Working towards greater community control over land, forests and natural resources

Laos does not need new mining projects: World Bank economist

Vientiane Times, May 28, 2012

The Lao economy will not experience a sharp decline over the next few years, despite the government’s decision not to encourage new mining proposals, a senior World Bank economist has said. Ms Genevieve Boyreau made the comment on Wednesday amid concerns that the Lao economy will see a major downturn over the next few years once  the government imposes its new policy. The mining sector has made a major contribution to economic growth over the past five years and the government’s decision to call a halt to new mining investments has caused public concern.

Ms Boyreau said that based on information received by the World Bank, output in the mining sector would continue to increase over the medium term due to the expansion and development of existing projects, adding that some that are currently still in the surveying and exploration stages will switch to commercial operation. She said she hoped the government would encourage further investment in already approved projects so that commercial operations can begin and contribute more to economic growth. Ms Boyreau also said data collected showed that electricity generation will become the main driving force of the Lao economy for the foreseeable future, adding that many hydropower projects now under construction will begin commercial operation in the next few years.

Much of the power produced will be exported at fixed pricing, so this reliable income stream will help the country to maintain stable economic growth. By contrast, mining products can vary considerably in price, with some minerals proving susceptible to volatile market forces and the world economic situation. According to a report from the Ministry of Planning and Investment,  the Lao government has declared its intention to stop relying on the export of natural resources, which would lead to eventual depletion, and boost investment in other activities to ensure sustainable economic growth. The ministry has named agriculture as the top priority for both domestic and foreign investment. They also want to promote investment in the processing and logistics businesses since Laos is located in the middle of the Mekong region.

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