Laos 20231206

Mekong Memo Laos Weekly: Business, politics, finance, trade & legal news.

Dec 06, 2023

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Headlines:

Path to Economic Recovery: Inflation Eases, Trade Surplus Grows

Iron and Rare Ore Mining Projects Under Review

Laos and Russia Sign New Bilateral Co-op Protocol

Commitment to Improved Investment Management

Lao Airlines and Vietjet Further Collaboration

Greenhouse Gas Reduction Initiative

First CLV Parliamentary Summit Completed

5th Lao-Thai Friendship Bridge Nears Completion

E-Cigarettes to Be Banned

China's Debt Leverage Over Laos

Whistling on the Edge: The Disappearing Language of the Hmong People

Path to Economic Recovery: Inflation Eases, Trade Surplus Grows

Laos has a predicted GDP growth of 3.7% in 2023, up from 2.7% in 2022. The World Bank reports a projected growth of 4.1% in 2024, but warns of challenges including high inflation, external debts, and labor shortages. The growth is driven by tourism, transport, logistics, and foreign investment. Inflation is impacting household spending and savings, with many still at risk of poverty. The government is working on financial improvements, but the Lao kip remains under pressure due to high imports and obligatory debt repayments.

November saw a minor decrease in inflation, dropping to 25.24% from October's 25.8%. The devaluation of the kip is a major factor in this high inflation rate. Significant price increases were noted in hotels, restaurants, clothing, medical care, and household goods. Despite these challenges, Laos achieved a trade surplus of over $943 million in the first nine months of 2023. The government is doing its best to improve the situation by focusing on stabilizing the exchange rate, improving revenue collection, and trying to balance exports and imports (including via excise tax measures we have reported on before).

Read more: The Star (Growth), VietnamPlus (Inflation)

Iron and Rare Ore Mining Projects Under Review

Vientiane is taking steps to improve the management of iron ore and rare ore projects, bringing them into alignment with the government's mineral development strategy. The review is intended to improve planning, licensing, and mine management and is part of a five-year development plan for the energy and mining sector. The government has already approved investments in 505 projects and 382 companies in the sector, with substantial increases in iron ore exports in recent years.

Laos and Russia Sign New Bilateral Co-op Protocol

Laos and Russia have signed a new agreement to improve bilateral cooperation in several sectors, including trade, banking, finance, industry, transport, energy, and healthcare. This agreement, reached during the 17th Session of the Intergovernmental Lao-Russian Commission, will support exploration of new trade and economic partnerships, rebuild logistics chains, and increase the number of joint investment projects. Areas of focus include hydropower, peaceful nuclear energy, and medical equipment supply.

Commitment to Improved Investment Management

The government intends to improve management of state investments, with a goal of more efficient, auditable processes. This commitment, announced at a recent Public Investment Management Steering Committee Meeting, includes a training program supported by the Japan International Cooperation Agency to build capacity of civil servants in investment management. Laos has already exceeded its investment target for the year, with further increases expected before year end and a strong outlook for 2024.

Lao Airlines and Vietjet Further Collaboration

Lao Airlines and Vietjet have formalized a collaboration to improve passenger and cargo travel between Laos and Vietnam. This partnership, signed at Wattay International Airport, extends to aircraft maintenance, technical support, and operational efficiency. The airlines will also implement seat exchanges through interline and codeshare agreements, with a hope of smoother passenger transfers and improved flight operations. This alliance follows a similar contract for maintenance cooperation signed earlier this year.

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