Laos: Foreign Capital Set To Boost Economic Development


Nick Enfield

The province of Vientiane has been reported as having attracted more than US$80m over the last year in almost 70 foreign-invested projects. Recent years have seen a dramatic increase in the number of factories being set up in the capital. Last month a Lao-Chinese joint venture invested US$1m in a plant, which will produce spare parts for motorcycles and other small transport vehicles. It is the first factory in Laos with plans to eventually produce motor vehicles. Telecommunications services are also rapidly expanding, with a recent announcement that the Lao Telecommunications Company will broaden its mobile phone network, with an investment of over $3m from Ericsson. Demand for mobile phone use in the capital is rapidly increasing, and services are to be increased by 50 per cent in the next few months. The Lao government has also recently signed an agreement with a Chinese company to install fiber optic cables along the major North-South routes, in a bid to meet the current high demand for telecom services.

Commercial navigation along the Mekong is set to develop, as plans to blast sections of the Mekong River are already turning to reality. In April 2000, Burma, China, Laos and Thailand agreed to clear unnavigable sections of the river in order to facilitate commercial navigation between China and the Lao city of Luang Prabang. China has already invested some US$5m, and two sections of the river along the Burma-Laos border have recently been cleared. The blasting has prompted protest in Thailand, after surveys of areas downstream concluded that fishing communities have already been adversely affected.

In education, a Vientiane school recently announced the availability of locally franchised courses from Australia’s Royal Melbourne Institute of Technology (RMIT) University. Lao students will now be able to study some RMIT courses in Vientiane and receive RMIT University certification.

In other economic developments, the EU has announced that it will provide 14 million Euro for a range of expansions in development and trade in Laos, including feasibility studies on infrastructure development in remote Northern areas; support for an ASEAN-EU copyright protection project; a livestock promotion and veterinary project; a project to help Laos accede to the World Trade Organisation; and, assistance for the judicial sector. The Lao News Agency stated that over the past 10 years the EU has provided Laos with more than 60 million Euro in 25 projects. Laos is also set to receive a loan of over $US10m from the Asian Development Bank as part of a project to develop tourism in the lower Mekong River basin.

WATCHPOINT: Many millions of dollars in international aid have flooded into Laos over more than a decade. When will we see evidence that this investment will have an enduring and positive effect?


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