Lao PDR needs to be selective and focus on quality investments when natural resources are involved. Promoting investments in the non-resource sector is important to diversify the country’s economy and ensure sustainable development;
Promoting a good environment for fair competition in the banking sector could improve access to finance for everyone;
Plans, budgets, and sector allocations should be based on objectives, priorities and the total resources available.
Vientiane, April 5, 2012 – Over 400 teachers, students and provincial government officials took part when a World Bank road show presented and stimulated discussions on the topic of three of its analytical reports—the Lao Economic Monitor (LEM), Investment Climate Assessment (ICA), and Public Expenditure Review (PER) from February 20 to 28, 2012.
Lao experts working at the World Bank participated in discussions at the National University of Laos in Vientiane, Souphanouvong University in Luang Prabang, and Champasack University in Champasack province.
“By sharing the findings of the World Bank’s main economic reports on Lao PDR widely across the country, the World Bank aims to encourage active engagement of stakeholders – students, researchers and government officials - in the country’s development discourse", said Ms. Keiko Miwa, Country Manager of the World Bank to Lao PDR. “The World Bank is committed to sharing knowledge and information, and we want to stimulate discussions on the findings of these reports”, she added.
Lao Economic Monitor
The Lao Economic Monitor (LEM) is the World Bank’s comprehensive medium-term review of the country’s economy published twice per year in Lao and in English, the most recent report was launched in January 2012.
The report projects an estimated eight percent GDP growth in 2011 that is mainly driven by hydropower, manufacturing, and service sectors. Many students participating in the discussion raised concerns about the country’s high dependency on natural resources, and on the mining and hydropower industries, for its economic growth.
“Exploiting natural resources and minerals is not sustainable”, said Vice Dean Sihata Chankeovithoun of the Faculty of Economics and Business Management of Champasack University. “We should be looking at other sectors as well.”
Keomanivone Phimmahasay, World Bank Economist, said that Lao PDR indeed was facing a challenge in diversifying its industries. Effective natural resource management was needed for the sustainable economic growth of the country.
“Lao PDR needs to be selective in choosing quality investments when natural resources are involved. There is also a need to promote non-extractive sector investments such as tourism,” she said, “At the same time, good public financial management should be practiced to ensure that all, particularly rural and poor communities benefit equitably from the revenues of the extractive industries”.
“Improving the country’s human resources and skills base is key for creating a better future,” added World Bank Senior Economist Somneuk Davading.
Investment Climate Assessment
The Investment Climate Assessment (ICA) for Lao PDR was carried out by the World Bank in close coordination with government agencies and development partners. The report presents suggestions on how to address fundamental challenges impeding sustainable business growth and how to improve the investment climate.
The report mentions that business growth and competitiveness in Lao PDR is driven by skills development, easy access to finance, and an improved tax rate. The report has found that there is currently a mismatch between the skills possessed by the available labor force and the type of skills potential employers are looking for.
“Improving vocational education and adding more training initiatives will help improve the job shortages and skills mismatches,” said World Bank Trade Analyst Konesawang Nghardsaysone, “Public-private partnerships along with a longer-term plan to improve basic education could address this growth impeding problem”.
Upon learning from the Investment Climate Assessment report that the construction sector incurred most loans, Sithilikone Phengsavath, a teacher from Souphanouvong University, asked: “What policies can facilitate access to loans for other sectors?”
“Promoting fair competition in the banking sector could make finances more accessible to people and businesses across sectors. Establishing an efficient registration system for real estate and other movable collaterals, such as vehicles and machineries, is also crucial,” said Mr. Nghardsaysone, “More importantly, financial literacy of borrowers should also be improved”.
Public Expenditure Review
The Public Expenditure Review (PER), also a joint analytical work of the World Bank and related government agencies, examines public financial management systems in public services. The PER findings show that plans, budgets, and sector allocations should be based on the total resources available and sector objectives. Ensuring that there is a right balance between capital and recurrent spending in sectors is also crucial.
Students were very interested in issues relating to revenue allocation. “The health and education service providers should receive more budgets in order to effectively and efficiently provide those basic services to the people,” said Phetsamay, a National University of Laos economics student.
Public Sector Specialist Saysanith Vongviengkham explained: “The Government always gives high priority to the social sectors. The budget allocations for the education and health sectors have increased in recent years, especially in 2011-2012, despite being below the targets defined by the National Assembly.”
Somneuk Davading, Senior Economist
Somneuk Davading is a Country Economist at the World Bank Country Office in Lao PDR. He works on World Bank’s Lao PDR macroeconomic policy and monitoring under the Poverty Reduction and Economic Management Unit.
Somneuk joined the Lao Country Office as an Economist since 2002. He has been leading the work on Lao Economic Monitors and macro modeling and projections, macro policy dialogues with the GOL. He has contributed to the preparation of First Lao Development Report (2010) - wrote the Lao PDR Growth Analysis background paper for the LDR, and other World Bank’s analytical work.
Before joining the World Bank, he had worked for several private firms and development agencies in Lao PDR.
Somneuk holds Mater of Business Administration from the UTS, Sydney, Australia, in 2001 and Mater of International Economics from MGIMO, Moscow, Russia in 1991.
Keomanivone Phimmahasay is the World Bank’s Country Office-based staff in Lao PDR. She supports macroeconomic monitoring and budget support under the Poverty Reduction and Economic Management Unit.
Keomanivone joined the World Bank’s Vientiane Country Office as a research analyst in 2009. She has been providing support and technical assistance to the preparation of the Lao Economic Monitors, Poverty Reduction Support Operation (budget support), Debt Sustainability Analysis and to disseminating the World Bank analytical products.
Before joining the World Bank, she has worked for projects, namely National Human Development Report (NHDR) and Strengthening to the National Socio-Economic Development Plan (NSEDP), based in Ministry of Planning and Investment.
She graduated from Monash University, Victoria, Australia in 2008 with a M.A. in Diplomacy and Trade.
Konesawang Nghardsaysone is a local staff based at the World Bank Country Office in Lao PDR. He works on World Bank’s Lao PDR trade program under the Poverty Reduction and Economic Management Unit.
Konesawang joined the Lao Country Office as a trade analyst since 2008. He has provided technical assistance and project implementation support to the Multi-donor Trust Fund Trade Development Facility, and the Customs and Trade Facilitation Project, administered and financed by the World Bank and he has contributed to the preparation of various trade-related analytical work covering key areas including export competitiveness, export survival, trade and gender, and investment climate.
Before joining the World Bank, he had worked for the Phou Xieng Thong Community Development for Conservation Project in Salavan and Champasak provinces, and served as local staff on political, economic and consular affairs for foreign diplomatic missions in Vientiane.
Konesawang graduated from the University of Newcastle, New South Wales, Australia, in 2002 with a Master of Trade and Development (MTD).
Saysanith Vongviengkham is the World Bank’s Country Office-based staff in Lao PDR. He works with the task team in implementing the Public Sector Program for Lao PDR under the Poverty Reduction and Economic Management Unit.
Saysanith joined the World Bank Vientiane Office since 2008. He has worked with the task team in providing support and technical assistance to implement the Government’s endorsed reform programs namely the Public Finance Management Strengthening Program, the Nam Theun2 Revenue Management Arrangements and the budget support operations, and in conducting and disseminating the World Bank analytical products.
Before joining the World Bank, Saysanith had worked at the School of Communication and Transport for five years, with the German Technical Cooperation Agency at National Academy for Politics and Public Administration for nine years, and with an Australian consulting firm to implement an ADB Technical Assistant project on public Expenditure Planning at the Ministry of Finance.
Saysanith graduated from the Graduate School of Asia-Pacific Studies, Waseda University, Tokyo, Japan in 2002 with a M.A. in International Relations focusing in “Economic Development and Infrastructure”.