Laos needs to attract more foreign currency to stabilise the kip: economist
A high-level economist has stressed the need for Laos to create conditions that favour the inflow of foreign currency into the money supply, saying it will help to stabilise the value of the kip by boosting exports, tourism and foreign investment.
Senior economist and Dean of the Faculty of Economics and Business Management, National University of Laos, Professor Phouphet Kyophilavong, made the comment during an exclusive interview with the Vientiane Times recently to highlight the opportunities and challenges facing the country.
“In order to stabilise exchange rates and deal with economic challenges, we need to bring in more foreign currency by increasing the value of exports, tourism and foreign investment. The inflow of foreign currency will help to stabilise exchange rates and the value of the kip,” he said.
Asked how business operators can turn crisis into opportunity, Prof. Phouphet said the weak kip will boost the competitiveness of Lao products in the international market. Exporters should make use of this opportunity and ship more agricultural products on the Laos-China railway to help boost foreign exchange earnings.
Concerning the Visit Laos Year 2024 promotion campaign, he said visas should be taken into consideration by granting or extending visas free for foreign visitors.
“When tourists come to Laos, they bring foreign currency and spend it here. If we want more foreign visitors, we must make it easy for them to get visas,” Phouphet said.
“For instance, the free visa that is granted to Japanese visitors should be extended for a longer period so that more Japanese will come and spend more time in Laos, boosting the country’s economy.”
Another significant issue to be addressed is real estate. No specific regulations have yet been issued to indicate that foreign investors can buy property in Laos.
Phouphet said that without clear regulations, foreign investors will be reluctant to buy property on sale in Laos. When buyers lack confidence, investors in the real estate business will be reluctant to expand and invest more in their operations.
He recommended that barriers around foreign investment be removed, and investment mechanisms be revised in ways that attract more foreign investment.
In addition, the requirements around procedures for investment in the tourism industry must be streamlined so they are more attractive to foreign companies considering investing in the hospitality sector.
“If more foreign companies invest in hotels, restaurants and other tourism-related businesses, they will help attract international visitors and bring in more foreign currency,” he said.
Phouphet said that although Laos faces severe economic challenges, with skyrocketing inflation, continuing depreciation of the kip and high public debt, the country has strong potential to boost economic growth next year when Laos becomes the Asean Chair and launches the Visit Laos Year 2024 programme.
Meanwhile, the Laos-China railway, connecting Laos to Asean countries, China and Europe, provides an unprecedented opportunity for Laos to strengthen its export market.
Somsack Pongkhao
The Vientiane Times
Asia News Network
