Laos Leads ASEAN’s Next Chapter
As ASEAN Chair this year, the Lao People’s Democratic Republic (PDR) is receiving renewed interest and attention. Setting the theme “Turning Vision into Reality for a Dynamic ASEAN Community,” the Lao leadership is now under pressure to lead and implement the ASEAN Community Vision 2025 as ASEAN begins a new chapter after the establishment of the ASEAN Economic Community (AEC) at the end of 2015. Despite many challenges, leaders have welcomed and supported the Lao chairmanship. Indonesian President Jokowi Widodo has expressed confidence that “ASEAN will develop better cooperation and succeed in realizing ASEAN’s mission under Laos chairmanship,” while the U.S. Ambassador to ASEAN Nina Hachigian has reinforced U.S. support for the Lao chairmanship.
Laos will play an integral role in representing ASEAN interests and enhancing further cooperation between ASEAN and its partners as ASEAN continues to be an attractive region for business expansion. In AmCham’s 2016 ASEAN Business Outlook Survey, 77% of respondents from Laos mentioned that ASEAN integration will be important for them to do business in the region. This is anticipated to help boost Laos’ strong economic performance over the past decade and Laos expects a GDP growth rate in excess of 7% annually. Additionally, close to half of survey respondents (46%) have indicated plans to expand within Laos, while the same proportion of respondents also expect their workforce to expand in 2015.
As the chair this year, Laos has laid out eight priorities for its term, including trade facilitation, narrowing the development gap, enhancing connectivity, fostering greater regional cooperation, and transitioning to a formal economy. These priorities will strengthen the current government’s initiatives while creating a more positive business environment in Laos. This will be especially important as the expansion of the rule of law still remains a key issue for many businesses; more than 80% of respondents indicate that the lack of efficient and fair enforcement of the law is a major hindrance for business operations in Laos. Yet, businesses are optimistic that this will improve in the future. 69% of respondents have expressed confidence that the US$3.9 million grant received in 2014 from foreign donors including United States, United Nations, France, and the European Union to expand the rule of law will likely improve the business environment. This in turn will help to build foreign investors’ confidence in Laos.
This year will be an opportunity for Laos to lead and maintain the momentum in moving ASEAN forward this year despite being the smallest economy in ASEAN. Companies continue to be attracted by the strong growth prospects in this region with most ASEAN respondents (86%) expecting their company’s level of trade and investment to increase over the next five years. Backed by the ASEAN Chairmanship, this could position Laos as an increasingly attractive destination for foreign investors.
The next edition of the report, the 2017 ASEAN Business Outlook Survey, will be released in Laos during the United States-ASEAN dialogue at the ASEAN Economic Ministers Meeting in early August.