Trucks carrying goods destined for export to China. - VT
VIENTIANE (Vientiane Times/Asia News Network): The government will strive to ensure that at least 50 per cent of export receipts enter Laos in the coming years, the Prime Minister told the National Assembly this week.
Dr Sonexay Siphandone highlighted the importance of ensuring that foreign currencies earned from exports are made available so the government can address the shortfall in the balance of payments.
At present, only a little more than 30 per cent of export receipts enter Laos through the banking system. For instance, in 2022, the value of exports stood at US$8.19 billion, but only US$2.7 billion actually entered the country.
This is because investors are permitted to pay their debts in foreign countries after borrowing money offshore to finance development projects in Laos, especially in hydropower and mining.
The premier said importers and exporters are required to hold bank accounts in Laos to process their financial transactions.
In the future, opening an account at a commercial bank in Laos will be one of the main requirements for importers and exporters.
Deputy Minister of Industry and Commerce Chansouk Sengphachanh said “Our ministry will register importers and exporters so we can better regulate import and export activities and ensure that more export receipts enter the banking system.”
She said her ministry will work with other sectors, including the Bank of the Lao PDR, to handle the matter.
The Ministry of Industry and Commerce will also work with the Ministry of Agriculture and Forestry to reduce exports of raw materials and allocate supplies to domestic industries, so that more high-value products such as coffee, potatoes and sweetcorn can be produced.
The government also wants to limit imports of luxury and non-essential goods that require large amounts of foreign currency, while reducing unnecessary use of foreign currencies in Laos.
In the medium- and long-term, Dr Sonexay said the government will continue to tighten its monetary policy in a way that does not ramp up pressure on the demand for foreign currencies as this would result in continuing depreciation of the kip.
The prime minister acknowledged that the rising price of fuel and high public debt forced the government to source more foreign currency, especially the Thai baht and US dollar, in order to buy imports amid the declining amount of foreign currency generated by loans, tourism and foreign investment.
In the first five months of 2022, the price of fuel on the world market surged by 65 percent and the cost of fuel imported by Laos rose by 50 per cent compared to the same period in the previous year.
In addition, the raising of interest rates by the US Federal Reserve has strengthened the US dollar, which in turn weakens the value of other currencies including the kip.
