VIENTIANE, LAO PDR — Asian Development Bank (ADB) President Takehiko Nakao today met Thongsing Thammavong, Prime Minister of the Lao People’s Democratic Republic (Lao PDR), Liane Thykeo, Minister of Finance, and Somdy Douangdy, Minister of Planning and Investment, to discuss how ADB can support the country’s infrastructure, private sector, skills development, and health services. He also attended the 20th ASEAN Finance Ministers’ and Central Bank Governors’ Meetings in Vientiane. He discussed the Asian economic outlook and ways to build greater financial resilience and foster an effective ASEAN Economic Community.
“Lao PDR’s economy is performing strongly as the government steps up efforts to diversify the sources of growth, including agribusiness and tourism, away from over-dependence on mining and electricity,” said Mr. Nakao. “To support diversification, the government should strengthen macroeconomic management, develop infrastructure, enhance human capital, and promote regional cooperation and integration.”
Lao PDR’s economy grew 6.7% in 2015 and ADB estimates that it will expand at 6.8% in 2016 and 7.0% in 2017, well above the forecast average for Southeast Asia of 4.5% in 2016 and 4.8% in 2017. The government aims for Lao PDR to graduate from the United Nations list of Least Developed Countries after meeting threshold criteria by 2020.
Mr. Nakao said Lao PDR needs to address its fiscal deficit and low foreign exchange reserve levels through efforts to mobilize revenues such as expanding the tax base, improving revenue administration, and better planning of medium-term expenditure.
Infrastructure development and improved connectivity has supported Lao PDR’s rapid economic growth. Infrastructure development supported by ADB assistance includes strengthening of the national transportation network, power sector expansion, and sustainable urban development, as well as public-private partnerships in the Nam Ngiep 1 hydropower development and the Vientiane sustainable urban transportation projects.
ADB is also supporting the Lao PDR economy’s connectivity with neighbors. Northern Greater Mekong Subregion (GMS) rural infrastructure development, GMS tourism for inclusive growth, and GMS corridor town development projects are spurring job creation.
This year ADB plans to provide grants and concessional loans to higher secondary education and technical and vocational education and training programs, which will increase job opportunities particularly among agriculture workers who comprise about 70% of the labor market.
ADB is targeting to provide more than $300 million in concessional loans and grants over 3 years from 2017 through 2019 to strengthen rural infrastructure, boost agriculture value chains and tourism, expand water supplies and corridor town development, facilitate trade, and improve health services delivery.
ADB’s upcoming 5-year Country Partnership Strategy will help Lao PDR promote inclusive and sustainable economic growth through support to the government’s 8th National Socio-Economic Development Plan 2016-2020.
In his address to the ASEAN Finance Ministers’ and Central Bank Governors’ Meetings, Mr. Nakao noted ASEAN has a labor force of more than 320 million people, making it the third-largest after the People’s Republic of China and India. ASEAN represents a major economic bloc, with a combined gross domestic product of more than $2.4 trillion. “ASEAN’s single market and production base hold great potential to accelerate ASEAN’s growth and increase its economic resilience,” he said. “It is important for ASEAN countries to pursue sound macroeconomic policies, strengthen open investment and trade regimes, and promote financial integration in the region, backed by good regulatory frameworks and sound macroprudential policy.”
Lao PDR is currently the Chair of ASEAN. Mr. Nakao and Mr. Thongsing agreed on the importance of deepening regional cooperation and integration. Mr. Nakao said the ADB-supported ASEAN Infrastructure Fund can mobilize further infrastructure investments to promote integration.
Lao PDR joined ADB as a founding member in 1966. Since then, it has received $1.8 billion in loans, $501 million in grants, and $153 million in technical assistance.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region.