Currently, the infrastructure in Laos is lacking and the majority of workers in the country simply do not possess adequate skills. With this, the most recent reports on Purchasing Power Parity for per capita income are around $2,000. On a positive note, the location of Laos places it near beautiful rivers, which provides a valuable means of transportation but also needed water for the agricultural industry. In fact, of all industries for Laos trade, agriculture is the most important to include substantial r
Currently, the infrastructure in Laos is lacking and the majority of workers in the country simply do not possess adequate skills. With this, the most recent reports on Purchasing Power Parity for per capita income are around $2,000. On a positive note, the location of Laos places it near beautiful rivers, which provides a valuable means of transportation but also needed water for the agricultural industry. In fact, of all industries for Laos trade, agriculture is the most important to include substantial rice crops.
Even with agriculture, a large part of the population depends heavily on concessional loans specific to investment sources pertaining to economic development. For the GDP, it is estimated that over 20% accounts for foreign loans and grants. Ten years ago, foreign debt for Laos was near $2 billion and with the recent financial crisis felt around the world, this number has certainly risen.
Over the years, reforms were put into play, one that allowed prices to be set by the current market, which in turn stopped prices from being determined by the government. At that time, farmers could purchase land and sell any crops grown on the open market. In addition, firms were allowed to have more power in the decision making process but lost most of the advantages for pricing and all their subsidies. Additionally, the exchange rate was set by the government to be close to the real market levels, import barrier were replaced with tariffs, Laos trade barriers were eliminated, and firms in the private sectors now had the opportunity to access Laos imports.
Then, the Lao government decided to stimulate the economy further for international commerce by allowing a bridge across the Mekong River going into Thailand be built by Australia. The bridge was successful but getting a permit so traffic could go back and forth freely was significantly delayed. The Asian Financial Crisis hit the Laos trade market hard and this with mismanagement by the country’s government caused serious inflation, as well as the kip being greatly depreciated.
While Laos, to include Laos Trade, Laos Exports, Laos Imports has stabilized somewhat in the past two years, the agricultural industry has not recovered so well. Therefore, to make it possible for farmers to keep growing crops, the financial economy continues to depend on foreign money. Because of this, the public sector still has a very active and dominant role in Laos trade.
While agriculture is the primary source of work and income, approximately 42%, two other sectors responsible for Laos exports and Laos imports include industry around 33% and services close to 27%. Of the three, most workers are still involved with agriculture in one form or another. However, when looking at revenue for Laos, which runs around $474 million versus the country’s expenditures at $646 million, it is easy to see why the country depends so much on outside assistance.
For the industry sector, this includes primarily gypsum mining, tin, electric power, timber, processing of agricultural products, garments, and construction. Then for agriculture, the primary crops grown include all types of vegetables, sugar cane, sweet potatoes, maize, tobacco, coffee, tea, cotton, rice, peanuts, poultry, pigs, cattle, and domestic buffalo.
The most recent reports for Laos exports show $970 million, which includes electricity, garments, coffee, wood products, gold, tin, and copper mostly. For Laos exports, current partners include Vietnam, Thailand, France, Belgium, and Germany. As far as Laos imports, numbers run approximately $1.4 billion to include vehicles, fuel, machinery, and equipment. For Laos imports, the primary partners include Thailand, Vietnam, Japan, Singapore, Hong Kong, and the People’s Republic of China.