The Lao government anticipates exports and imports to dramatically increase next fiscal year as economic growth will remain strong at 7.5 percent.
According to a report from the Ministry of Planning and Investment to a National Assembly conference last week, government projections expect the country’s exports to be US$4.168 billion in 2014-15 fiscal year, which officially begins on October 1.
The main export products, which will generate foreign exchange for Laos next fiscal year will be electricity, minerals, garments and agricultural products. Tourism is also one of the top foreign exchange earners.
A number of hydropower plants, which are now under construction, will begin commercial operation next fiscal year. The move will play a significant role to drive export values. A number of manufacturing firms including garment producers have relocated their production base to Laos due to the cheap labour force and investment incentives.
Over the first six months of this fiscal year, exports from Laos reached US$1.6 billion which amounts to about 74.43 percent of the annual plan. This represents an 84.09 percent increase compared to exports for the same period last fiscal year.
The report on national socio-economic development for 2014-15also shows Lao government projections that imports will be US$4.7 billion.
The main imported goods are expected to be construction materials and fuel due to the rapid increase of foreign investment in construction of hydropower plants, shopping malls and accommodation.
Over the first six months of this fiscal year, imports into Laos amounted to US$1.9 billion, accounting for 72 percent of the annual plan. This was a 70 percent increase in imports compared to the same period last year.
Economists said it was normal to see rapid growth in Lao exports and imports over the next few years due to strong economic growth at 7.5 percent.
However, they said one of the major concerns with the rapid increase in exports is that it would result in negative impacts on the environment as most of Laos’ exports are from natural resources. Laos will need to build more dams and increase mineral production output to boost growth.
Exports of manufactured goods have seen a steady increase but these goods still only make up a small portion of exports compared to the volume of natural resources sent abroad.
The rapid increase in imported goods also poses challenges as it will result in Laos facing a larger trade deficit. Laos expects a US$532 million trade deficit next fiscal year. Over the first six months of the current fiscal year, the country recorded a US$359 million trade deficit.
Source: Vientiane Times