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Laos Urged To Think Beyond Being A Land Bridge Country

Source: Vientiane Times

The government must employ concrete measures to implement its policy on transformation of the country from landlocked to a land bridge, a senior economist has said.

“Laos will become a land bridge within the region. This provides us with a huge opportunity, but it is up to us to make use of this opportunity,” President of the Lao National Economic Research Institute, Dr Leeber Leebouapao, said on Monday.

The economist made the comment after attending a meeting last week to discuss the findings of Japanese-funded research on the maintenance of fiscal stability in Laos.

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According to the findings, Laos has borrowed a large amount of money from foreign nations to finance the construction of roads and railways to transform the country from a landlocked state into a land bridge, so it must ensure that this investment is profitable and beneficial.

Laos has built roads linking to Vietnam, Thailand, Myanmar, China and Cambodia and is eagerly anticipating completion of the Laos-China railway, which will become operational in 2021.

The government is now planning to build an expressway and railways to connect with Vietnam and Thailand. Over the next five years, Laos will without doubt be a land bridge within the Mekong region. 

But Dr Leeber said that in order to ensure the profitability of these investments Laos needs concrete measures in place, adding that Singapore is a good example of how a small country can benefit from being a transit hub.

Observers say Laos could serve as a regional logistics centre, adding that it’s not necessary for the country to embark on the mass production of goods because it has an inadequate workforce.

In addition, import and export costs are too high for Laos to produce goods for export unless locally-sourced raw materials are used, they note.

Dr Leeber said the government was on the right track in its efforts to improve the business climate in order to attract more foreign investment, adding that this was essential for Laos to benefit from being a transit hub.

But, he said, the challenge was to ensure effective implementation of the government’s policy on business climate improvement.

In addition, Dr Leeber said the government needs to make it clear what kinds of business it wants to promote. It should then create an enabling environment as well as incentives for companies to operate.

When asked about the outlook for growth in 2020, he said economic growth would remain strong. However, the challenge is to ensure the stability of currency exchange rates while Laos must also be prepared to accommodate external challenges such as rising oil prices.