New report proposes action plan to boost FDI opportunities

Developing a holistic investment strategy along with continued regulatory reforms will help Laos attract more diverse and higher-quality foreign direct investment (FDI), a new report suggests.
The approach will allow Laos to expand its economy, generate more jobs, and achieve shared prosperity, according to the report, which was published by the International Finance Corporation, a member of the World Bank Group.
The report was presented at an online meeting on Thursday, chaired by Deputy Prime Minister and Minister of Planning and Investment, Dr Sonexay Siphandone.

Conducted in partnership with the government of Japan, the report titled ‘Investment Reform Map for Laos - A Foundation for a New Investment Policy and Promotion Strategy’ lays out a proposed action plan for targeted reforms to realise the positive impact of FDI on the local economy.
Over the past 15 years, FDI has been a major contributor to Laos’ strong economic growth. However, the report reveals that most of the investments have been in natural resources, generating limited job opportunities and failing to unlock the full potential of FDI. It says the volume of investments has been low in non-resource sectors, which have high potential for job creation.
Dr Sonexay welcomed the report, saying it provided a timely and in-depth analysis of the private investment context in Laos.
“This will help policymakers determine the current and potential positioning of domestic economy in light of regional and international linkages,” he said.
“The report’s proposed reform action plan will also help advise the government on priority reforms to capitalise on FDI opportunities, enabling economic diversification and promoting productivity and efficiency.”
The report recommends a strategic FDI shift to help the economy venture into knowledge-intensive industries, as well as removing unnecessary restrictions on FDI entry and establishment, providing enhanced incentives, and introducing an investor grievance mechanism.
IFC Senior Country Manager for Vietnam, Cambodia and Laos, Kyle Kelhofer, said the report clearly shows how targeted reforms can help spur a favourable investment climate and enhance Laos’ competitiveness in attracting higher-quality FDI.
“This will help create jobs, transfer knowledge to domestic firms, and foster their integration into global value chains, diversifying the economy for sustainable and inclusive growth,” he said. The report shows FDI in the non-resource sectors made up less than 40 percent of total approved FDI stock during 2005-2017. This can be primarily attributed to the high cost of doing business in Laos, triggered by a range of complex and time-consuming investment entry procedures.
In laying out its recommendations, the report also provides a comprehensive analysis of the current investment climate in Laos.

By Times Reporters
(Latest Update February 19, 2021)