On behalf of the Government and the people of the Lao People's
Democratic Republic (Laos), I would like to express appreciation at
being given the opportunity to submit comments to the U.S. Senate
Finance Committee regarding the extension of unconditional
Most-Favored-Nation (MFN) status to Laos. We applaud the efforts of the
United States to actively engage a relationship with Laos on a political
and trade related basis. We are a nation that has struggled many years
as one of the world's poorest countries, but a nation that is proud of
its accomplishments and its plans for further achievements in the near
future.
Laos has set on a course to become a member of the international
community. Our commitment to reaching our reform goals is evidenced by
the recent enactment of our Constitution, establishing a New Economic
Mechanism, developing, approving and implementing socioeconomic plans,
updating our systems and bringing them into conformity with requirements
to join the Association of Southeast Asian Nations (ASEAN) and in
actively negotiating with the United States to establish an agreement on
trade based on the principle of reciprocal MFN trading status and
signing the first southeast Asian bilateral investment treaty with the
U.S.
Domestically, we have undertaken reforms and changes to move toward a
market-oriented society, to an educated populace, to an empowered
citizenry, and to elevate the economic status of all Lao. Article six
of our Constitution ensures the well-being and security of all its
people, regardless of ethnicity. Approximately 49% of the Lao
population is made up of about 68 ethnic minorities. We have embraced
our differences. In order to move forward as a country and create
national unity, it is incumbent upon the Government of Laos to fully
appreciate, respect and incorporate the varying ethnic groups.
Government policies and practices are working to foster each ethnic
group's cultural integrity. The Lao Government is committed to actively
engaging all sectors of our society in economic reform to bring Laos
into the global trading environment.
Internationally, Laos has just become a member of the ASEAN,
Association of South East Asia Nations. Our membership in ASEAN
signified the recognition by our neighboring countries of the resolution
of Laos to elevate its people and work toward full participation in the
world economy. To join ASEAN, we had to undertake several reforms and
we are committed to taking further reforms to earn the right to
participate on a level field with other trading partners.
On a bilateral basis, we have sought a strong economic relationship
with the United States. Our most recent achievement with the United
States was the conclusion of a bilateral trade agreement granting
reciprocal most favored nation status and guaranteeing intellectual
property rights protection and a bilateral investment treaty. Laos is
the first country in Asia to sign a bilateral investment treaty with the
United States. The General Counsel for the U.S. Trade Representative
Susan Esserman stated the "These agreements form a solid basis for
establishing trade and investment relations between the United States
and Laos...They will expand opportunities for U.S. companies wishing
to do business in Laos, and send an important signal of Laos' efforts to
integrate into the world economy." We are prepared to finalize the
trade agreement as soon as the U.S. Congress passes legislation
extending MFN status to products of Laos.
In addition, Laos has offered unparalleled cooperation with the U.S. to
solve the POW/MIA and narcotics issues. We have worked with the U.S. to
stymie drug trafficking through and in Laos. Our country is often used
as a conduit for drug traffickers in some neighboring countries.
However, with the cooperation of the U.S., friendly countries and U.N.
organizations, we are providing alternative economic incentives to our
people, thus discouraging and eliminating participation by the Lao people
in the growth and transit of illegal drugs.
We have also offered significant cooperation with the National League
of Families (NLF). In a July 24 letter from Ann Mills Griffiths,
Executive Director of the NLF, to Representative Randy Cunningham, she
praised the efforts of Laos to work with her group and argued that Laos
has been a big help in locating the loved ones of American families lost
during the Vietnam war on our land. Ms. Mills Griffiths supports MFN for
Laos.
Laos has also addressed the concerns of many non-governmental
organizations (NGOs) in the area of environment. Some NGOs raised
concern with the slash and burn techniques of some of our hill tribes
which result in de-forestation. We have worked with these groups to
address the problem. Our Government has committed to a relocation
program granting land to hill tribes, relocating them for free and
offering money and assistance in establishing a new home. At the same
time, as previously mentioned, we are encouraging these people to grow
legal and profitable crops on this land.
We feel very close to the United States. It is home to one of the
largest expatriate Lao groups, the Hmong. A certain number of them
fought beside the U.S. troops during the Vietnam war. Having left the
country for more than two decades, they are not aware of the real
situation in Laos, where Hmong customs and tradition are well preserved
and promoted as a national heritage. Allegations of government abuses
and killings of Hmong people in Laos however, are unsubstantiated. In
fact, Lionel Rosenblatt, head of Refugees International has conducted
several fact-finding missions in Laos for alleged systematic abuse of
Hmong but has found a lack of evidence to substantiate these
allegations. Mr. Rosenblatt supports MFN for Laos and has encouraged
additional funding to aid in the Lao resettlement processes in his July
letter to Chairman of the House Ways and Means Trade Subcommittee, Phil
Crane.
All of these changes are moving Laos in the desired direction.
However, we believe it is essential that the global community recognize
our efforts and assist us in becoming a more market-oriented society.
We believe the granting of MFN status to Laos by the United States is
fundamental to further economic development and investment in Laos.
Such trading status would encourage private sector development in our
country and provide confidence to businesses in Laos.
In order to provide you with confidence in the changes occurring in
Laos and to support your decision to extend unconditional MFN status to
Laos, I am including a brief overview of the most recent achievements of
the Lao Government.
New Economic Mechanism
In 1986, the Fourth Party Congress adopted a package of reforms
intended to transform its economic management from a central command
system to one which is market-based and characterized by decentralized
economic decision making, with the private sector playing an active
role. The new economic management system emerging from the
implementation of the economic reform package is referred to as the New
Economic Mechanism (NEM) in Laos. Adoption of the NEM was confirmed by
the Fifth Party Congress in 1991. Under the NEM, we have drastically
reduced inflation, rationalized and stabilized the exchange rate,
committed to privatize or make autonomous all the state owned
enterprises except for those located in "strategic sectors", eliminated
consumption subsidies for public sector employees and have reformed the
banking system. One example of our success is in the stabilization of
the Lao kip vis-a-vis the US dollar.
New Constitution
The Constitution of Laos, adopted in August 1991, provides for the
separation of legislative, executive and judicial powers. The people,
with whom the political power ultimately resides according to the
Constitution, exercise such power through an elected National Assembly.
The members of the National Assembly were first directly elected by the
people in December 1992 for a five-year term, which began in 1993. Many
human rights are also guaranteed in our Constitution.
The Lao Government has also restructured. This restructuring has
affected the administrative arrangements for economic, financial and
development management. In February 1993, at the first session of the
National Assembly, a framework outlining the country's development
planning up to the year 2000 was presented. The actual plan was
completed approximately two years later.
These plans set forth the goals and objectives of the Lao Government on
an annual basis. Part of our success can be measured by examining the
results of the plan as implemented for the 1995-1996 period.
1995-1996 Socio-economic Plan
During the 1995-1996 year, the GDP increased an estimated 7.5% compared
with 1994-1995 period. The plan as approved and implemented by the
Government had projected an increase in GDP of 7-8%. The population in
mid-1996 totaled approximately 4.729 million (an increase of 2.4%
compared with 1995) and the average GDP per capita was about US$
370/person. In the first 6 months of 1996, 24 foreign investment
projects were licensed at a registered capital of approximately US$
1.200 million, of which 72.2% was invested in hydropower projects, 8.5%
in hotel-tourism, 6.6% in telecommunication and transport, 4.4% in
mining and 8.3% in other sectors.
During 1995-1996, the provinces selected their respective priority
areas and detailed development projects, totaling 63 focal areas in this
year. Currently, over 800 projects are presently under implementation.
Among such projects, over 70% are focusing on the development of
infrastructure and 30% invest in the re-orientation of the population
shifting from cultivation. As we move from an agrarian society to a
market-oriented society we must provide training and skills to our
people in order for them to benefit from the changing society.
On a regional basis, as outlined in the initial five year plan for each
region, several projects have been implemented which include: major
road improvement and construction projects, irrigation projects,
hydropower projects, wood processing plants and other infrastructure
development projects, which has allowed the regional economic structures
to take form along the direction of linkage between
agriculture-forestry, processing industry and services.
The value of circulated retail goods has increased approximately 27%.
External trade still suffers from a high deficit, however, a portion of
this is due to imported machinery and equipment for foreign investment
projects. Such a deficit may impact on our financial-monetary stability
in the near future, but will be beneficial in the long term for the
establishment of firm national economic base.
The 1995-1996 plan emphasized education. During this period education
has been further improved in terms of quality, namely in formal
education, which has increased the rate of enrollment among the children
of 6-10 years age group at the primary level by 73%. Illiteracy was
eradicated for 17,358 persons - of which 9,533 were women in the 15-40
year-old age group. Non-formal education such as providing vocational
training was introduced in combination with illiteracy eradication.
During the 1995-1996 period, significant achievements and success were
accomplished, however, there are still some weaknesses and pending
issues in certain areas which must be addressed. Laos is therefore
committed to following the socioeconomic plans as originally set forth
through the year 2000.
1996-1997 Socio-economic Plan
Most recently, the Lao Government has undertaken and adopted the
"1996-1997 Socioeconomic Development Plan" to help build up our people
and to actively participate in the global trading market. General tasks
in the 1996-97 annual plans include the initial development of the Fifth
Party Congress Resolution and implementation of the 5 year state plan,
by: further ensuring consistent socioeconomic growth; widely expanding
economic structures and market-oriented production; further upgrading
the quality of material and cultural life for civil servants and the
pluri-ethnic people; establishing a firm position and base to progress
into the 21st century and national industrialization and modernization
after the year 2000.
To achieve the tasks and general guidelines the Government has outlined
a number of 1996-1997 plan's targets as follows:
Actively ensure financial-monetary stability by firmly promoting
revenues and strictly managing expenditures.
Actively manage import-export and circulation of goods.
Firmly promote training, create a professional labor force, technical
workers for supply to major programs in socioeconomic development and
strive to create new employment for the Lao labor.
Sectoral Development Plans:
Food
Food production must be firmly improved and ensured for poor families,
namely in remote ethnic areas. The main emphasis will be placed on
further implementing the priority programs of the Government, which are:
food production, commercial production and shifting cultivation
stabilization.
Communication, Transport, Post and Construction
In 1996-1997, Laos's plans call for the further improvement and building
of national roads to the North of the country. Preparation will be
made for the construction of strategic bridges and roads to create a
strong communications network.
We also plan to continue to build the navigation route, namely in the
northern section of the country to meet acceptable standards of the
international community. We will improve and build ports to accelerate
transport services. Additionally, we will upgrade and improve air
transport services to meet international standards. Our plan calls for
the development of cargo and passenger air transport to neighboring and
regional countries.
The 1996-1997 State Planning Committee plan also calls for:
Further improvement to guarantee and accelerate postal services - both
local and outgoing. At the same time, concentrate on expanding postal
network at the district level and in priority socioeconomic areas,
expanding telephone centers and continuing to install the microwave
system according to adopted plans.
Bring solutions to sewerage systems, roads and construction in Vientiane
Municipality and other main urban areas in view of progressively meeting
the standards.
In 1996-1997, the state will make a total investment of Kip 89.47
billion in the sector of communication, transport, post and
construction, of which Kip 23.55 billion of domestic funds and Kip 65.92
billion of foreign funds.
Trade
Laos plans to increase the supply of basic necessary consumption goods
to the population. We are also preparing for accession to the World
Trade Organization (WTO). We also plan to improve our cooperation
mechanisms with trading partners. For example, as previously mentioned,
negotiating bilateral agreements with key global trading entities such
as the trade agreement currently being negotiated between Laos and the
United States.
Socio-cultural sector
In the 1996-1997 year, further emphasis will be placed in three main
areas: (1) on compulsory primary education to increase the primary
school enrollment by 5% and net enrollment by 75%; (2) on the
eradication of illiteracy among 60 thousand people within the target
group (15-40 years of age); (3) on upgrading educational attainment at
the primary level for 30,000 people and to lower secondary level for
7,000 civil servants, and to upper secondary level for 2,000 persons.
Information and culture
Our plans include the continued improvement and upgrading of quality in
radio broadcast, television, press and newspapers, magazines to ensure a
coverage of 100% throughout the country.
Labor and social welfare
As Laos moves toward a more market-oriented economy we must improve the
salary system, pension, policies toward public and private employees and
improve the social security system in Laos. We plan to build housing
for handicapped persons and a number of civil servants.
In general, during the 1996-1997 socioeconomic plan, we will strive to
elevate the standard of living for our people, to open our economy, to
become a global competitor, and to expand our efforts at becoming a
market-oriented society. We will increase cooperation with ASEAN
countries and continue to cooperate with international organizations and
international financial institutions.
Summary
The challenges we face are not too great to be overcome and conquered.
Our socio-economic plans include many opportunities for American
businesses. We look to those countries, such as the U.S., who have gone
before us in developing a sound economy in the global environment for
guidance. We turn to the United States for its assistance not only
through monetary contributions and training, but through the granting of
MFN status to Laos. Such status will enable us to represent our country
on par with all of the U.S. trading partners. The action of granting
unconditional MFN to Laos will send a message to the people of Laos that
the United States supports them in their endeavors to become a strong
nation. It will put Laos on an even playing field with the rest of the
world vis-a-vis trade with the United States. The active engagement of
Laos will encourage the move toward a market-oriented economy. We
believe that Laos is on the right path. We also believe that the United
States should treat Laos with the same trading privileges it grants to
almost all other nations. On behalf of my Government and its people, I
strongly encourage the U.S. Congress to expeditiously seek the granting
of unconditional MFN to Laos.
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