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Laos PDR
By: Neda Admin
  • 30 Apr. 2556
  • 580 View
Laos PDR still has plenty of mineral resources, both surveyed sources and those pending surveys. Demand for minerals has recently increased in line with growing demand in the global market during the last few years. Prices of minerals have shot up very rapidly, due to limited supply. At present, Lao government has granted concessions for mineral survey in many areas to foreign miners.
 

 General Information

 
 Economic Conditions
 
Economic Sectors
 
 Laos has an agricultural economy, or a share of 39.2 percent, as followed by manufacturing of 34.3 percent and service sector of 26.5 percent and (2008).
 
 
 GDP 
 
 
 
 
 During 2006-2008, Laos registered an average GDP growth rate at 7.48 percent, i.e.
   In 2006, GDP valued at USD 12.10 Million.
   In 2007, GDP valued at USD 13.10 Million (up 8.26%).
   In 2008, GDP valued at USD 13.98 Million (up 6.71%).
 
 
 GDP Per Capita 
 
 
 
 
 During 2006-2008, GDP per capita averaged at USD 2,000, i.e.
   In 2006, GDP per capita stood at USD 1,900.
   In 2007, GDP per capita stood at USD 2,000 (up 5.26%).
   In 2008, GDP per capita stood at USD 2,100 (up 5.00%).
 

 

Inflation
 
 
 
 
During 2005-2008, Laos’s inflation averaged at 6.8 percent, i.e.
   In 2005, inflation stood at 7.2 percent.
   In 2006, inflation stood at 6.9 percent.
   In 2007, inflation stood at 4.5 percent.
   In 2008, inflation stood at 8.6 percent.
 

 

FDI
 
  
 
During 2006-2008, foreign direct investment (FDI) to Laos averaged at USD 246.33 Million, i.e.
   In 2006, FDI stood at USD 187 Million.
   In 2007, FDI stood at USD 324 Million (up 73.26%).
   In 2008, FDI stood at USD 228 Million (down 29.62%).
 

 

Thailand’s Investment in Laos
 
  
Thailand is the biggest FDI in Laos.  During 2001-2005, Thai companies were granted approval to invest in 102 projects in Laos, equal to the total value of USD 606.53 Million, especially in the areas of hydropower projects, transportation and telecommunications, hotels and tourism, banking sector, wood processing, garment and craft.
 

 

International Reserves
 
 
  
 
 
 
During 2004-2008, Laos registered average international reserves at USD 429 Million.
   In 2004, international reserves stood at USD 227 Million.
   In 2005, international reserves stood at USD 239 Million (up 5.29%).
   In 2006, international reserves stood at USD 336 Million (up 40.59%).
   In 2007, international reserves stood at USD 540 Million (up 60.71%).
   In 2008, international reserves stood at USD 803 Million (up 48.70%).
       
  Foreign Exchange Rate 256.41 Kip = 1 Baht (December 2009
     
 

International Trade Status of Laos

 

Trade Balance

During 2004-2008, Laos registered average trade deficit at USD 244 Million.
 

 

Trade Value
 
During 2004-2008, Laos registered average trade value at USD 1,797.6 Million, comprising average export value at USD 776.8 Million, and average import value at 1,020.8 Million.
 

 

Export
 
 
 
 
 
 
 
 
 
 
Major export items included garment, timber, processed wood, wooden products, ores, metal scraps, coal, raw hides and skin, tanned leather, maize, tobacco leaf and coffee.
Principal export markets are Thailand, Vietnam, France, Japan, Germany, UK, USA, theNetherlands.
Export Value

   In 2004, export value stood at USD 363 Million.
   In 2005, export value stood at USD 553 Million (up 52.34%).
   In 2006, export value stood at USD 882 Million (up 59.49%).
   In 2007, export value stood at USD 923 Million (up 4.65%).
   In 2008, export value stood at USD 1,163 Million (up 26.00%).
 

 

Import
  
 
 
 
 
 
 
 
 
Major import items were, i.e. motorcycles and parts, machinery, thermoelectric, food, cloth, chemical products and consumer products.
Major import sources were, i.e. Thailand, China, Vietnam, Singapore, Japan, Australia and Germany.
Import Value
   In 2004, import value stood at USD 713 Million.
   In 2005, import value stood at USD 882 Million (up 23.70%).
   In 2006, import value stood at USD 1,060 Million (up 20.18%).
   In 2007, import value stood at USD 1,065 Million (up 0.47%).
   In 2008, export value stood at USD 1,384 Million (up 29.95%).
 
     
 

Thai-Lao Trade

 
Thai-Lao Trade Balance 
During 2005-2008, Laos registered trade deficit with Thailand at 43,315.50 Million Baht on average.
 

 

Thai-Lao Trade Value  
 
During 2005-2008, Thai-Lao trade averaged at 76,188.00 Million Baht, comprising export value of 59,751.75 Million Baht and import value of 16,436.25 Million Baht.
 

 

Thai-Lao Export
 
 
 
 
 
 
 
Major export items included garment, timber, processed wood, wooden products, ores, metal scraps, coal, raw hides and skin, tanned leather, tobacco leaf and coffee.
Export Value
   In 2005, export value stood at 40,090 Million Baht 
   In 2006, export value stood at 58,473 Million Baht (up 45.85%).
   In 2007, export value stood at 61,480 Million Baht (up 5.14%).
   In 2008, export value stood at 78,964 Million Baht (up 28.44%).
 

 

Thai-Lao Import
 
  
 
 
 
 
 
Major import items included petroleum products, machinery for agriculture and animal rearing, construction materials, vehicles and parts, garment and consumer products, food, electrical appliances and parts, drugs and pharmaceutical products.
Import Value
   In 2005, import value stood at 9,125 Million Baht.
   In 2006, import value stood at 19,753 Million Baht (up 116.47%).
   In 2007, import value stood at 16,295 Million Baht (down 17.51%).
   In 2008, import value stood at 20,572 Million Baht (up 26.25%).
 

 

Thai-Lao Border Trade Status
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Border trade between Thailand and Laos takes place at 38 border passes.  There are 14 permanent border passes, one temporary border pass and 23 checkpoints for border trade, at border provinces, i.e. Nong Khai, Mukdahan, Ubon Ratchathani, Nakhon Phanom, Chiang Rai, Loei, Nan, Phayao and Uttaradit.  During 2005-2008, the border trade value averaged at 53,111 Million Baht, comprising export value of 40,742.25 Million Baht, and import value of 12,368.75 Million Baht, or Thailand enjoyed trade surplus with Laos of about 28,373.50 Million Baht.

Major export items included petroleum products, vehicles, equipment and part, agro-industrial products, consumer products and textile.

Export Value
   In 2005, export value stood at 29,844 Million Baht.
   In 2006, export value stood at 35,494 Million Baht (up 18.93%).
   In 2007, export value stood at 41,602 Million Baht (up 17.21%).
   In 2008, export value stood at 56,029 Million (up 34.68%).

Major import items included wood and wooden products, minerals, metal products, vehicles, equipment and parts, and farm products.

Import Value
   In 2005, import value stood at 6,767 Million Baht.
   In 2006, import value stood at 10,938 Million Baht (up 61.64%).
   In 2007, import value stood at 10,278 Million Baht (down 6.03%).
   In 2008, import value stood at 21,492 Million (up 109.11%).

Problems and obstacles in trade: Laos has launched protectionism policy on imports from Thailand, by enforcing quota limit for certain types of products, such as cement, vegetable oil and iron rods. 
 
These include tax measures, different standard requirements at each border pass, corruption among border officers, stability of the Kip and lack of purchasing power.
     
 

Geographic Locations

 
Location 
Laos is the only land-locked country in Indochina.
 
 
Borders
 
 
   
 
 
Laos borders six nations:
   North: China (505 kilometers)
   South: Cambodia (435 kilometers)
   East: Vietnam (2,069 kilometers)
   Northwest: Myanmar (236 kilometers)
   West: Thailand (1,730 kilometers)
 

 

Thai-Lao Border
 
 
 
 
 
The borderline between Thailand and Laos is 1,810 kilometers long (land - 702 kilometers and water - 1,108 kilometers), comprising:
   11 provinces in Thailand, i.e. Chiang Rai, Phayao, Uttaradit, Phitsanulok, Loei, Nong Khai, Amnat Charoen, Mukdahan and Ubon Ratchathani
   Nine provinces of Laos, i.e. Bokeo, Xaignabouri, Vientiane, Vientiane Capital, Bolikamxai, Khammouan, Savannakhet, Saravan, and Champasak.
 

 

Area
 
Laos has the total area of 91,429 square miles, or 236,800 square kilometers or 148 million rai (approximately half of Thailand).
 

 

Geography
 
  
 
Laos consist mostly of rugged mountains, filled with dense forest and minerals.  High mountains are in the North and East, which slope downward to Southwest.  Four-fifths of the whole areas are mountains and plateau.  The highest mountain peak is Phou Bia in Xiangkhoang Province, of 2,800 meters high.  Farmland totals only 50,000 square kilometers (31.25 million rai), or 21.11 of the total area.
 

 

Climate
  
 

The climate of Laos is in a monsoonal tropical zone.  High rainfalls are during May to September.  An average temperature at Vientiane is 25 degree Celsius (January), and 36-37 degree Celsius (April).  Total rainfalls are 1,715 millimeters a year.

 

 

Main Cities and Provinces
  
 
 
 
- Vientiane is the capital of Laos, being classified as an administrative zone, or the so-called Vientiane Capital, opposite Nong Khai.
- Savannakhet has the highest number of population, opposite Mukdahan.
- Champasak has the third highest number of population, bordering Ubon Ratchathani.
- Khammouan has plenty of forest area and minerals, bordering Nakhon Phanom.
     
 

Society

 
Population
  
 
 
 

Total population is 6.8 million (2008), comprising “Lao Theung”, “Lao Soung”, “Lao Loum”, or 68 ethnic groups, i.e.
   - Lao Theung of 34 percent of total population, i.e. Kha, Phou Tai and Lao Phuan,
   - Lao Soung of 10 percent of total population, i.e. Mong and other hill-tribes,
   - Lao Loum of 56 percent of total population, mainly Aui Lao, especially people of Vientiane and Louangphrabang

 

  Birth Rate
 
 
 
 
 

During 2004-2008, an average birth rate in Laos is 5.59 percent, i.e.
   In 2004, total population is 5.5 million.
   In 2005, total population is 5.6 million (up 1.82%).
   In 2006, total population is 5.7 million (up 1.79%).
   In 2007, total population is 5.9 million (up 3.51%).
   In 2008, total population is 6.8 million (up 15.25%).

 

  Density Population density is 25 persons per kilometer.
     
 

Political Situation

  Administrative System
 
 
 
 
Laos is a communist single-party socialist republic. The only legal political party is the Lao People's Revolutionary Party (LPRP).  LPRP Leader is the head of the state.  Major political institutions include:
   1. The Lao People's Revolutionary Party (LPRP)
   2. Council of Ministers (appointed by LPRP)
   3. National Assembly (people elect members from candidates proposed by LPRP)
 
  Administrative Zones
 
 
Laos divides its administrative zones into 16 provinces, and two special administrative zones, which are sub-divided as 142 Mouangs (district) and Baan.  Main provinces include Savannakhet, Louangphrabang, Pakse, Thakak, Champasak, Khammouan.
     
 

 

National Economic and Social Development Plan of Laos

 

The Sixth National Economic and Social Development Plan (2006-2010) emphasizes participation of the private sector both inside and outside the country in economic development of Laos.  FDI and exports tend to grow continuously.  Previously, the country had to rely mainly on government spending and assistance from international organizations.  Laos has also set the targets for 2020, comprising:

           - The economy will grow continuously not less than 7.5 percent a year,
           - Stop deforestation for slash-and-burn farming,
           - Eradicate poverty,
           - Develop human resources for industrialization
           - Increase per capita income to more than USD 800 a year

  In detail:
           1. Economic Growth: The Sixth Plan sets a target for an average economic expansion at 7.2 percent a year, consistent with expansion of investment and exports of the country.
           2. Eradication of Poverty: Economic expansion during the Sixth Plan will generate income and employment opportunities for people.  The Sixth Plan aims to increase income per capita from approximately USD 380 in 2004 to USD 720 in 2010.
           3. Exports: The Sixth Plan has set a target for export expansion at 10 percent a year during 2006-2010 to attain the national economic growth target.  Major industries to support growth include hydropower, wood and wooden furniture, textile and garment and mining.  The Lao government projects that total exports during 2006-2010 will gross at USD 2.92 Billion in 2010, the final year of the Plan.  In addition, the Sixth Plan will promote participation of the private sector, both inside and outside the country, in the national economic development.  FDI and exports tend to grow continuously, as compared with the previous period when the country had to rely mainly on government spending and assistance from international organizations.

Export Target of Laos in 2010
 
 

 

Industries

Value (Million USD)

      Hydropower

140

      Textile and Garment

138

      Mining

110

      Wood and Wooden Furniture

164

      Coffee

36

      Craft

25

      Agricultural Products

29

      Others

34

Total

676

 

 

Factors that enhance potentials of Laos include:

 - Laos still enjoys Generalized System of Preferences (GSPs) from 35 countries worldwide, such as the European Union (EU) and Japan, due to relatively lower competitiveness in exports of the country.  Export value from Laos is the lowest among ASEAN nations.  In addition, EU has extended its incentives under the “Everything but Arms” (EBA) projects to the least developed nations, including Laos, since 2001.  EU has exempted the collection import tariffs and quota restriction for all types of goods from Laos that meet the rule of origins requirement.

 - Laos has been granted an NTR status (Normal Trade Relations) from the USA since December 3, 2004.  Import tariff levied on Lao products dropped from 45 percent to 2.4 percent, which will enhance export opportunities from Laos to the USA, especially garment and natural-based products.

 - Nam Theun 2 Hydropower Project, due for completion in 2009, will generate more income to Laos, especially concession fees to the government.  More employment opportunities will be generated, including greater cash flow in the construction site.  It will be a main source for foreign exchange earnings in the future.

 - Investment in mining tends to grow very rapidly, due to abundance in mineral resources in Laos, both surveyed sources and those pending future surveys, given the rising demand for minerals in the global market during the last few years.  Prices of minerals have shot up very rapidly, due to limited supply.  Recently, the Lao government has granted mining concessions to several foreign mining companies, such as mining companies from China and Vietnam to survey sources of iron at Khilek Mountain in a special administrative zone of Xaisomboun and Viangxai district in Houaphan Province, respectively.  In addition, export of copper from Xepon mine, the biggest goal and copper mine in Laos tends to grow continuously. 
     
 

Sources:

1. Ministry of Foreign Affairs 
 2. Office of the Board of Investment