Under the rule of the Lao People’s Revolutionary Party, the one-party socialist republic has implemented various economic reforms to transform itself from a centrally-managed economy to a market-oriented one. The Laos Securities Exchange was established in 2011 and currently lists two state-owned enterprises. GDP in 20
Under the rule of the Lao People's Revolutionary Party, the one-party socialist republic has implemented various economic reforms to transform itself from a centrally-managed economy to a market-oriented one. The Laos Securities Exchange was established in 2011 and currently lists two state-owned enterprises. GDP in 2014 was 7.5 percent based on figures released by the World Bank with inflation at 4.1 percent. The government is currently focused on projects that will alleviate poverty and remove its name from the UN Development Program's list of least-developed countries by 2020.
According to Biswas Surajit, VP of Sales for ASEAN at Robert Bosch SEA, the security market in Laos currently amounts to US$1.5 million with a CAGR of roughly 7 percent for 2013 to 2017. Potential investors have to be aware, though, that developments are few and limited to specific market segments. He also added that companies in Laos often prefer to source products from overseas rather than ordering them from a local supplier.
POWER SECTOR
As Laos' borders incorporate a large section of the Mekong River basin, harnessing its power via hydropower plants presents an opportunity for Laos to supply local energy needs, as well as export electricity to neighboring countries, such as Thailand, Vietnam, and Cambodia, where energy needs are steadily increasing. The Ministry of Energy and Mines reported that the government has signed agreements with local and foreign companies to reach its goal of constructing 45 new hydropower plants by 2019 and quadruple its current hydropower generation capacity.
The controversial Nam Theun 2 (NT2) hydropower project started operations in 2010 and is expected to garner a total of $2 billion in revenue in the next two decades that will be used to finance government projects. The Hongsa Lignite power plant, the first and biggest of its kind in Laos, will be fully operational in March 2016, while the Xayaburi hydropower plant is scheduled to be completed in 2019. Total electricity production is forecasted to rise by 6 percent this year and will increase even more next year when six new plants become operational.
INFRASTRUCTURE
Poor infrastructure in this land-locked country is a major issue that is hindering its development. To help deal with this, the Bank for Investment and Development of Vietnam plans to lend $146.8 million to Laos to help develop infrastructure such as roads and other facilities. Japan has also granted assistance to Laos through its Grassroots Human Security Project (GGP) and has implemented, among other projects, 35 community-based small infrastructure projects.
OUTLOOK
According to Tone Bounkham, MD of Telecom & Security, even though the local market is relatively small compared to other countries such as Thailand or Vietnam, there is much potential for growth with small and medium-sized enterprises. Security needs in the country is expected to increase in number as important verticals in the country opens up.