Lao firms and households are expected to benefit from a new US$13-million project, approved on Sep 27, 2018 by the World Bank’s Board of Executive Directors, which will promote reforms to the business environment, for instance reducing the number of days needed to start a business.
The Lao PDR Competitiveness and Trade Project will support the government’s efforts to simplify business regulations, facilitate trade, and improve competitiveness.
New and existing Lao firms will benefit from lower costs of doing business, easier procedures, and access to funding for business improvements. These reforms will also benefit the public as they will generate new formal employment opportunities, and lead to more competition, lower prices, and increased choice in goods.
“Our vision is to develop a stronger private sector in the Lao PDR, by improving the business environment, enhancing competitiveness of local companies, and deepening economic integration through the WTO and ASEAN,” said Minister of Industry and Commerce Khemmani Pholsena. “This project directly contributes to our goal of qualifying for Least Developed Country Status graduation by supporting the diversification of our economy.”
Although the Lao PDR has been one of the fastest growing economies in East Asia and Pacific for the past two decades, the country has not experienced proportionate gains in poverty reduction and shared prosperity.
Economic growth is largely attributed to natural resources, while the business environment remains weak, with the Lao PDR ranked 141 out of 190 in the most recent Ease of Doing Business Index.
The government has declared improving the business environment a key priority.
“The Lao PDR has been among the fastest growing countries in the world recently. We would like more of Laos’ population to share in the benefits of this growth. Improving the business environment to attract higher quality private investment will be critical for the country to unlock its full economic potential,” said Ellen Goldstein, World Bank Director for Myanmar, Cambodia, and the Lao PDR. “Diversification of sources of growth from natural resources to a broader base will lower vulnerability and increase prosperity for a larger portion of the population.”
In addition to improving the transparency and efficiency of business regulations, the project aims to ensure these reforms particularly benefit Small and Medium Enterprises and women-led enterprises. Reforms will include streamlining operating licenses, and making it easier to register a business, aiming to reduce by half the number of days to start a business and to prepare documentation for import and export. Firm competitiveness will be supported through the Business Assistance Facility (BAF), which helps individual private enterprises to access business development services, aiming to improve company management and innovation. This builds on the original BAF under the Second Trade Development Facility Project, a World Bank-supported project running since 2013, which supported implementation of the government’s trade and integration policies.
To be implemented from 2018 to 2022, the project will receive US$10 million in financing from the International Development Association (World Bank), and a Multi-Donor Trust Fund of US$3 million.