Research Survey on Industrial Human Resource Development in the Lao People's Democratic Republic Final Report January, 2017 Japan International Cooperation Agency Mitsubishi Research Institute, Inc. IL JR 17-004 Table of Contents Summary 1. Basic Principles of Research Survey ....................................................................................... 1 1.1 Background and Objectives .............................................................................................. 1 1.2 Methodology ..................................................................................................................... 1 1.3 Basic Principles ................................................................................................................. 3 2. Economic Trends ..................................................................................................................... 5 2.1 Achievements of 7th NSEDP and Outline of the 8th NSEDP ........................................... 5 2.2 Macro-economic Indicators............................................................................................... 7 3. Industrial Development ......................................................................................................... 20 3.1 Manufacturing ................................................................................................................. 20 3.2 Service Industries (Tourism) ........................................................................................... 38 3.3 Service Industries (IT Services) ...................................................................................... 52 3.4 Service Industries (Logistics) .......................................................................................... 59 3.5 Construction Industry ...................................................................................................... 70 3.6 Agribusiness Industry ...................................................................................................... 94 3.7 Analysis of Growth Industrial Sectors .......................................................................... 107 4. Industrial Human Resource Development .......................................................................... 110 4.1 Current Situation and Challenges of HRD in the Industrial sector ............................... 110 4.2 Policies and Systems of Higher Education and TVET .................................................. 112 4.3 Current Situation and Issues of Higher Education and TVET ...................................... 123 4.4 Policies and Institutions Related to In-house Training and Fostering Entrepreneurs ... 126 4.5 Current Situation and Issues of In-house Training and Fostering Entrepreneurs .......... 128 5. Cooperation Program for Industrial Human Resource Development ................................. 131 5.1 Direction of Cooperation ............................................................................................... 131 5.2 Cooperation Program for Industrial Human Resource Development (Plan) ................. 133 APPENDIX 1. Current Situation and Issues in the Higher Education Sector 2. Japan’s Assistance for Industrial Human Resources Development 3. The portfolio of Industrial Human Resource Development List of figures Figure 1-1 Study Implementation Flow ................................................................................ 2 Figure 2-1 Trends of GDP (at constant prices) and Growth Rate ......................................... 8 Figure 2-2 Trends of GDP per Capita (at current prices) ...................................................... 9 Figure 2-3 Trends of GDP per Capita (constant prices at 2010) ......................................... 10 Figure 2-4 Trends of Growth Rate of GDP per Capita ........................................................ 10 Figure 2-5 Trends of GDP per Capita and GNI per Capita ................................................. 11 Figure 2-6 Trends of Gross Domestic Saving ..................................................................... 12 Figure 2-7 Trends of Balance of Current Account .............................................................. 13 Figure 2-8 Trends of Public Debt ........................................................................................ 14 Figure 2-9 Trends of External Debt ..................................................................................... 14 Figure 2-10 Trends of Total Exports and Imports ............................................................... 15 Figure 2-11 Trends of Total Exports and Imports ............................................................... 15 Figure 2-12 Trends of Gross Capital Formation ................................................................. 16 Figure 2-13 Comparison of Amount of FDI (net inflows) by Country ............................... 17 Figure 3-1 SME Development Plan—Vision and Mission Statement ................................ 22 Figure 3-2 Organization of Investment Promotion Department, MPI ................................. 23 Figure 3-3 Locations of SEZs for Manufacturing Industries in Lao PDR .......................... 35 Figure 3-4 Number of Visitors ............................................................................................ 38 Figure 3-5 Foreign Currency Acquired from Tourism ........................................................ 45 Figure 3-6 Construction Industry Structure in Lao PDR..................................................... 78 Figure 3-7 Accumulated Investment Amount and Number of Projects of Lao PDR .......... 82 Figure 3-8 Investment Amount in the Construction Industry in 2015 ................................. 83 Figure 3-9 ALACE Organization Chart .............................................................................. 85 Figure 3-10 Breakdown of ALACE Membership (2016) and Transition of Number of Members (2006 – 2016) .............................................................................................. 87 Figure 4-1 Education System in Lao PDR ........................................................................ 113 Figure 4-2 Numbers of Higher Education Institutions, Students, and Teachers in Lao PDR ................................................................................................................................... 119 Figure 4-3 Numbers of TVET Institutions, Students, and Teachers in Lao PDR .............. 123 Figure 5-1 Challenges of Higher Education and TVETs ................................................... 132 Figure 5-2 Strategic Issues Extracted from the Negative Cycle of HRD .......................... 133 List of tables Table 2-1 GDP Growth Rate during 7th NSEDP in Lao PDR .............................................. 5 Table 2-2 Changes in Economic Structure during 7th NSEDP in Lao PDR ......................... 6 Table 2-3 Trends of Inflation Rate during 7th NSEDP in Lao PDR ..................................... 6 Table 2-4 Trends of Exchange Rate during 7th NSEDP in Lao PDR ................................... 6 Table 2-5 Targets Set in 8th NSDPE on Macro-economic Indicators ................................... 7 Table 2-6 Outcomes and Outputs Set in 8th NSDPE ............................................................ 7 Table 2-7 Organizations Covered by Interview Survey ........................................................ 8 Table 2-8 Trends of GDP Growth ......................................................................................... 8 Table 2-9 Trends of GDP per Capita (at current prices) ........................................................ 9 Table 2-10 Trends of GDP per Capita (constant prices at 2010) ......................................... 10 Table 2-11 Trends of GDP per Capita and GNI per Capita ................................................. 11 Table 2-12 Trends of GDP per Capita and GNI per Capita ................................................. 12 Table 2-13 Trends of Balance of Current Account .............................................................. 12 Table 2-14 Trends of Public Debt ........................................................................................ 13 Table 2-15 Trends of External Debt .................................................................................... 14 Table 2-16 Trends of Gross Capital Formation ................................................................... 16 Table 2-17 Trends of FDI into Lao PDR（by Sector） ...................................................... 17 Table 2-18 Trends of FDI into Lao PDR (by Country)) ...................................................... 17 Table 2-19 Competitiveness Ranking According to “DOING BUSINESS” ....................... 18 Table 2-20 Competitiveness Ranking According to “DOING BUSINESS” ....................... 19 Table 3-1 Outcomes and Outputs in 8th NSEDP（same as Table 3-6） ............................ 21 Table 3-2 GDP ratio of Manufacturing（2014） ................................................................ 24 Table 3-3 Industrial Structure of Manufacturing Industry in Lao PDR .............................. 25 Table 3-4 Organizations Covered by Interview Survey (Manufacturing) ........................... 29 Table 3-5 Organizations Covered by Interview Survey（Manufacturing） ....................... 32 Table 3-6 SEZs for Manufacturing Industries in Lao PDR ................................................. 35 Table 3-7 Example of Guide License Training Curriculum and Examination ...................