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Workshop on Lao Trade Policies: Effects on Business Incentives and Government Revenues

Opening Remarks
by
Mr.Gil-Hong Kim
Country Director of ADB Lao Resident Mission at the,

Novotel hotel, Vientiane

14 August 2008

Mr. Bounsom Phommavihan, Director General of Foreign Trade Policy Department, Ministry of Industry and Commerce. Colleagues from other Ministries, Ladies and Gentleman:

It is my pleasure to deliver the opening remark on behalf of ADB at this very important workshop on Trade Policies and their Effect on Business Incentives and Government Revenues in Lao PDR.

First of all, allow me to take this opportunity to congratulate the Ministry of Industry and Commerce for successfully setting up the Business registry office here in Vientiane and the 3 pilot offices in Khammouan, Savanakhet and Luangprabang.

Colleagues

ADB has a long standing partnership with the Government on the public expenditure and financial management. Under the Public Expenditure Management Strengthening Program (PEMSP) and the Public Financial Management Strengthening Program (PFMSP) ADB is working closely with other partners in helping the Government implement one of the priority areas of the Government. ADB is helping to improve efficiency, transparency and compliance with international public financial management practices.

To help the Government leverage its revenue collection through better managed duties and taxes ADB is supporting 5 key areas including Fiscal Planning and Budget Preparation; Budget Execution, Accounting, and Financial Reporting; Local Government Financial Management; Financial Regulation and Legislation Framework; and Capacity building.

Lao PDR is now mplementing the ASEAN Free Trade Area (AFTA) with tariff reduction to 0-5% and preparation for WTO accession. There is therefore need for the country to strengthen its analytical capacity in the area of trade policy analysis. Such capacity is needed by the focal point in Government as well as other concerned agencies. The Foreign Trade Policy Department of the MOIC as the focal point in Government would need such capacity. In the immediate term we feel that MOIC need the capacity to:

• estimate the effective rate of protection as an analytical tool for the Government to assess resource allocation effects of trade policy, Including AFTA and WTO accession;
• assess market barriers in major trading partners and
• provide in-house training for staff

ADB is ready to provide support in these areas. In fact ADB is assisting the Government promote private sector and SME through Private Sector and SME Development Program Cluster and TA 4974 (Private Sector and SME Development Program). This is designed to help Government implement the key elements of the Enterprise Law and other measures under the program cluster, provide timely economic policy analysis and advice on SME and business climate issues, and strengthen institutional capacity in Government to deepen the private sector reform agenda.

Let me conclude by congratulating MOIC for organizing this very important workshop. I believe the results of the survey on measurement of the incentive effect of Lao economic policies using the effective rate protection and estimation of customs revenue effectives of ASEAN tariff cuts and Lao foreign investment incentive would be substantive inputs for policy makers.

I am sure there would be fruitful discussions today and your strategic recommendations will indeed be useful in further advancing the private sector/SME and trade policy development agenda in Laos. I am very pleased to be a part of this activity.

Thank you very much.