Final Report Summary Report Introduction 1. INTRODUCTION 1.1 BACKGROUND OF THE STUDY Since around year 2000, the Lao economy has been enjoying vital economic growth; the average GDP growth rate was 7.1%, especially after 2005 were the rate was recorded in the high 7 to 8 percent. There is little negative influence on Lao economy from the global recession caused by the “Lehmann Shock”. The vital economic growth depends on mineral resources and hydropower development from a macro-economic point of view. However, the fruits of the vital economic growth are not equally distributed among the peoples of Laos, which is still a big issue for the Lao PDR Government. The share of population and GDP are respectively around 30% and 28% in the southern area consisting of Savannakhet, Saravane, Sekong and Attapeu provinces. The region exhibits potential in the rich farmlands of the Bolaven Plateau and the international transport corridor of National Road No. 9: however, this potential has not been realized yet. In recent years, Foreign Direct Investments (FDIs) have gradually increased with the aim of utilizing rich natural resources in the southern region, so that production activities are facilitated. It is observed that self-sufficient agriculture in the region is changing to a commercial agriculture. For the enhancement of economic activities and further acceleration
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