Government reaffirms GDP growth at 7.5 percent

The government has presented its plan for GDP growth to attain 7.5 to 8 percent over the next five years.

The preliminary session of the Sixth Legislature of the National Assembly ( NA ) will consider and approve the socio-economic development and budget plans for 2006 to 2010, to bring GDP growth in line with the target of a per capita annual income of US$ 800.

On Saturday, Deputy Prime Minister Dr Thongloun Sisoulith reviewed the implementation of the socio-economic development and budget plans over the last five years and presented future five-year plans at the first NA session. Many members contributed their opinions to making the plans more comprehensive and effective.

2006-2010 is a very significant period for the Lao economy. If the country can reach its economic goals, it will set the stage for positive developments from 2010 - 2020, by which time Laos hopes to graduate from least developed status.

To raise GDP growth from 7.5 to 8 percent, the government plans to boost agriculture and forestry growth to 3-3.4 percent annually, industry to 13-14 percent and services to 7.5-8 percent.

Dr Thongloun said that from 2000 to 2005, GDP growth averaged 6.2 percent a year, an increase of 0.3 percent over the term of office of the fourth legislature from 1996-2000. The growth of the economy in 2005 was 1.3 times greater than that of 1995, with an average annual per capita of US$490.

All sectors have grown both qualitatively and quantitively. Agricultural production reached 3.4 percent; industry reached 11.3 percent and services reached 6.7 percent growth in 2005, he said.

According to Dr Thongloun Sisoulith’s report, the government will focus on promoting productivity and services and will aim to boost agricultural production, especially that of rice. In 2005, rice production reached 2.6 million tonnes, equalling 472 kg of rice per person.

To reach targets, it is vital to attract foreign investment. In the past, the Party and government have tried to encourage domestic and foreign investment in order to attract funding, technology and experience for the development of the economy. They have improved laws, regulations and other procedures, and have authorised provinces to manage investment projects independently. At present, there are over 580 investment projects in the country, valued at US$2.8 billion. The largest of these are the Nam Theun 2 hydropower plant and several mining projects.

Between now and 2010, we plan to attract US$600 million of investment annually, Dr Thongloun said, adding that more investment will increase the amount of national revenue available for development. It is planned that national revenue will reach 34,600 billion kip by 2010, a 19 percent increase over the previous five years, while expenditure is expected to reach 49,600 billion kip in the next five years.

The government predicts that world circumstances will continue to create favourable conditions for the development of Laos. The construction of infrastructure such as roads remains a key factor in linking the country to its neighbours.

The main challenges for Laos are its low productivity and sluggish economy. The income of most people remains very low, financial services are limited and outdated, management of the state is not effective enough, and infrastructure does not meet development demands, Dr Thongloun added.

The government pledged to speed up development in the next five years, producing a wide variety of products of higher quality for markets, increasing exports to boost earnings for national development, improving state executive mechanisms and strengthening financial services ( End ).