Since 1975, the Government of Lao PDR has aimed to heal the wounds
of war and steadily improve people’s living conditions. In 1986
the Government adopted the new Economic Mechanism, moving economic
activity away from a central command system towards a market-based
approach – allowing the private sector an active role in socio-economic
development. Since then there has been considerable progress, with
steady improvements in key social and economic indicators. Economic
growth rates have also been strong. Despite the Asian financial crisis,
for example, the macro-economic climate has remained stable and growth
was maintained throughout the 1990s and through the first years of
the new millennium. At the same time, Lao PDR has become an active partner
in ASEAN and in other initiatives for regional co-operation.
The Government of Lao PDR sets the guidelines and defines
the way forward. Through its 5-year National Socio-economic
Development Plans, the Government then translates these into
specific targets and objectives and for each sector identifies
the necessary strategic programs and priorities. In March
2001, the 7th Party Congress further refined its 2020 vision
for the country by specifying poverty reduction targets for
2005, 2010 and 2020 and highlighted priorities for industrialization
and modernization.
To achieve these objectives, the Government of Lao PDR has
outlined the following strategic priorities:
- Maintain an appropriate level of economic growth
for the medium and long-term in response to demographic
trends.
- Enhance human resource development through education,
particularly basic education at all levels – including
the formal and informal sectors as well as vocational
training.
- Develop and modernize social and economic infrastructure
in order to facilitate economic development in each
region of the country while accelerating Lao PDR’ regional
and international economic integration.
- Facilitate access to electricity for people in all
areas and regions of the country in order to foster
integrated economic development.
- Promote industries utilizing domestic natural resources,
and actively promote small and medium-sized enterprises
and the production of handicrafts.
- Develop and promote all economic sectors, particularly
the private sector, including foreign direct investment,
in order to expand business opportunities – emphasizing
the export-oriented sectors in which Lao PDR has a comparative
advantage.
- Enhance market linkages and trade facilitation.
- Strengthen existing legal and regulatory frameworks.
- Create favorable conditions and mechanisms for improving
financial institutions and further capital market development;
- Promote economic cooperation with all partners and
countries.
This refinement of strategic priorities has helped the
Government implement its eight priority programs:
food production; commercial production; shifting cultivation
stabilization; infrastructure development; rural development;
human resource development; service development, and foreign
economic relations. Over half of the populations are young
people and the Government’s
over-arching concern is to pursue national development strategies
that will create a positive future for them. One clear success
has been in poverty reduction. As a result of efforts by both
the Government and the people, between 1993 and 1998, the proportion
of people living below the national poverty line fell from
45 to 39 percent. First estimates for 2002-03 suggest
that the proportion of people below the poverty line
will reduce further. The Government has also put an increasing
emphasis on the social sector. Between 2000-01 and 2002-03,
it increased the proportion of the budget spending on education
from 7.0 to 11.2 percent, and the proportion going to health
from 3.5 to 8.7 percent. It will also increase the proportion
going to the social sector in the years ahead. Between 2003-04
and 2005-06 this will increase from 28 to 34 percent, by which
time health and education will account for three-quarters
of social investment. With the rise of the social sector allocation
over this period, the proportion going to the economic
sector will decline slightly from 59.7 to 56 percent. Nevertheless,
because of its importance, investment in the economic
sector will remain a strategic priority for the government.
|