The in 1975 introduced planned economy in the pattern of the easter block failed as it did there. The Laotion government reacted on that already in 1986, implementing elements of a free market economy (by the way, the Chinese 'opening' started already in 1978). Since the 1990s the Latotian economy grows by around 6% annually. Sounds much, but considered the originating level it's not much in total volume.
The Laotian currency is the 'Kip'. Here and there it's possible to pay in Thai baht or in US dollars. Some of the higher priced hotels in Luang Prabang or Vientiane price out in dollars.
11a.
Import and Export Economy
Laos is an export country for wood, coffee, electricity, tin, gold, copper, fur, leather and some other agricultural products. It imports petrol (expensive, makes a country dependent and vulnerable), chemical products, cars, busses, agricultural vehicles and trucks, machinery, electrical devices, steel and cotton. China, Thailand, Japan and partially Singapore are the most important foreign trade partners.
So, Laos exports mostly simple, agricultural products (who are cheap on the world market) and is depending on the import of highly advanced industrial products (who are expensive on the world market).
That's why Laos suffers an annual trade gap. Trade gap means, the country as a whole spends more money for buying foreign goods than gaining money for selling goods. That's desastrous for any national economy and leads in long-term to severe problems (shortages, inflation, economic downbreaks). Although there is some compensation in the Laotian case for there is foreign investment into the country and development aids from western countries. In fact the country is sold out to foreign investors.
So the focus of the economy is still on the agricultural sector. Around 80% of the population are peasants. They make up together around half of the domestic product of the country. A great deal of their products fall in the sector of subsistence economy. Some 40 percent of the agricultural production is rice. Therefore it's interesting to see that there is an immense variety of different rice species cultivated - estimated 3,000 to 4,000 different kinds! Most of them are sticky rice species.
Besides rice there is corn, potatoes, peanuts, soybeans, cotton, sugar, coffee, tea and a number of other crops grown. Except of the plain regions along the Mekong River there is no industrial agriculture maintained and the usage of chemicals and fertilizer is still low. That's a reason why the production in Laos is lower than in the neighbouring countries.
The 'meat production' is also relatively low in Laos, for there are few vets, the vets are not good and the peasants loose a considerable part of it's cattle to diseases. By the way, after all what I saw in Laos I generally avoid to eat meat here. It's ways too unhygienic. And you never know, what ends up in the noodle soup - snake, worm, cat, rat, dog...
Tourism in Laos is the fastest growing economic sector at the moment, although particularly package tours are rare and target almost exclusively Luang Prabang. There were 80,000 international visitors in Laos in 1990, the number increased up to 1,876,000 in 2010 and, unbeliveable, overpassed in 2012 the 3 million mark up to 3,110,000. Most of them were Chinese, followed by south Koreans. 2,8 million of the international visitors came from the Asia-Pacific region.
The 'Plain of Jars' with it's mysterious huge stone jars.
Image by Asienreisender, 2006
Tourists from the ASEAN countries as well as Russians, Koreans, Japanese and Swiss do not need to pay for a tourist visa. All the other nations have to pay a visa fee. The amount differs from country to country, mostly from 30 to 35 US dollars. On weekends and holidays the officials charge one dollar extra (for their hard work cashing visitors for putting useless stamps in their passports). They always appear to me as charming as crocodiles in uniforms. Besides they demand a passport photo. There is absolutely no need for that, particularly for they make themselves photos of the arrivals. But they want to have it. Keeps them busy, makes them happy. Great collectors they are.
The national tourist industries promote cultural and eco tourism. Hahaha! That's a good one! Where they destroy their natural resources in turbo speed.
Tourism is important for bringing foreign currencies into the country, reducing the trade gap.
A brickburner in Muang Sing. The clay-made bricks are stored in a cave inside a hill. On top of the bricks is a fire chamber. The bricks are burned for 48 hours, as the brickburner explained me. The construction sector needs enormous amounts of building materials in the Laos of our time. And still, much of it is small business. I have seen a tiny, simple cement factory as well, which makes cement bricks in Nong Khiaw.
Image by Asienreisender, 2010
There are almost no advanced industries developed. The low educational standard of the population makes the country completely dependent from foreign investment. That reflects also in the hydropower sector, which is the most important emerging industry for Laos. There are countless dams planned along the Mekong River and it's tributaries to produce electricity for export. The investment for that inclusive the construction companies are coming from abroad. A precedent case is the notorious Sanyabury Dam at the Mekong River, financed and constructed by Thai banks and companies.
So, here we can clearly see how an underdeveloped country is coming under foreign domination. The high party functionaries, actually the national ruling class, is selling out concessions for foreign companies and make their fortune with it. The foreign companies have a free hand at what they do, and the local population suffers the consequences as pollution and land grabbing and can only hope on the general 'trickle down' effect, means, that the growing industries around give them here and there a possibility to make a few dollars - or kips, in this case.
The electric sector is exclusively in the hand of the state owned company 'Electricite du Laos'.
The rest of the industries are mainly textile industries and wood industries. 90 percent of the industries are actually family business. The few bigger companies were until recently state-owned companies or run by the military. Military-run companies are common in all the Southeast Asian states. Normally the military is the biggest power (in the background) in the politics and economy of these countries.