Laos could sustain economic growth through mega projects

VIENTIANE (Vientiane Times/ANN) - Laos could accomplish economic growth of 7 per cent in 2018 but needs to push for stronger development of mega projects, a respected economist says.

Dr Leeber Leebouapao from the National Economic Research Institute told Vientiane Times on Thursday that the further progress of mega projects would serve as the main driver for economic growth amidst the government’s revenue shortfall.

“Laos is a small country with an economic value of US$16.8 billion and a population of 6.5 million people. Just four or five mega projects can drive the nation’s economic growth,” Dr Leeber said.

Falling under this umbrella are the ongoing construction of the US$5.8 billion Laos-China railway, the US$3.5 billion Xayaboury hydropower project, development of special economic zones, and other projects associated with China’s One Belt, One Road initiative.

Additionally, construction of the Vangvieng expressway, the first section of the planned Vientiane-Boten expressway, will start soon.

“If these mega projects progress as planned, we can maintain economic growth at 7 percent in 2018. Construction of several hydropower projects will begin this year while others will be completed and become operational. These projects will be key to economic growth,” Dr Leeber said.

During the government’s monthly meeting last month, Prime Minister Thongloun Sisoulith instructed the relevant ministries to push for the development of mega projects as a means to strengthen economic growth.

The premier told the cabinet to work with China to promptly implement projects to be financed by grants worth more than 6,598 billion kip (5.2 billion yuan) provided by the Chinese government.

The prime minister also told meeting participants to work with Vietnam towards realising cooperation projects that the leaders of both countries had agreed to in principle.

Economists say 2018 could be a golden year for Laos if the Visit Laos Year 2018 campaign boosts tourist arrivals as expected and generates more revenue for economic growth and poverty reduction efforts.

The government is aiming to attract at least 5 million visitors this year, who it is hoped will generate revenue of about US$900 million.

A number of tourism activities are being carried out in various provinces for Visit Laos Year 2018.

To further boost economic growth, economists called for the government to improve the investment climate by resolving problems that hinder business operations.

Laos’ ranking dropped to 139 in 2016 from 136 in 2015 and Ease-of-doing-business in Laos averaged 155.11 from 2008 until 2016, reaching an all-time high of 167.00 in 2009 and a record low of 136.00 in 2015, according to the World Bank.

Streamlining procedures to speed up the investment approval process through a one-stop service could raise the country’s position in the global ease-of-doing-business ranking.