Source by: Department of Statistic / MPI

Lao-German cooperation has seen impressive results in all fields, especially over the past 20 years since Germany was reunited on October 3, 1990, the German ambassador to Laos said yesterday. Dr. Peter Wienand was speaking at a conference in Vientiane to mark 20 years of German unity and bilateral cooperation.

“Germany is a trusted partner of the Lao PDR and as a developing partner can look back on over 50 years of proud achievements,” he told participants.Representatives from the Lao government and international organisations attended the one-day conference entitled ‘Results Matter – Getting to the Heart of Development Effectiveness in the Lao PDR’.
Prior to 1990, both German states (East and West) were active in Laos, during which period some very impressive results were achieved, such as more than 3,000 Lao nationals receiving education and training in Germany.“Many former students now hold important positions in the Lao PDR and contribute to the development of their country and to Lao-German friendship,” Dr. Wienand said.“Investing in the youth development of a country is in the long run the most effective and cost-efficient form of cooperation.” Over the past two decades since German reunification, Laos and Germany have developed ever closer relations, with improved cooperation on all matters of mutual interest.

“Germany is today the most important trading partner of Laos in the European Union. The number of German tourists who enjoy the natural beauty, cultural heritage and renowned friendliness of the Lao people is growing all the time,” the ambassador said.With programmes and projects in the fields of human resources, rural development, and environmental and cultural preservation, Germany is active in a wide variety of areas.

The country is also an important partner in the fight against drugs and human trafficking, and clearance of unexploded ordnance.“In recent years, bilateral cooperation was and is a success story and this was honoured by a doubling of our two-yearly commitments since 2008/2009, from 17 million euros to 34 million euros,” the ambassador said.Dr Wienand recalled the reunification between East and West Germany on October 3, 1990, which took place 11 months after the fall of the famous Berlin Wall. Last year, Germans also celebrated the 60th birthday of the Federal Republic of Germany and the fall of the wall.
He said reunification after 41 years of separation was like a dream come true and was greeted almost unanimously by East and West Germans alike.During the conference, Deputy Minister of Planning and Investment Dr. Bounthavy Sisouphanthong touched upon ways to further develop cooperation activities in which Germany is already engaged.The topics included how to improve vocational training, strengthen micro-finance and boost small and medium enterprises.The challenges of measuring development results and the role of development results within the framework of the Lao planning system were also discussed at the conference.

Times Reporters

Sepon mine has achieved production of 34,282 tonnes of copper and 54,631 ounces of gold in its first 6 months.Production for the full year 2010 remains on track for 67,000 to 70,000 tonnes of copper cathode and 95,000 to 100,000 ounces of gold.

According to MMG LXML, gold production increased 15 percent to 29,258 ounces during the second quarter compared to 25,373 ounces of gold at the same time last year. However, copper production during the quarter remained steady due to the onset of the wet season and complex unexploded ordinance clearance requirements in the mine area.

The Sepon Copper Expansion Project is making solid progress with 84 percent of works completed. The expansion is expected to be finished by early next year.The second high-voltage power line project, which links the project into the national grid, has also recently been completed.

The US$60.4 million copper expansion is set to Sepon gold and copper production on targetincrease copper production capacity at the Sepon project from around 65,000 to 80,500 tonnes per annum.Group Manager for Corporate Affairs Asia Richard Taylor said “MMG’s Sepon operation has performed well in 2010. We have met our milestones and remain focused on our safety, community and environmental responsibilities.”

The mining sector has been criticised this year, but there are positive stories about the sector’s contribution to national economic development that should be highlighted, he said Metal prices in the world market softened considerably during the second quarter, driven by negative macroeconomic sentiment and concern over financial difficulties in several European nations as well the softening of the Chinese economic stimulus, according to MMG LXML. Three-month prices at the London Metal Exchange were also down for the second quarter by between 16 and 26 percent depending on the metal

Despite government policy to motivate private sector growth, Lao businesses are still hampered by unnecessary fees and red tape.

These barriers to trade have an impact on goods of trade services and the competitive capacity of domestic business.

Speaking at the National Assembly (NA) last Friday in Vientiane, Minister of Industry and Commerce Dr Nam Vinhakhet said that for trade to grow more quickly in Laos all obstacles must be removed, starting at village level.

Addressing the unreasonable fee system, Dr Nam commented that the village authorities and the sectors involved to be able to manufacture their product, then pay district authorities for the privilege of transporting goods before they can be sold.

He raised the question of how businesses can survive if this situation continues, and urged the government sector responsible to abolish all trade barriers to enable businesses to develop.

The government and prime minister have already issued announcements requiring changes in checkpoint procedures and regulations, with the aim of removing unnecessary procedures. But many sectors have been slow to follow the reforms.

“If we work like this it is not an open economy. We should seek ways to ease business operation,” said Dr Nam.In future the ministry will phase out issuing goods monitoring documents to businesses as the practice is seen as outmoded.

In future the ministry will phase out issuing goods monitoring documents to businesses as the practice is seen as outmoded.

The documents only create difficulties for companies that want to export goods, who have to ask first permission from the relevant department or ministry.

Dr Nam told the NA that companies no longer need apply for the documents, but the ministry urges manufacturers to have the proper goods certificate, brand name and trademark to certify their own products.

It is believed this system will make it easier for businesses to export their products and help break down the complexities they have faced in the past.

Dr Nam has quoted Late President Kaysone Phomvihane who said commercial production needed to open up independent goods traffic throughout the country, and led the implementation of this policy in 1992 by abolishing all trade barriers and inspections to ensure free movement of goods.

But the business sector continues to confront obstacles, which need to be removed if real sustainable private sector growth is to be achieved.

The Ministry of Planning and Investment and Lao-German Human Resource Development for a Market Economy (HRDME) last week launched a survey report for research into business performance in Laos based on 2009 data. Enterprise Survey 2009 (ES 2009) was put together to assess the impact of the HRDME programme as well as measuring changes in enterprise performance and identifying constraints in the sample. The survey gathered data from the tax register which last year recorded about 84,000 enterprises for Laos. Interviews were carried out in three selected districts in Luang Prabang, Luang Namtha, Savannakhet and Champassak provinces and in Vientiane from June to July 2009, covering 728 enterprises in total.
The survey revealed progress in the business environment shown by higher levels of satisfaction with government support among business owners and managers, as well as with the shorter time needed to register an enterprise. The report also states that the impact of the global financial crisis on the Lao economy, while limited, affected larger companies more than small and mediumsized enterprises. Limited competiveness of Lao enterprises on international markets, access to business finance and business management skills, particularly in smaller enterprises, and inadequate technical and vocational skills in the labour force remain the major constraints to the sector. The survey had five main objectives: to determine changed values of project indicators compared to the 2005 to 2007 period; identify changes in business environment and performance compared to 2005 and 2007; assess the impact of the global financial and economic crisis of 2008-2009; assess trade liberalisation under the Asean Free Trade Area on enterprise in Laos; and monitor changes in the ranking of constraints to business development. The research lays the foundations for an impact monitoring system for partner organisations by comparing EBS 2005, ES 2007 and ES 2009 data.
German Ambassador to Laos Dr. Peter Wienand said at the launch of the report “We always complain about insufficient statistical data in Laos but fortunately with this survey we have a reliable guideline for the state of the business sector which can serve as a model for other statistical inquiries as well. The survey not only measures improvements in the business environment over the years in general, it also measures the success of the bilateral HRDME programme, he said. Because of this improvement in the institutional regulatory and human resource condition, the private sector and SME development is at the heart of this programme and the results of the survey can be used as one of the benchmarks for progress. More than 100 participants from the public and private sectors as well as international organisations attended the launch of the report in Vientiane, which was attended by the Director of the Ministry of Planning and Investment’s Department of International Cooperation, Mr Somchith Inthamith.

Representatives from tourism and hotel groups in Champassak province have asked provincial finance officials to resolve the problem of double tax payment by some hotel guests. Fifty-five tourism and hotel units shared their comments in a provincial public-private dialogue meeting in Champassak on Thursday. Champassak Chamber of Commerce and Industry President Dr Chinda Vongsouri said that when tourists buy package tours, the price includes value added tax (VAT).“However, they also have to pay tax when they stay in a hotel,” he said.

Tax officials collect the VAT from hotels and the hotels collect it again from customers, even if they are on a package tour, he explained. “The tax should only be collected from hotel guests who are not on package tours.”To resolve the issue, service operators want officials to amend tax regulations to match those in Vientiane, where tax is collected only once.

An official from the provincial finance department, Mr Vixianh Sombounkhanh, said this issue had already been resolved in December and each related state sector had been informed of its implementation in early January.“There is no double tax payment now. There may be misunderstanding about the payment among some businesses,” Mr Vixianh said. Tax officials do not collect tax from hotel guests a second Champassak tourism operators debate double tax paymenttime because they have already paid it when they bought the package tour, he said.“We have taxed hotels only on their business operation.” “Under the amended regulations, customers will be able to get a refund if they pay twice,” Dr Chinda said.The department will need to go back and check whether state officials are acting on the amended regulations.“We have to identify the problem and solve it.

Tax regulations must be clear to facilitate service operations,” Mr Vixianh said.The Champassak chamber has been trying to improve coordination between public agencies and the business sector. Director of the Lao-German Programme on Human Resource Development for Market Economy (under Deutsche Gesellschaft fur Technische Zusammenarbeit, GTZ), Dr Manfred Matzdorf, commented that Champassak is a model province in terms of finding business solutions for better economic development.

Provincial public-private dialogue has so far solved 14 out of 24 business problems raised by the private sector.“It serves to bring the public and private sectors together to identify critical problems for business and investors in the province and initiate action to solve those problems,” Dr Matzdorf said. The meeting was organised by the Champassak chamber and supported by the Lao National Chamber of Commerce and Industry, United Nations Development Programme, United Nations International Development Organisation, and GTZ.

Phonsavanh Vongsay

The Ministry of Industry and Commerce and a Taiwanese investor plan to complete land clearance and infrastructure construction of a planned industrial and trade park within the next six months.The industrial area will be located at Km 21 in Xaythany district, Vientiane.A joint agreement on the development of the project was signed between the Ministry of Planning and Investment and Nam Wei Development Co Ltd last Friday in Vientiane.“The area will be 110 hectares and is in a different area from the current Vientiane industrial zone,” said the Office Head, Ministry of Industry and Commerce, Mr Bounmy Manivong, in an interview at the ceremony.The two parties hope to build 147 factories, including assembly plants for bicycles, computers, garments, pick-ups, plastic products and shoes. “The area is intended to manufacture goods for export,” he said.It will also have a shopping centre, trade buildings, vocational institutions, schools, a hospital and a hotel. “It will be a model industrial and trade area in Laos,” he said.The project, named the Vientiane Capital Industrial and Trade Area, or VITA Park, is located in Nonthong village. The two parties will operate the area for 75 years. “The company can negotiate with the government if it wants to extend the agreement,” Mr Bounmy said.Laos will contribute the land as its share of the investment.The company will invest in infrastructure and facilities to encourage local and foreign businesses to invest in industry, trade and services. It will build facilities for investors to lease or rent.“We think that after six months or a year, there will be many factories built,” Mr Bounmy said.Laos would benefit from greater production leading to an increase in exports, tax revenue and duty collection.Employment is expected to grow to 60,000, with an eventual goal of 200,000. It will be a way to reduce poverty, he said.However, the two parties are unable to identify costs as yet. They will have to conduct a feasibility study and design following the agreement.“We will also draft a decree to manage and administrate the factories and the area as per the Prime Minister’s suggestion,” he said.The joint agreement ceremony was attended by 70 people including foreign investors from countries that are interested in investment in the scheme. It was in line with a memorandum of understanding signed between the company and the Lao government last May.

Phonsavanh Vongsay,

The nation’s small and medium sized enterprises (SMes) promotion and development committee expects to continue the improvement of its online business registration system nationwide in fiscal year 2009-2010.SMe Promotion and Development office Head, Mr Somdy Inmyxai, made the comments at the 4th committee ordinary meeting yesterday in Vientiane.“We have improved the system to facilitate its use in seven provinces, with links directly to the centre in Vientiane,” Mr Somdy said.He said the committee also plans to complete planning for and initiate funding for SMes in the upcoming year.These are just some of the activities the committee hopes will promote the growth of the SMe sector.Studies have shown that SMe operations are increasing in size and effectiveness despite the global recession.“Growth was experienced by 49 percent of the 400 SMes studied in 2005, and 59 percent of 500 SMes in 2007,” Mr Somdy said.The result was a good one thanks to set up and registration being easier than in the past, after the government had improved the enterprise law.The study also showed that 31 percent of businesses needed to submit more than 10 sets of documents to set up a business in 2005. “However, only 10 percent needed this number of documents in 2007,” Mr Somdy said. “The 2009 study result will come out soon.”With SMes increasingly seen as a backbone of economic growth, the government has paid attention to promoting and facilitating their growth quickly, improving legal frameworks to allow their establishment.Yet Minister of Industry and Commerce Dr Nam Vinhaket said more needed to be done to facilitate business start ups.“as Mr Somdy said, some businesses had to pay 3 percent of their investment cost to a middleman or broker for document work, to register for a licence.”“It is a frightening figure,” Mr Somdy said.The SMe sector is the basis of the national economy comprising 99.8 percent of businesses. “Positive growth in the Lao economy depends on the development of this sector,” Dr Nam said.“once SMes grow more strongly, we will see stronger national economic growth.” “If this sector is not experiencing growth, the national economy will also fail to do so.”“In the past, those who wanted to open a business had to wait for approval from the government. Now they can register more easily if they abide by the law. Ministry offices will sign and stamp their proposal faster,” Dr Nam said.He said the SMe sector was strengthening thanks to cooperation with international organisations in technical cooperation, research, training and workshops. “So far they have provided support to the sector worth more than 67.7 billion kip (US$8 million),” Mr Somdy said.Current    project cooperation efforts are managed under the Lao-german Human resource Development for the Market Economy Programme, a joint effort combining the German development organisations of the Deutsche Gesellschaft fur Technische Zusammenarbeit, the German Development Bank, German Development Service and Integrated CIM Experts.Small enterprises are classified as those with an average number of employees not exceeding 19 persons, total assets not exceeding 250 million kip, or an annual turnover not exceeding 400 million kip.Medium enterprises are those with an average number of employees not exceeding 99 persons, total assets not exceeding 1.2 billion kip or an annual turnover not exceeding 1 billion kip.

The inflow of investment into Laos is expected to see a big jump this year despite the global recession, according to data released by the Ministry of Planning and Investment. The data shows the government has already given the green light to 208 projects nationwide in the past nine months, valued at about US$4.3 billion. This figure exceeds total investment in 2008 of about US$1.2 billion.

Most investment projects are in mining, hydroelectric power, industrial tree plantations such as rubber, and light industry such as garment manufacture and electrical equipment assembly, according to investment officials. Vietnam topped the list of investors in Laos for the second year, with investments valued at about US$1.4 billion. China comes in second with investments of US$932. Million and Thailand has the third highest investment in Laos with US$908 million. Republic of Korea is ranked fourth with investments of US$74 million.

Investment Promotion Department Director General Houmpheng Souralay said the main reason for the increase in investment this year was that businesses had realised the investment potential of Laos. Laos has plenty of fertile land suitable for tree plantations, large mineral deposits that can be supplied as raw materials to major industries, and rivers that can be harnessed for hydropower. Mr Houmpheng said the government’s efforts to streamline the investment process had also helped to encourage local and foreign businesses to invest in Laos, as they could now submit investment proposals through a one-stop service unit at the Ministry of Planning and Investment.

The one-stop service unit allows investors to submit proposal documents at just one place, where officials liaise with the sectors concerned to consider approval of the project. Officials said although Laos has approved more investment projects this year, it did not reflect the true inflow of investment into the country. Some investors had suspended their projects as they were unable to obtain the capital they needed from banks due to the recession. They also said investors wanted to get permission for concession projects from the Lao government first and wait until the recession was over to get the funding they needed. Mr Houmpheng admitted the ministry was unable to obtain accurate reports from commercial banks on the true amount of foreign investment in Laos.

Somsack Pongkhao

The Ministry of Commerce and Industry intends to establish a trade portal to facilitate business operations in Laos. However, trade officials are yet to confirm when the trade portal would be established as they need some time to prepare the proposed scheme. The portal is one of five priority projects to facilitate business in Laos approved at a national meeting in 2006.

A trade portal is a ‘customer centred’ web-based team application that provides flexible, pro-active, efficient and interactive services and communication to all users. Deputy Director General of the ministry’s Import-Export Department, Dr Laohoua said at a meeting yesterday in Vientiane that the trade portal would not overlap with the current website operated by the ministry.  “The portal will include a variety of information in relation to trade from both Laos and other countries,” he said.  Dr Laohoua said the ministry’s current website only covers trade information within Laos. The portal would include updated information regarding laws, trade promotion, forms for business operation, marketing and market trends.

Deputy Minister of Commerce and Industry, Ms Khemmani Pholsena said the trade portal would provide information on import and export regulations for businesspeople.   “Although our ministry does provide information about import and export, business people have requested the government improves information generating systems in a transparent way,” she said.

At the meeting, Ms Khemmani urged officials to pay attention to learning and exchanging ideas with experts. International consultant, Mr Henri Stetter said global economic and business methods are constantly evolving. What works today, might not work tomorrow.

Mr Stetter said tools such as trade portals allow businesses to become more competitive. “Every successful trade portal needs to have a vision as well as core values. These visions and values are the genetic makeup of the portal and must be clear and known to all stakeholders, staff members and partners,” he said. The role of a trade portal includes business matchmaking, business facilitation and opportunities, he said.

Matchmaking includes trade promotion, country profile, suppliers, product profiles and investment opportunities. Business facilitation includes import and export trends, market surveys, trade statistics, information on tariffs and taxes as well as trade and investment policies