Energy and Mining Policies in Laos and National Budget

Transcription

1 1 Energy and Mining Policies in Laos and National Budget Dr. PHANHPAKIT ONPHANHDALA NATIONAL UNIVERSITY OF LAOS Lower Mekong Public Policy Initiative Ho Chi Minh City, 29 th November 2016

2 Outline 2 Introduction Economic Perspective of Lao PDR The Dynamic Change of Natural Resource Governance Energy and Mining in National Budget Concluding Remarks

3 Introduction: Fast Facts of Lao PDR 3 Demographic Total Area : 236,800 Km 2 Population : 6.49 million Age : 0-14 = 35.1% : = 61.1% : 65+ = 3.8% Pop. Growth : 1.9% Urban Pop. : 37.6% Source: ADB Key Indicators (2015)

4 Introduction (Cont.) 4 Value Added by Sector as % of GDP 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Agricuture Service Industial Source: World Bank (2016)

5 Introduction (Cont.) 5 Value Added by Sector as Annual % Growth Agriculture Service Industry Source: World Bank (2016)

6 Introduction (Cont.) 6 The rapid growth of Lao economy is a result from natural resource and energy exporting, mostly in mining and electricity. This growth has occurred in a short period and not lead to sustainability!!! Better natural resource governance is the engine of sustainable development of Laos.

7 The Dynamic Change of Natural 7 Resource Governance in Lao PDR Early 90s Timber Late 90s Electricity 2000s Mining 2010s Agricultural Product

8 The Dynamic Change of Natural 8 Resource Governance in Lao PDR (Cont.) Value of Natural Resource Export (in thousand USD) 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 - Timber Electricity Mining Source: Bourdet (2000) and Trade Map (2016)

9 The Dynamic Change of Natural 9 Resource Governance in Lao PDR (Cont.) % of Natural Resource Export (in thousand USD) 120% 100% 80% 60% 40% 20% 0% Timber Electricity Mining Source: Bourdet (2000) and Trade Map (2016)

10 The Major Change of Development 10 Strategy 1986 The first appearance of New Economic Mechanism (NEM). The NEM aims to introduced market incentives and began decentralizing government economic enterprise. An increasing of private investment and joint venture The new constitution was promulgated Laos becomes ASEAN member.

11 Forestry Policy 11 Late 1990s, wood products account for more than 30% of the total export revenue. Demand for timber is expected to grow both in Laos and neighboring countries. Source: Ministry of Agriculture and Forestry

12 Timber Exportation during Value of Timber Export (in thousand USD) 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 - Source: Bourdet (2000) and Trade Map (2016)

13 Timber Exportation in early 1990s 13 Value of Timber Export (in thousand USD) 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, Source: Bourdet (2000)

14 Timber Exportation in early 2000s 14 Value of Timber Export (in thousand USD) 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 - Source: Trade Map (2016)

15 Hydropower Policy and Regulation 15 The hydropower sector serves two vital national priorities: It promotes economic and social advancement by providing a reliable and affordable domestics power supply. It earns foreign exchange from electricity exports. Source: Ministry of Energy and Mines

16 Hydropower Policy and Regulation 16 (Cont.) The Law on Electricity, No. 03/NA, officially issued on 20 December 2011 emphasizes that the concession period of Hydropower project is under 30 years after commercial operation date (COD). There are 4 criteria of hydropower dam by installed capacity: Governance of Hydropower Dam Operation Installed Capacity 1 District Governor < 100 KW 2 Provincial Governor/Vientiane Mayor 100 KW 50 MW 3 Government of Lao PDR WM 4 National Assembly approval base on the request of the government > 100 MW or 50 ha of water reservation

17 Hydropower Projects in Laos 17 Projects Location Capacity COD* Market IPP Hydropower Projects Operation Central (4) Vientiane (3) North (3) South (3) MW MW 3-44 MW MW EDL Hydropower Projects Operation Vientiane (4) South (3) North (2) MW 5 76 MW MW IPP Hydropower Projects under Construction North (13) South (5) Central (3) Vientiane (1) MW MW MW 61 MW Source: Ministry of Energy and Mines Mostly Thailand / Laos Thailand / Laos Laos Vietnam / Laos Thailand / Laos Mostly Thailand /Laos Laos Mostly Laos and some export to Thailand *Commercial Operation Date

18 Electricity Export during 1990s 18 Value of Electricity Export (in thousand USD) 700, , , , , , ,000 - Source: Bourdet (2000) and Trade Map (2016)

19 Electricity Export during 1990s 19 Value of Electricity Export (in thousand USD) 25,000 20,000 15,000 10,000 5, Source: Bourdet (2000)

20 Electricity Export during Value of Electricity Export (in thousand USD) 700, , , , , , , Source: Trade Map (2016)

21 Mining Sector in Lao PDR 21 The Lao government aims to develop the nation to become industrialization and modernization. During , FDI inflows to Laos in mining sector remarkable high (MPI, 2016). GDP growth was at the highest between regarding to minerals exportation.

22 Mining Sector in Lao PDR (Cont.) 22 There are 3 majors working mines companies in Laos namely Lanexang Minerals, Phu Bia Mining and Lao-Korean Tin Mines, respectively. Company Name Mine Name Type of Minerals Investors Lanexang Minerals Sepon Gold and Copper Australia Phu Bia Mining Phu Kham Gold Australia Lao-Korean Tin Mines No data Tin Laos-North Korea Source: MINDECO (2006) and Kyophilavong (2008)

23 Minerals Policies and Regulations 23 Law and Regulation No. Issued Date Remarks Law on Mining 49/NA 12 Apr 1997 Prime Minister Decree on Minerals Export 90/PM 9 Jun 2008 Raw minerals are not allowed to export. Law on Minerals (revised) 02/NA 20 Dec 2011 Emphasizes minerals classification, mineral resource area, activities

24 Minerals Export during Value of Minerals Export (in thousand USD) 1,400,000 1,200,000 1,000, , , , ,000 - Source: Bourdet (2000) and Trade Map (2016)

25 Minerals Export during Value of Minerals Export (in thousand USD) 7,000 6,000 5,000 4,000 3,000 2,000 1, Source: Trade Map (2016)

26 Minerals Export during Value of Minerals Export (in thousand USD) 1,400,000 1,200,000 1,000, , , , , Source: Trade Map (2016)

27 National Socio-Economic 27 Development Plan VII ( ) Promoting food security, food production for domestic consumption and exportation such as rice, coffee, beans, sugar cane and maize. Enhancing agricultural productivity. Promoting growth and green. An Agreement on Macroeconomic Stability Measurement, No. 14/PM, issued date on 7 Feb 2014 also suggests agricultural products promoting lists as follows: Rubber, Sugar, Coffee, tea, maize and cassava Source: NSEDP (2011 and 2016)

28 Agricultural Export Products in Top 10 Agricultural Export Products Value (thousand USD) Coffee 97,800 Maize 35,300 Cassava 28,500 Locust Bean/Sugar Cane 18,000 Rice 13,000 Starches 10,500 Cabbages 9,200 Ground Nuts 5,000 Processed Cereal 4,900 Perfume Plants 3,500 Source: OEC (2016)

29 29 Major Export Country of Laos Agricultural Products 4% 4% Coffee Maize 1% Cassava 3% 7% 36% 23% 34% 22% 92% 75% Vietnam Japan Europe Thailand USA China Vietnam Thailand Thailand Vietnam China Source: OEC (2016)

30 National Budget 30 Government Revenue during (in thousand USD) 1990/ / / / / /15 Revenues and Grants 10, , , , ,736, ,839,965.0 Revenues 7, , , , ,272, ,271,740.0 Tax Revenues 4, , , , ,138, ,959,483.8 Profits Tax , , , , ,012.5 Income Tax , , , , ,476.3 Land Tax , , , ,347.5 Business Licenses N/A Minimum Tax N/A N/A N/A 2, , ,691.3 Turnover Tax , , , , ,708.8 VAT N/A N/A N/A N/A 236, ,590.0 Natural Resources Taxes N/A , , , ,382.5 Timber Royalty Receipts N/A 4, , , , ,508.8 Hydropower Royalties N/A N/A 6, , , ,368.8 Non-Tax Revenues 2, , , , , ,131.3 Source: BOL Annual Report (1991 to 2015)

31 National Budget (Cont.) 31 Share of direct tax from mining, timber and electricity during % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1995/ / / / /15 Timber Royalty Receipts Hydropower Royalties Natural Resources Taxes Source: BOL Annual Report (1995 to 2015)

32 32 National Budget (Cont.) Government Revenue as % of Total of Revenue from Natural Resource (direct and indirect tax) during % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1995/ / / / /13 Mining 0% 0% 3% 13% 11% Electricity 0% 4% 3% 1% 1% Timber 13% 7% 3% 1% 1% Source: BOL Annual Report (1991 to 2013)

33 Concluding Remarks 33 The Lao government has emphasized national development to become industrialization and modernization. The dependency of natural resource can cause the economy slump, due to the short period of growth. In the case of Laos, the economy growth is a result from energy exportation. The better governance of natural resource can ensure the long term development and sustainability of the nation.

34 34 Thank you very much Questions & Answers Dr. Phanhpakit ONPHANHDALA National University of Laos