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LAO PDR
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Improving Quality Investment for Achieving Sustainable Development Goals in Lao PDR

Strengthen government’s regulatory capacity to coordinate and promote higher-quality investment; and improve ease of doing business, transparency, accountability and effectiveness of investment management for achieving the SDGs. Help government address and remove the investment regulatory and business barriers which currently hinder development of a healthy, vibrant, competitive business environment; while regulating compliance and obligation of investment projects to create more jobs for local people and build skills of national staff.

Partner(s)

Investment Promotion Department (IPD), The Ministry of Planning and Investment (MPI), the Ministry of Natural Resources and Environment, the Ministry of Energy and Mines, the Ministry of Industry and Commerce, the Ministry of Agriculture and Forestry, United Nations agencies and other development partners, international and local Non-Governmental Organizations, civil society organizations and the private sector.

Focus

Support the central, provincial and district authorities to leverage quality investment in natural resources, improve ease-of-doing business, and diversify the economy beyond natural resource-based industries for the purpose of poverty reduction, efficient natural resources utilization, and least-developed country (LDC) graduation by 2020 in line with Lao PDR’s National Socio-Economic Development Plan (NSEDP) 2016-2020.

Mainstreaming Context

Lao PDR is well-endowed with natural resources such as minerals, forest, land and fresh water. The rapid economic expansion of the country is mostly attributed to inflows of foreign direct investment (FDI) generally targeting the natural resource sector, specifically the mining, hydro power and agriculture sub-sectors. To achieve the high Gross Domestic Product (GDP) growth targets to ensure LDC graduation by 2020, it will be essential to promote sustainable and inclusive socio-economic development through quality FDI inflows and sustainable domestic investment in the areas of hydro, agriculture and tourism.

Main Activities

Attract investments that will lead to a reduction in poverty, create inclusive and sustainable growth and maximise the effective management and utilisation of natural resources, with a more concerted effort to strengthen regulatory process for investment concession approvals by the government.

Strengthen overall enforcement of investment regulatory environment in Lao PDR, which will mostly pertain to land concessions although authorities regulating general business, special economic zones (SEZ) and the public investment programme (PIP) will also be engaged in trainings.

Promote a private sector-driven approach to inclusive development, consistent with the Government of Lao PDR’s ambitions for the private sector to make up 54-58 percent of total investments in Lao PDR, in particular, the need to develop the non-natural resource sector.

Expected Achievements

The Poverty-Environment Action project will build on the tools already established by the Poverty-Environment Initiative, expanding their application in 17 provinces and further expand engagement with other important institutions that play a role in investment regulatory compliance.

The private sector component of the project will include working with Chambers of Commerce/Companies and Government to identify and remove business barriers that currently hinder the development of a healthy vibrant competitive business environment.

New quality business opportunities will be identified, and a guidance manual/tool will be developed to advise government on how to set up business incubator to promote innovation and pro poor and environmentally sustainable responsible businesses.

Initial interventions will focus on the pre-approval stage by supporting investment officers to collect the appropriate information for investment applications.

Officers from the Department of Mines will receive further training on financial decision-making modelling tools to assess mining proposals and to present a more realistic financial picture of the proposals by including environmental and social costs and benefits in the projected future cash flows.

The software operated by the One Stop Service at Investment Promotion Department to track the investment approval process will be integrated in the Concession Compliance Database, which will be made available to the general public, to improve transparency and enhance the level of data sharing inter and intra-department.

A number of regulation checklists according to the laws and policies related to investment authority will be formulated, and key regulations will be included in relevant departmental compliance data system, and be linked to the Investment Promotion Department’s database and be populated and generated by the department.

An Inter-departmental joint monitoring mechanism will be designed, and a network of government information systems will be established that help inform the joint inspection teams and corresponding enforcement agencies to take actions against non-compliant project developers.

Poverty-Environment Action will support the National Assembly of Lao PDR by building the capacity of members and technical committees to monitor the laws related to investments.

A network of government information systems will be established and allow for a better cross system compliance.

The Poverty-Environment Action project is supporting the government in engaging the private sector in achieving the 8th National Socio-Economic Development Plan goal of promoting corporate socially responsible investment implementation and reporting.

The project will support the identification and removal of selected business barriers through bringing together government and existing business forums and create new business opportunities through creating marketable investment profiles.

Lessons Learned

Insufficient regulation and incentives to direct private investment toward supporting pro-poor environmental and natural resources use.

Effectively measured investment for compliance, effectively enforced laws and regulations, sufficient checks and balances across ministries and the national assembly will contribute to quality investment and enforcement of laws and regulations.

The Way Forward

The Poverty-Environment Action will be to maximize the potential for the long-term sustainability of the interventions in improving quality investment regulation for achieving sustainable development goals. Responsible and diverse business driven growth sustainability will be promoted through the implementation of the Corporate Social Responsibility (CSR). Results from the project will be disseminated within and beyond the project intervention zone through existing information sharing networks and forums.

Names and contacts