Govt urged to reprioritize investment promotion

The government should promote investment which helps to create jobs and income for local people, according to the Lao National Economic Research Institute.
The institute, which serves as an economic policy thinktank, made the recommendation to the government in its latest economic update, which was unveiled at an official ceremony held in Vientiane earlier this month.

According to the report, one of the policy recommendations urges the government to pay atten-tion to reprioritizing investment promotion, adding that businesses committed to training and employing Lao people should be offered with incentives.
This recommendation is based on the fact that Lao economic growth has created only a small number of domestic jobs. The natural resources sector, which has served as a key driver of Lao economic growth over the past decade employs only 1.2 percent of the total workforce.
Based on this data, the Lao National Economic Research Institute concluded that the government should reprioritize investment which generates jobs and income for the local population so they can liberate themselves from poverty.
Observers said that the natural resource sector not only employ a small workforce, but many foreign companies investing in the sector do not want to employ Lao people whom they argue have insufficient work skills.
Legislators said the Lao government has a policy to encourage investors to employ local people first. However, due to a lack of mechanisms, international firms find it easy to give jobs to foreign nationals.
In addition, the Lao National Economic Research Institute reported there was little relationship between recent economic growth and poverty reduction levels. This conclusion was based on a comparison between Laos and neighbouring countries.
Laos witnessed average economic growth of 7.66 percent from 2005 to 2018, the highest in the region. However, poverty levels in Laos only saw a 1.04 percent drop. In contrast, neighbouring Cambodia saw average annual economic growth of 6.60 percent but a 3.25 percent drop in poverty levels over the same period.
Vietnam saw 6.11 percent economic growth from 2005 to 2018. Over the same period, the coun-try recorded a 2.5 percent drop in poverty. Myanmar witnessed economic growth of 8.27 percent a year which resulted in a 1.60 percent drop in poverty levels.
According to the Lao National Economic Research Institute, the nation’s economic growth has resulted in a widening income gap between the rich and poor of the country.

By Ekaphone Phouthonesy
(Latest Update March 23, 2019)