Lao Economy

Asphalt Imports Drop Due To Economic Slowdown

Asphalt imports to Laos have fallen to almost half what they were the previous year as a result of the economic slowdown in the country, according to importers of the road construction material.

Sen-oudom Company, a major importer of asphalt in Laos told local media recently that the drop commenced at the beginning of this year.

It came after the government announced a halt to various state investment projects and unnecessary infrastructure including various road projects late last year.

The halt to unnecessary infrastructure projects arose in the aftermath of the country’s revenue shortfall last fiscal year, forcing the government to tighten its budget expenditure in order to prevent the country from entering a major economic crisis.

The government’s budgetary tensions have impacted many road projects, leading to a decline in asphalt imports to the country.

Director of Sen-oudom Company Mr Intong Oudom said his company planned to import 10,000 tonnes of asphalt from January to May this year but was able to import only 6,000 tonnes.

In 2013, the company imported as many as 18,000 tonnes of asphalt but in 2014, he expects to import only 12,000 tonnes.

Mr Intong said the drop was also related to the fact that many road projects in Vientiane and some other provinces have turned to use concrete instead of asphalt.

Authorities have moved to lay concrete when building roads in towns as they believe that it can last for longer periods of time but still use asphalt when building connecting roads between a province and another province or district.

Laos has started building the country progressively after having limited infrastructure after national liberation in 1975. Therefore the government attaches great importance to infrastructure development including roads connecting destinations throughout the country.

Although roads play an important role in terms of facilitating socio-economic development and poverty reduction among local people, the government has experienced challenges implementing the current budget plan as it is facing difficulties collecting revenue.

Many road projects in the provinces have been delayed and the government has also suspended some prior private investment projects in road construction.

Over the first quarter of this fiscal year, the government was able to collect only 12 percent of the annual revenue plan. The shortfall also delayed government expenditure.

A number of businesses – ranging from construction firms to office equipment suppliers – have revised their business plans following the government announcing its belt tightening policy.

Economists and business leaders believe that businesses will continue to face negative impacts from the government cutting spending, especially the construction firms.

Sen-oudom Company has an asphalt mixing plant in Vientiane with a production capacity of between 80-100 tonnes/hour.

The company supplies asphalt for various road projects throughout the country. It also has asphalt for use in airport runways and other kinds of asphalt.

Source: Vientiane Times