History of SocioHistory of Socio--Economic Economic Development Planning in Lao PDRDevelopment Planning in Lao PDR

Presented by Presented by Associate Prof. Associate Prof. SamoutthongSamoutthong SomphanithSomphanith, ,

Director General of Technical Affairs DepartmentDirector General of Technical Affairs Department

Roles and Importance of SocioRoles and Importance of Socio--economic Development Planning economic Development Planning

In the socioIn the socio--economic development process, all countries around economic development process, all countries around the world apply planning as a tool in governing the countries bythe world apply planning as a tool in governing the countries bysetting overall objectives and targets for the immediate and futsetting overall objectives and targets for the immediate and future ure sociosocio--economic development. Guidelines, tasks and implementing economic development. Guidelines, tasks and implementing measures are set from time to time to achieve the objectives andmeasures are set from time to time to achieve the objectives andtargets set out.targets set out.

After the foundation of the Lao PDR in 1975, the PartyAfter the foundation of the Lao PDR in 1975, the Party--State (the State (the Government) have applied planning as the key tool in translatingGovernment) have applied planning as the key tool in translatingand implementing the Partyand implementing the Party’’s guidelines and managing the economy s guidelines and managing the economy by formulating policies, measures, programs and projects from tiby formulating policies, measures, programs and projects from time me to time for the purpose of fully achieving the objectives set outo time for the purpose of fully achieving the objectives set out by t by the Party: the Party: ““To enrich and strengthen the country, to build the To enrich and strengthen the country, to build the country with civilization and to make people rich and happycountry with civilization and to make people rich and happy””..

1.1. The long term plan, dealing with periods of 10 The long term plan, dealing with periods of 10 years and more. Such plans define the years and more. Such plans define the overview, strategies and priorities of the nation overview, strategies and priorities of the nation over the long term.over the long term.

2.2. The medium term plan has duration of less The medium term plan has duration of less than 10 years and covers 5 years in Lao PDR.than 10 years and covers 5 years in Lao PDR.

3.3. The annual plan is the plan to implement the The annual plan is the plan to implement the targets and duties of the 5targets and duties of the 5--year plan.year plan.

Types of PlanningTypes of Planning

SocioSocio--economic Development Planning economic Development Planning Lao PDRLao PDR

Socio-economic development planning in Lao PDR can be divided into two periods:

1st Period: Centrally-planned System (1976-1985 )

2nd Period: “New Economic Mechanism”(Transition to a Market-oriented System) (1986-Now)

SocioSocio--economic Development Planning economic Development Planning Lao PDRLao PDR

1st Period: Centrally-planned System (1976-1985 )In this period, the Government applied thecentrally-planed system by setting the production targets. The Government provided the capital, production means and techniques, set the prices,distributed goods and services based on equitableprinciple. During the period, the Governmentformulated one-year plan, three-year plan andfive-year plan.

Annual plan (1976Annual plan (1976--1977)1977)This annual plan was drawn up in the beginning This annual plan was drawn up in the beginning period of national socialperiod of national social--economic development economic development for Lao PDR and provided guidelines and major for Lao PDR and provided guidelines and major targets to recover agricultural and industrial targets to recover agricultural and industrial production, to move from a subsistenceproduction, to move from a subsistence--based based economy to a commodityeconomy to a commodity--based system.based system.

This plan sought to secure national defense and This plan sought to secure national defense and construction and to strengthen the new construction and to strengthen the new administration aiming to improve the peopleadministration aiming to improve the people’’s s living standard and the national security.living standard and the national security.

Annual plan (1976Annual plan (1976--1977) (1977) (ConCon’’tt))

The economic reconstruction program The economic reconstruction program after war set the major targets to improve after war set the major targets to improve peoplepeople’’s living standard and to rebuild s living standard and to rebuild districts destroyed by war to enable districts destroyed by war to enable people to make their living.people to make their living.

ThreeThree--year Plan (1978year Plan (1978--1980)1980)It was formulated to provide housing, It was formulated to provide housing, farming land and employment for the farming land and employment for the people, to rebuild districts destroyed by people, to rebuild districts destroyed by war, and to improve the industrial facilities war, and to improve the industrial facilities in order to increase the production.in order to increase the production.

The outline of the first fiveThe outline of the first five--year socioyear socio--economic economic plan was set by the Party Congress IIIplan was set by the Party Congress III

Main objectives of this plan were to:Main objectives of this plan were to:Encourage agricultural and forestry Encourage agricultural and forestry production for food securityproduction for food securityImprove existing industrial plants and Improve existing industrial plants and factories and to construct a number of factories and to construct a number of new industrial plants and factoriesnew industrial plants and factoriesInfrastructure construction primarily for Infrastructure construction primarily for the national highway No. 9 and the the national highway No. 9 and the national highway No.13national highway No.13

The 1The 1stst five year plan (1981five year plan (1981--1985)1985)

SocioSocio--economic Development Planning economic Development Planning in Lao PDRin Lao PDR

Transition to a marketTransition to a market--oriented economic oriented economic system (1986system (1986--now):now):After applying the centrallyAfter applying the centrally--planned system for a planned system for a decade, it was realized that a new system consistent decade, it was realized that a new system consistent with the current situation was necessary and was aimed with the current situation was necessary and was aimed at proving necessary social and economic infrastructure at proving necessary social and economic infrastructure for the national development.for the national development.After the Central Party Congress IV in 1986, the Party After the Central Party Congress IV in 1986, the Party announced the introduction of the soannounced the introduction of the so--called called ““New New Economic MechanismEconomic Mechanism”” for the national development for the national development aiming at preparing the foundation for a market aiming at preparing the foundation for a market economy.economy.

Transition to a marketTransition to a market--oriented oriented economic system (1986economic system (1986--now)now)

A marketA market--oriented planning which was more oriented planning which was more appropriate with emerging requirements at that appropriate with emerging requirements at that time replaced the old systemtime replaced the old system

A marketA market--oriented planning was based on the oriented planning was based on the targets set by the local level, sectors, business targets set by the local level, sectors, business sector, other economic sector and the sector, other economic sector and the production base.production base.

This plan elaborated the policies and guidelines set out This plan elaborated the policies and guidelines set out by the IV Party Congress in 1986 and the transition by the IV Party Congress in 1986 and the transition period from the central command economy to the New period from the central command economy to the New Economic Mechanism (NEM) policyEconomic Mechanism (NEM) policy

The main objectives of this plan were toThe main objectives of this plan were to::Create the structures for growth in agricultureCreate the structures for growth in agriculture--forestry, industry and servicesforestry, industry and servicesImprove and prepare the laws and regulation Improve and prepare the laws and regulation for the private sectorfor the private sectorOpen door policy for foreign cooperationOpen door policy for foreign cooperationDevelop education, public health, and upgrade Develop education, public health, and upgrade peoplepeople’’s livelihoodss livelihoodsPrivatize of former state enterprisesPrivatize of former state enterprises

The 2nd five year plan (1986The 2nd five year plan (1986--1990)1990)

This document was prepared for implementing the V This document was prepared for implementing the V

Party CongressParty Congress’’s Resolution in 1991 and continuation s Resolution in 1991 and continuation

of new economic mechanismof new economic mechanism

Main objectives of the second fiveMain objectives of the second five--year plan were to:year plan were to:

Transform the natural economy to commodity Transform the natural economy to commodity production economyproduction economy

Continue to improve the infrastructure for socioContinue to improve the infrastructure for socio--economic development and approval system for foreign economic development and approval system for foreign investment and cooperationinvestment and cooperation

Promote foreign cooperation and foreign investment Promote foreign cooperation and foreign investment

Improve peopleImprove people’’s living standards living standard

The 3The 3rdrd fivefive--year plan (1991year plan (1991--1995)1995)

The 4The 4thth five year plan (1996five year plan (1996--2000)2000)This document was prepared for implementing the This document was prepared for implementing the VI Party CongressVI Party Congress’’s Resolution in 1996.s Resolution in 1996.

The main guidelines were to:The main guidelines were to:enhance unity within the party and the people enhance unity within the party and the people ensuring the stability and security of the nation ensuring the stability and security of the nation Encourage all economic sectors and people to Encourage all economic sectors and people to contribute to the national development and promote contribute to the national development and promote savings for the national balance and selfsavings for the national balance and self--reliancerelianceprovide social welfare and increase the number of provide social welfare and increase the number of the people participating in the national economythe people participating in the national economyIncrease the roles and support the capacity of the Increase the roles and support the capacity of the party in all professional fields, improve and upgrade party in all professional fields, improve and upgrade the management and state lawsthe management and state lawsPromote international cooperation and pursue an Promote international cooperation and pursue an open door policy with international friendsopen door policy with international friends

The main targets until 2000 were to:The main targets until 2000 were to:

Encourage economic growth at the average of 8Encourage economic growth at the average of 8--8.5% per 8.5% per annumannum

GDPGDP’’ sshare of agriculture and forestry should increase by hare of agriculture and forestry should increase by an average of 5% per annuman average of 5% per annum

GDPGDP’’ sshare of industry should increase by an average of hare of industry should increase by an average of 12% per annum12% per annum

GDPGDP’’ sshare of services should increase by an average hare of services should increase by an average for10for10--11% per annum11% per annum

Maintain exchange rate stability and keep the inflation rate Maintain exchange rate stability and keep the inflation rate at less than 10% to the year 2000at less than 10% to the year 2000

Mobilize state revenues at not less than 13Mobilize state revenues at not less than 13--16% of GDP 16% of GDP while reducing the state budget deficitwhile reducing the state budget deficit

By the year 2000, itBy the year 2000, it’’s estimated that the s estimated that the population will be about 5.2 million and population will be about 5.2 million and the per capital GDP will be 500 USD the per capital GDP will be 500 USD

80% primary school enrolment80% primary school enrolment

Control and limit the epidemic malaria, Control and limit the epidemic malaria, diphtheria, cholera and reduce the rate of diphtheria, cholera and reduce the rate of patients and prevention of decease by patients and prevention of decease by vaccinations, increase life expectancy to vaccinations, increase life expectancy to 5555--58 years by the year 200058 years by the year 2000

The main targets until 2000 were:The main targets until 2000 were:

This document was prepared for This document was prepared for implementing the VII Party Resolution in implementing the VII Party Resolution in 20012001The main targets till the year 2005:The main targets till the year 2005:

Encourage economic growth rate at the Encourage economic growth rate at the average of 7% per annumaverage of 7% per annumGDPGDP’’ share of agriculture and forestry should share of agriculture and forestry should increase by an average of 4increase by an average of 4--5% per annum5% per annumGDPGDP’’ share of industry should increase by an share of industry should increase by an average of 10average of 10--11% per annum11% per annumGDPGDP’’ share of services should increase by an share of services should increase by an average of 8average of 8--9% per annum9% per annum

The 5th five year plan (2001The 5th five year plan (2001--2005)2005)

GDP per capita will be 500GDP per capita will be 500--550 USD550 USDControl the inflation rate less than 10%Control the inflation rate less than 10%Reduce poverty by 50% of householdsReduce poverty by 50% of householdsReduce slash and burn cultivation basically, Reduce slash and burn cultivation basically, eliminate poppy cultivationeliminate poppy cultivation86% primary school of 686% primary school of 6--10 years old enrolment10 years old enrolmentLife expectancy 61 yearLife expectancy 61 year

The 5th five year plan (2001-2005)

The Achievements of 5 year planThe Achievements of 5 year plan

GDP grew at an average 6.2% while the GDP grew at an average 6.2% while the plan defined 7% per annumplan defined 7% per annumGDPGDP’’s share of agriculture and forestry increased an average s share of agriculture and forestry increased an average of 3.5% per annum (plan 4of 3.5% per annum (plan 4--5%)5%)GDPGDP’’s share of industry increased an average of 11% per s share of industry increased an average of 11% per annum (plan 10annum (plan 10--11%)11%)GDPGDP’’s share of services increased an average of 6.7% per s share of services increased an average of 6.7% per annum (plan 8annum (plan 8--9%)9%)Able to reduce poverty 135 thousand household (plan Able to reduce poverty 135 thousand household (plan 150 thousand household)150 thousand household)Primary school enrolment of 6Primary school enrolment of 6--10 years old is 84.2%10 years old is 84.2%ControledControled the inflation rate less than 9.6%the inflation rate less than 9.6%Life expectancy: 61 yearsLife expectancy: 61 yearsGDP per capita 491 USDGDP per capita 491 USD

The main targets till the year 2010:The main targets till the year 2010:Encourage economy growth rate at the Encourage economy growth rate at the average for 7.5average for 7.5--8% per annum8% per annum-- GDPGDP’’s share of agriculture and forestry s share of agriculture and forestry

should increase by an average of 3should increase by an average of 3--3.4% per 3.4% per annumannum

-- GDPGDP’’s share of industry should increase by ans share of industry should increase by anaverage of 13average of 13--14% per annum14% per annum

-- GDPGDP’’s share of service should increase by ans share of service should increase by anaverage of 7.5average of 7.5--8% per annum8% per annum

The 6The 6thth five year plan (2006five year plan (2006--2010)2010)

GDP per capita will reach 827 USDGDP per capita will reach 827 USDControl the inflation rate no more than Control the inflation rate no more than 6.5%6.5%Reduce the poverty basicallyReduce the poverty basicallyThe population growth rate should be The population growth rate should be 1.91% per 1.91% per yaeryaer, population 6.17 million in , population 6.17 million in the year 2010the year 20102121Primary school enrolment of 6Primary school enrolment of 6--10 year old 10 year old is 90.6%is 90.6%Life expectancy 63.5 yearsLife expectancy 63.5 years

The 6th five year plan (2006The 6th five year plan (2006--2010)2010)