By Brian McCartan for Asia Times
BANGKOK – Laos aims to lift itself out of least-developed country status by 2020, but a shift underway from reliance on Western aid to Asian private capital has sparked criticism from development specialists who believe the trend towards large-scale projects is unsustainable and works against the country’s long-term economic goals.
Lao Prime Minister Bouasone Bouphavanh announced new plans to increase foreign investment and reach annual growth rates of over 8% for the next five years at the “Future of Asia” business conference held in Tokyo in May. He said, “From 2011-2015 there are plans by our government to achieve economic growth targets of about 8% or more while at the same time maintaining our stability.”
Towards that end, he announced an overhaul of investment policies and said “we want to develop human resources to cope with this growth and, at the same time, care for and nurture our precious asset – the environment”. Bouasone reiterated the government’s fast growth strategy earlier this month at the World Economic Forum on East Asia in Ho Chi Minh City, Vietnam, where he stated that Laos aimed for “no less than” 8% annual economic growth through 2015.
As part of that plan, the Lao government seeks to promote greater foreign investment in agriculture, electricity generation, alternative energy, hotels and tourism, and logistics and services. It is also promoting expanded investment in infrastructure as part of its plan to transform the country from “land-locked to land-linked” as a trade crossroads in mainland Southeast Asia.
Plans to open a stock exchange this year are also in the works. Officials hope the new bourse will help to finance a mounting mining and hydropower boom driven by foreign investment and a rebound in global commodity prices. The new bourse will be set up though a joint venture with the Korea Exchange and hydropower and mining companies are expected to be the first to list, followed by telecommunications and manufacturing firms.
The World Bank, in its mid-year Lao Economic Monitor, estimated that real gross domestic product (GDP) in Laos will increase from 7% in 2009 to 7.8% this year. The growth is mostly a result of rapid expansion in the natural resources sector, as well as steady growth in agriculture, construction and a rebound in the processing and tourism industries. The multilateral lender has forecast that Lao GDP will average 7.7% per annum between 2011 and 2015.
However, development experts are concerned about the country’s over-reliance on hydropower and other mega-projects to stoke growth