The impact of the global financial and economic crisis on
Laos is becoming more serious and widespread, especially in the export sectors
of different provinces, which experience drop in their exports, while government
revenues have been decreasing and negatively affecting the implementation of
different development projects across the country.
Standing Deputy Prime Minister Somsavath Lengsavad admits
that the global economic and financial crisis has not only affected Laos' overall
economy, but also sent extensive ripple effects to different provinces,
especially in the export sectors which have already seen a decrease averaging
more than 41% in exports over the last three months.
Hardest hit is the copper mining sector. With prices continuously
declining in
corn grown in northern Laos
world markets, earnings from copper mining have dropped as much as 60%. In addition, decreasing demands
for electricity abroad, especially in Thailand, have resulted in a drop of over
30% in electricity exports to that country. Moreover, coffee and garment
exports have also dropped over 20% each, while agricultural products face a
dramatic drop in their prices. That, combined with the lack of markets, has
resulted in increasing inventories of agricultural products, such as corn, in
northern provinces that now have tons of unexported corn on their hands. Growers
of cassava, however, are luckier in that their produce is in high demand by
Chinese companies who would buy all the cassavas that Lao farmers can produce,
but at a lower price than before. Previously, a ton of cassava would bring farmers
400,000 kips or about 50 U.S. dollars, but now the price is only 320,000 kip, a
20% drop.
Consequently, revenues taken in by the government have dropped
significantly. Mr. Somsavath admits that revenues for the 2008-09 fiscal year will
at least decrease 700 billion kips, and that will result in a budget deficit of
over 3,000 billion kips. All that will inevitably affect the implementation of
many development projects, especially those in other provinces.
Songrit Pongern reported in Lao from Bangkok on June 02, 2009
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