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Session 4.2: Avoiding the curse and sustaining the blessing: what progress in governing natural-resource based pro-poor growth? P R ESENTER: MR . BOU N L E UA S I N XAYVORAVONG N AT IONA L BUDG E T DE PA RTMENT, M I N I STRY OF F I N A NCE, L AO P DR Overview of Lao PDR Lao PDR’s Map • Situated in the center of Southeast Asia, sharing common boarder with China, Vietnam, Cambodia, Thailand, and Myanmar • Divided into 17 provinces and 1 prefecture which include the capital city, Vientiane • 6.77 million population as of 2013 • The terrain is mostly rugged mountains, which gives the country tremendous hydroelectric potential. Forest and woodland cover 47% of the country’s land area. These resources all play a significant part in inducing foreign investment to the country • Political stability and strong social order • Became member of ASEAN in 1997 • Became member of WTO in February 2013 • GDP per capita of 1,589 USD in 2013 ECONOMY OF LAO PDR AND INVESTMENT OPPORTUNITY FOR THAI Page 2 High and Sustained GDP Growth GDP (in Kip billion) & GDP Growth (2009-2013P) • Lao PDR’s has consistently demonstrated high and sustained GDP growth with 5-year average growth of 7.9% (2009-2013) • Total GDP in 2013 is Kip 80,199 billion, with yoy growth rate of 7.95% GDP Breakdown by Sectors (2009-2013P) • Four main GDP contributors include services, industry, agriculture, and import duties • Gradual increase in the contribution of services and industry sectors leads to aggregate contributions to GDP of 67% in 2013, comparing with 62.3% in 2009 • Such increase is due to public policy to promote commercialization in order to gradually transform Lao PDR from an agricultural-based country to be an industrial-based and modern country Source: Ministry of Finance, Bank of the Lao PDR Remark: P stands for Preliminary Data ECONOMY OF LAO PDR AND INVESTMENT OPPORTUNITY FOR THAI Page 3 Natural resources Water for hydropower: Capacity 25,000MW, completed 3,500 MW and under construction 3,000 MW Land for plantation: rubber, eucalyptus, acacia Mining for gold, copper and other minerals Forestry Natural resource income National Budget National Assembly resolution: 17% of total spending for education, 9% of total spending for health sector Special arrangement: NT2 revenue arrangement; all revenue is earmarked basic education, basic health care and poverty reduction Fund: poverty reduction fund, forestry fund 8th NSEDP (2016-2020) Outcome 1: Sustain inclusive economic growth with economic vulnerability (EVI) reduced to level required for LDC graduation and consolidated financial, legal and human resources to support growth Outcome 2: Human development enhanced to LDC graduation criteria level and achievement of off-track MDGs through the provision and use of services which are balanced geographically and distributed between social groups Outcome 3: Reduced effects of natural shocks as required for LDC graduation and sustainable management of natural resources Financing the 8th plan NATIONAL & PROVINCAL STRATEGIES Alignment to: NSEDP Strategy toward 2025 Vision 2030 Order 13 National Investment Strategy New Regulations: EIA/IEE Moratorium 13: Evaluating Land Concessions Getting the best deal for our precious resources….. Contract Templates Align development plan M&E frameworks to SDGs M&E framework for 8th National Social Economic Development Plan CSR / SDGs and the 8th Plan – how can private sector contribute to the successful delivery of the 8th plan? Link CSR reporting to 8th Plan indicators? Lessons learned Dutch disease: no significant evidence on exchange rate appreciation, but rent seeking is an issue Aggressive budget planning, need fiscal adjustment when the commodity price falls Inefficient resource allocation, mainly focus on resource sector Future Direction Increase law enforcement on natural resource governance Standardize negotiation process for CA, and increase institutional and staff capacity to govern the CA Better budget planning process, earmark more revenue from natural resource to human capital development