Under the national export strategy for 2011 to 2015, the government plans to target nine sectors that have the potential to generate foreign exchange, which is needed to boost economic growth. These sectors are hydropower, tourism, organic agriculture, minerals, garments, and silk and cotton handicrafts. Wood products, medicinal plants and locally produced products are also on the list.
Lao PDR officially became a member of the WTO on February 2 and will join other nations in establishing the ASEAN Economic Community in 2015, turning the region into a single production base and market. Lao PDR needs a strategy to promote its exports both in the region and further afield in order to sustain economic growth. The country itself has a market of less than 6.5 million people, while the ASEAN bloc is home to 600 million consumers.
According to the World Bank, Laos' export value was about US$2,845 million in 2012 while imports were worth US$4,162 million, resulting in a trade deficit of US$1,317 million.
The deficit has soared amid rising foreign investment in Laos. According to the World Bank, the value of Foreign Direct Investment (FDI) was projected to reach US$1,621 million in 2012. In 2011, FDI stood at US$1,128 million while in 2010 it was US$770 million.
The 2007-2008 fiscal year was a turning point for Laos' balance of trade when the value of exports reached US$1.06 billion, of which minerals accounted for US$640.9 million (49 percent).
In that year garment exports climbed to US$258 million (25.65 percent), while exports of other industrial products reached US$17 million (1.75 percent), electricity rose to US$97.1 million (9.68 percent), agricultural exports were valued at US$60 million (6 percent), wood products US$59.3 million (5.9 percent), and polished diamonds (imported for re-export) were valued at US$27.6 million (2.75 percent).
In the same period, the tourism industry, which had previously been excluded from the calculation of the trade balance, amounted to US$270 million, with the number of tourist arrivals at about 1.7 million people.
Despite the recent increase in the value of exports, Laos' exports comprised mostly raw materials without any value-addition to socio-economic development, particularly the export of agricultural and forestry products to neighboring countries. Those raw materials will now be processed into finished products to add more value, and then re-exported. Such products include coffee, wood and minerals.
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