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Matthews Asia Weekly

Laos Powering Up

Week of April 29, 2016

During an official state visit to Hanoi in late April, Lao President Bounnhang Vorachith (right) met with Vietnam Communist Party Secretary General (center) Nguyen Phu Trong in his drive to boost bilateral ties between the two Southeast Asian nations. 

Lao officials have urged efforts to have the small Communist nation advance from the United Nation’s list of least-developed countries. Critics, who say Laos continues to be among the most rights-repressive governments in Southeast Asia, are skeptical.

However in March, IMF Managing Director Christine Lagarde complimented Lao government officials for “the important achievements of the Lao economy, including robust growth, based on substantial public investments and deeper economic integration with neighboring countries.” 

With a population of just under 7 million, Laos has been investing in hydropower plants over the past decade. It consumes about 20% of the hydro-generated electricity it generates and the remainder is exported primarily to Thailand. Some of the power is slated for Vietnam and Cambodia and next year, power is expected to be exported to Myanmar.

According to Lagarde, the economic expansion has brought a solid decline in poverty and important improvements in social welfare. Following her visit to Laos, she also pointed to recent achievements “in bringing down the fiscal deficit in the last three years, which has helped safeguard macroeconomic stability and set the stage for sustainable growth going forward” and emphasized the “determination of the IMF to continue to be a close partner for Laos in its drive for development to graduate from low-income country status by 2020.”

The views and information discussed in this article are as of the date of publication, are subject to change and may not reflect the writers' current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of any securities or any sectors mentioned herein. 

The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information.