Laos reviews 25 years of economic reform

The government yesterday hosted a seminar to assess the success of the Party’s policy of economic reform over the past 25 years.

Standing Deputy Prime Minister Somsavat Lengsavad presided over the two-day meeting in Vientiane, which also aimed to clarify and strengthen economic reform measures to ensure sustainable economic growth.

President of the Vietnamese Academy for Social Science, Mr Do Hoai Nam, Vietnamese economic experts and a number of senior government officials and economists attended the seminar to discuss the Party’s economic reform policy.

Speaking at the opening ceremony, Mr Somsavat said the seminar was very important because the outcome of discussions would feature on the agenda of the 9th Party Congress, which will be held next year.

He urged seminar participants to pay attention to the discussions, to identify the strengths and weaknesses in the implementation of economic reform over the past 25 years. This would enable the shaping of a clearer and better policy, to reflect the actual circumstances in Laos.

Laos initiated a policy of economic reform in 1986, aiming to transform the centrally planned system into a market-based economy. The change in direction followed a decade of socialist economic policy which created hurdles to development.

The Lao economy was still fragile and agriculture-based, and the Lao people were not ready to pursue a socialist economy.

The setting of a market-based economy in 1986 resulted in the acknowledgement of individual and private ownership. The Party and government believed this would encourage people to take part in the development of the Lao economy.

Unexpected changes in both socialist and capitalist countries also inspired the Party to adjust itself to the new political environment.

Capitalist countries realised that workers were the driving force of their economies, reflecting their policy of improved social welfare. They also used scientific advances to boost productivity, which in turn created a better working environment.

Meanwhile, socialist countries including Laos realised the importance of markets as the engine of economic growth. They began to follow the theory of demand and supply, replacing the production of goods in line with centrally set plans.

The Lao government introduced measures to encourage private investment, aiming for about 30 percent to maintain economic growth at or above 7 percent a year.

This growth rate has been maintained in recent years thanks to increasing investment in the hydropower and mining sectors. At present, average per capita annual income in Laos is about US$900, up from US$80 in 1975.

Source: Vientiane Times
By Ekaphone Phouthonesy
March 17, 2010