30 years of economic development
In the past 30 years, with revolutionary and patriotic spirit and love for the new regime and independence, the entire Party, Army and people of Laos have united in solidarity, overcome many difficulties and hardships to carry out the government’s economic development plan with a number of significant achievements.
After successfully implementing the plan to heal the wounds of the war and the 1976-1980 plan for the recovery of the post-war economy, the Party led the people to implement the first five-year socio-economic development plan (1981-1985), which resulted in an average growth of the national economy of 7.6 percent per year and the gradual improvement of people’s living conditions.
The second five-year plan (1986-1990) dealt with adjusting the new economic mechanism to suit the reality of the country by using commodity-monetary relations and a market mechanism and introducing a system of a single price and a multi-sectoral economy into the national development. During this period, the average rate of the economic growth reached five percent per year.
The general orientations and tasks of the third five-year plan (1991-1995), which was adopted at the fifth Party Congress continued the task of comprehensive renovation, and actively shifted the country from a subsistence economy to a market-oriented economy and to continued widening economic relations with foreign countries.
The fourth five-year plan (1996-2000) was the period when the county experienced difficulties as a result of the economic and financial crisis in the world and the region as well as economic and financial instability and threats from natural phenomena. These events caused abnormally high inflation and brought down the value of Kip (Laos’ currency), however, the Party and Government paid attention to the domestic financial situation and as a consequence the economy recovered quickly.
The sixth Party Congress continued deeply scrutinising the world situation and the reality of the country, aiming to issue suitable policies toward further economic integration with foreign countries, which was seen to hold both opportunities and challenges. In addition, eight priority programmes of the Government were set forth to support many sectors and localities and to formulate detailed plans and projects, which could be implemented with success.
Entering the new century, the economic sector faces new challenges. The seventh Party Congress adopted a policy on shifting to industry and modernisation, and setting the target of “lifting the country from least developed status by 2020.” The declaration of the policy on shifting the country to industry and modernisation was a rapid response of the Party to the real situation of the country, where the majority of people live in poverty and make their living through subsistence agriculture, the productivity of all sectors is low and most technical equipment is out of date. While lacking funds, technology and qualified labours, we entered the era of economic globalisation, an era that is typified by high competition between nations and which holds both opportunities
and challenges for Laos. The economies of each country have become deeply integrated, therefore, we need to make efforts to strengthen our national economic system in order to ensure that Laos becomes competitive in the global market.
Shifting the country to industry and modernisation is one of the requirements for the development of the country, which has been shown through the experiences of many other. Only shifting the country to industry and modernisation can lift us up from least developed status and help us move toward becoming a progressive and modern society in line with socialism.
The policy of the Party on the shift to industry and modernisation that was adopted in the fourth plenary session (seventh Congress) states: ”to prioritise the power industry, agricultural and forest processing industry, tourism industry, mining industry and construction material production industry, but the education, science, technology, transportation and marketing sectors are key.”
The main target of the 2001-2005 socio-economic development plan remains the expansion of production in parallel with the improvement of production. The plan aims to expand the sectors in which the country has potential and promote the productivity of the people; explore and upgrade skills and abilities in all economic sectors; formulate the economic structure of agriculture and forestry so it is more connected with industry and services; and formulate the economic structure in areas in order to explore all the potentials of each locality as well as the country as a whole.
Through the implementation of the economic development plan in each period, the Lao PDR has able to gain satisfactory achievements in each field over the last 30 years.