ID :
44076
Wed, 02/04/2009 - 09:49
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Shortlink :
https://oananews.org//node/44076
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“Has the crisis impacted on all?”
“Has the crisis impacted on all?”
(KPL) Deputy Prime Minister and Minister of Foreign Affairs Thongloun Sisoulith last week said that the global financial crisis has already affected six main sectors of the country and foreign investment is one of the victims.
He said that they are tourism, foreign investment, international official development assistance (ODA), revenue collection, export and employment.
He cited the reasons for the rapid economic growth at six per cent for the last few years: political stability and abundance of natural resources especially minerals and hydropower. These, he added, attracted foreign investors and they exploited such resources.
But the foreign investment environment and climate in the country changed to become gloomy this year as the financial crisis began to ripple and worm its way into the Lao economy. This is clearly seen in the suspension and cancellation of some high level projects in 2008. They are the hydropower projects—the Nam Ngum II, the Nam Ngiap I and the Nam Theun I as well as the billion-US-dollar power plant project, Hongsa Lignite.
A Chinese funded mining company, Lao-China Fareast Minerals Development said it had suspended mining copper ore in Luang Namtha province as the price of copper in the commodity markets had capitulated, from its high of US$8,000 per ton in July last year to US$2,980 per ton in November 2008.
Another mining company, Sepon Gold-Copper Mine proposed that the government consider the reduction of taxes as it is being hard hit by the slump in the prices of hard commodities.
In response to the current market conditions, Sepon Gold-Copper Mine of OZ Minerals Limited has put in place a number of initiatives designed significantly to reduce the company’s cost base. On 25 November 2008, OZ Minerals announced that it would defer capital expenditure of approximately A$495 million (net) and reduce operating expenditure budgets in 2009 by approximately A$185 million for its offshore investment projects. These measures included the suspension of the Sepon copper expansion in Savannakhet of Laos, deferring an expenditure of US$200 million.
Are these deferments and suspensions indicative that the world’s economic crisis is causing investors to scale back their investment in the country? However, the Ministry of Planning and Investment Ministry sees the situation from a different perspective as it has seen as many as 20 foreign companies signing documents to invest in various projects in the country in the first quarter of the present fiscal year 2008-9, from October to December. Deputy Director of the Department of Domestic and Foreign Investment Promotion and Managemnt, Ministry of Planning and Investment, Mr Achong Laomao said that most of the investment is in mining, hydropower and agriculture-forestry and based on such figures, he added that the pace of foreign investment is running at a steady pace.
Although, the government had collected sufficient revenue in the first quarter of the fiscal year 2008-2009 (commencing from October 2008) it said last week that the total national collection would be reduced significantly for 2009 because of the reduction in foreign investment, international official development assistance and grant aids, caused by the financial crisis.
The revenue collection for the first quarter was 464 billion kip (approximately US$54.5 million) a 10 per cent increase, compared to the same period last year.
NOT GLOBALISED
Although the national economy is not globalised but foreign investment to Laos is most vulnerable to the effects of a global economic downturn. Most of the investment projects in the country, especially the big ones, rely on financing from international financial institutes as the domestic banks are small timers and lack huge cash hoards.
The financial crisis has already given headaches to some investors but not Deputy Director of the Domestic and Foreign Promotion and Management Department. He said that the state of foreign investment in the country is stable as just less than two per cent of the foreign investment projects had been suspended or cancelled since the world economic crisis began to impact the Lao economy. The Lao government is aware that the financial crisis has severely affected the economies of the western world and that is why it is turning its attention to attracting investors from China and Vietnam. Up to date both of them, strategic neighbours of Laos had not yet been seriously impacted by the financial crisis. Last year, China and Vietnam were the biggest investors in Laos. As in the past years, the government is planning to attract 500 million US dollars of foreign investment for the 2008-2009 fiscal year to maintain its eight per cent growth annually.
A crucial factor is whether the government is able to get the national economy on an even keel in a doom and gloom 2009 but it is searching for solutions and the economists heaped praise on the government on its brainstorming sessions. However, Deputy Director of Department of Economics, National University of Laos, Dr. Phouphet Kyophilavong, warned that the government should study the implications before it implements any stimulus packages.
(KPL) Deputy Prime Minister and Minister of Foreign Affairs Thongloun Sisoulith last week said that the global financial crisis has already affected six main sectors of the country and foreign investment is one of the victims.
He said that they are tourism, foreign investment, international official development assistance (ODA), revenue collection, export and employment.
He cited the reasons for the rapid economic growth at six per cent for the last few years: political stability and abundance of natural resources especially minerals and hydropower. These, he added, attracted foreign investors and they exploited such resources.
But the foreign investment environment and climate in the country changed to become gloomy this year as the financial crisis began to ripple and worm its way into the Lao economy. This is clearly seen in the suspension and cancellation of some high level projects in 2008. They are the hydropower projects—the Nam Ngum II, the Nam Ngiap I and the Nam Theun I as well as the billion-US-dollar power plant project, Hongsa Lignite.
A Chinese funded mining company, Lao-China Fareast Minerals Development said it had suspended mining copper ore in Luang Namtha province as the price of copper in the commodity markets had capitulated, from its high of US$8,000 per ton in July last year to US$2,980 per ton in November 2008.
Another mining company, Sepon Gold-Copper Mine proposed that the government consider the reduction of taxes as it is being hard hit by the slump in the prices of hard commodities.
In response to the current market conditions, Sepon Gold-Copper Mine of OZ Minerals Limited has put in place a number of initiatives designed significantly to reduce the company’s cost base. On 25 November 2008, OZ Minerals announced that it would defer capital expenditure of approximately A$495 million (net) and reduce operating expenditure budgets in 2009 by approximately A$185 million for its offshore investment projects. These measures included the suspension of the Sepon copper expansion in Savannakhet of Laos, deferring an expenditure of US$200 million.
Are these deferments and suspensions indicative that the world’s economic crisis is causing investors to scale back their investment in the country? However, the Ministry of Planning and Investment Ministry sees the situation from a different perspective as it has seen as many as 20 foreign companies signing documents to invest in various projects in the country in the first quarter of the present fiscal year 2008-9, from October to December. Deputy Director of the Department of Domestic and Foreign Investment Promotion and Managemnt, Ministry of Planning and Investment, Mr Achong Laomao said that most of the investment is in mining, hydropower and agriculture-forestry and based on such figures, he added that the pace of foreign investment is running at a steady pace.
Although, the government had collected sufficient revenue in the first quarter of the fiscal year 2008-2009 (commencing from October 2008) it said last week that the total national collection would be reduced significantly for 2009 because of the reduction in foreign investment, international official development assistance and grant aids, caused by the financial crisis.
The revenue collection for the first quarter was 464 billion kip (approximately US$54.5 million) a 10 per cent increase, compared to the same period last year.
NOT GLOBALISED
Although the national economy is not globalised but foreign investment to Laos is most vulnerable to the effects of a global economic downturn. Most of the investment projects in the country, especially the big ones, rely on financing from international financial institutes as the domestic banks are small timers and lack huge cash hoards.
The financial crisis has already given headaches to some investors but not Deputy Director of the Domestic and Foreign Promotion and Management Department. He said that the state of foreign investment in the country is stable as just less than two per cent of the foreign investment projects had been suspended or cancelled since the world economic crisis began to impact the Lao economy. The Lao government is aware that the financial crisis has severely affected the economies of the western world and that is why it is turning its attention to attracting investors from China and Vietnam. Up to date both of them, strategic neighbours of Laos had not yet been seriously impacted by the financial crisis. Last year, China and Vietnam were the biggest investors in Laos. As in the past years, the government is planning to attract 500 million US dollars of foreign investment for the 2008-2009 fiscal year to maintain its eight per cent growth annually.
A crucial factor is whether the government is able to get the national economy on an even keel in a doom and gloom 2009 but it is searching for solutions and the economists heaped praise on the government on its brainstorming sessions. However, Deputy Director of Department of Economics, National University of Laos, Dr. Phouphet Kyophilavong, warned that the government should study the implications before it implements any stimulus packages.
