Senior Economist Backs Mining Investment Freeze

May 11, 2012

Vientiane Times

The economy will not see a downturn over the next few years if the
government decides to stop granting permission for new mining
investments, according to a senior economist.

“There will be no impact on our economy in the short term if the
government stops giving permission for new mining projects this year,”
Lao National Economic Research Institute Director General, Dr Liber
Libouapao, said on Wednesday.

He made the comment after the Ministry of Planning and Investment
suggested to Prime Minister Thongsing Thammavong on Tuesday that no
more proposals for investment in the mining sector be accepted.
Companies that have already been given the green light to conduct
economic feasibility studies for mining projects can continue as
planned.

Economic growth has stayed above 7.5 percent over the past five years,
with mining as the main driving force. The proposal to rein in the
industry has caused concerns that it could result in a slowdown.

Prime Minister Thongsing spoke to investment officials at the second
private investment promotion and management workshop in Vientiane on
Tuesday, but did not comment on the ministry’s proposal to curb
investment in the mining sector. The prime minister focused on ways to
encourage more businesses to invest in the non resource sector.

Dr Liber said the government had already given permission for several
mining projects to go ahead in recent years and should now concentrate
on ensuring that investors carry out these projects instead of
continuing to allow new ones to be set up.

If these companies proceed with their projects, the economy will
continue to grow over the next five years. But he admitted the economy
could slow in the long term if the country is unable to source more
investment in the non resource sector.

Dr Liber said that cutting off investment in the mining industry would
force Laos to boost private investment in the non resource sector to
secure stable growth. He noted that it is Party and government policy
to reduce investment in the development of natural resources and boost
investment in the non resource sector to ensure sustainable growth.

The Ministry of Planning and Investment is recommending that the
government promote private investment in agribusiness, the processing
industry, education, health and tourism, which have high investment
potential.

Dr Liber warned it would not be easy for the government to divert
investment from the resource to the non resource sector, pointing out
that low education standards and a largely unskilled workforce were
major challenges in this regard.

Laos needs experienced businesspeople, a skilled workforce,
infrastructure and sufficient investment funding to boost private
participation in the development of the non resource sector, he said.

The government is increasing the budget available for education,
hoping to provide skilled workers to meet the demands of the growing
number of local and foreign investors. But the government is
struggling to improve education and train personnel, despite the
increasing number of state and private schools.

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