Dynamics of ASEAN: Its Regional &

International Significance
LAOS

Name: Putu Deniar Sekar Putri

Class: French 1
Batch: 2019
Student ID: 016201900093

Lecturer:
Drs. Teuku Rezasyah, M.A., Ph.D.
President Univesrity
1. What domestic and international policies have been conducted and practiced by Country X
from 2015 to 2020 in bridging the income gap inside ASEAN?.
(a) For domestic policies, please provide 2 information, using at least 3 sources, and to be ended
with your analysis. Total words: 400-500.
(b) For international policies, please provide 2 information, using at least 3 sources, and to be
ended with your analysis. Total words: 400-500.
In answering Question Number 1, even though you are free to pick up information and analysis
coming from various sources, it is important for you to listen to Meeting XV, on a discussion
between Dr. Surin Pitsuwan and Professor Robert Cribb, highlighting the huge gaps between
Singapore and Brunei vis-a-vis the rest of ASEAN member countries. Please also pay attention
on the Meeting X, highlighting Timothy Ong’s critics on the ASEAN Charter, and the use of
information coming from World Bank and the Heritage Foundation.

1. A

In an interview Professor Robert Cribb head of the new Southeast Asia Institute at The
Australian National University with Dr Surin Pitsuwan as Secretary-General of the Association
of Southeast Asian Nations (ASEAN), talked about the achievement of ASEAN in the last five
years. The global economic downturn in 2008 caused the attention shifting towards East Asia
from the European and America. This also becomes a huge opportunity to connect, coordinate
and promote ASEAN as the hearts of East Asia. ASEAN cooperates with other regions but the
wide economic gap is the crucial problem to be faced in ASEAN. According to Dr. Surin
Pitsuwan, the huge gap between the states makes ASEAN have to work harder to transform the
economies by becoming more innovative and creative in science-technology based. Not only
that, building relationships with other countries such as Australia, Japan, South Korea and the
European Union are important to reconfigure the economic development of ASEAN to
compete in the global market. In addition to cooperating with other countries, each member of
ASEAN also has its own policies in terms of developing the economy to help solve problems
of economic gap by ASEAN.
In this paper, the author will write down the domestic policies of Lao PDR from 2015
- 2020 in bridging the income gap inside the ASEAN. According to the World Bank’s Doing
Business Survey in 2015, Lao PDR ranked very low as 149th out of the 189 surveyed countries.
To help economic growth, the Lao PDR released The Government of Lao PDR's 8th Five-Year
Plan (2016 - 2020) is a continuation of the 7th Five-Year Plan. The policy was officially
approved at the VIIIth National Assembly’s Inaugural Session, 20–23 April 2016, Vientiane
by the Ministry of Planning and Investment (PDR, 2016). The “8th NSEDP” is aimed at
achieving socio-economic development, industrialisation and modernisation in the year of
2020. Also, “8th NSEDP” built a new foundation for graduating from Least Developed Country
status by 2020 to become an upper-middle-income country by 2030 (UNDP, 2016). Through
this policy of “8th NSEDP”, it is hoped that the Lao PDR government can overcome the
problem of economic development gap in the rural areas and cities, the urbanization problems,
waste management, unskilled labor, traffic safety, limitation of human resources among the
public and private sector staff. (PDR, 2016).
The Lao PDR government released the Industrial Development Strategies 2016–2030
policy, a policy to be conducive to the pursuit of new development strategies. These policy
ideas and recommendations were also incorporated into official Lao PDR plans such as 10
Years Development Strategy (2016 - 2025) and Vision 2030 (2016 - 2030) (Hidetoshi
Nishimura, 2016). This policy was proposed on the initiative of Khemmani Pholsena, the
Minister for Industry and Commerce. There are two serious basis for the formation of this
policy, first is the economic growth that is dependent on the mineral resources sector or the
mining industry which does not generate enough jobs needed for inclusive growth. Second is
the wide development gap within the Lao PDR’s regions. Through this policy, the Lao PDR
government wants to develop the manufacturing industry to contribute to the balanced
development of a developing country. Thus, the manufacturing industry is the most promising
in that it can enjoy both high returns and large job creation rather than other industries
(Hidetoshi Nishimura, 2016).
 1. B

The Lao People’s Democratic is category as the least developed country according to
the UN Department of Economic and Social Affairs in 2018 with Gross National Income per
capita is $1,996 and Human Development Index is 0.608 in 2017 (UN, 2018). Compared to
other ASEAN countries like Singapore, there is a huge gap in economic aspects in both
countries. Although both countries have the same geographic location in South East Asia,
Singapore has become a developed country in SouthEast Asia. ASEAN countries want to
achieve the goal of minimizing economic differences or bridging the income gap, such as
underdeveloped countries can change their status to developing countries or developed
countries. The speech of Timothy Ong as Forum Convenor and Acting Chairman, Brunei
Economic Development Board in ASEAN Leadership Forum 2008, Mr. Ong said that instead
of releasing the ASEAN Charter or economic integration blueprint, even better if together
ASEAN take the program actions into it because the richest country in ASEAN is 163x
wealthier than the poorest countries in ASEAN. Results from the Heritage Foundation prove
that one ASEAN economy considered free, two countries mostly free, three considered mostly
unfree, and three considered mostly repressed. And on the World Bank survey on ease of doing
business prove that in Singapore only take 5 days to start doing business, 6 months to get
building license in Vietnam, 2 years to get building licenses in Cambodia, also it took 2 days
to register property in Thailand and 4,5 months to get registered property in Laos (ASEAN
Leadership Forum, 2008).
It can be seen through a short speech of Mr. Timothy Ong that the economic differences
between ASEAN members are very huge even though the ASEAN Charter has been made as
a guideline for economic integration. Along with Cambodia, Myanmar, and Laos become the
CLM countries category in ASEAN or least developed countries that need more focus. The
development gap which confronts CLM is also reflected in education, highest infant mortality
rate, and maternal mortality rates compared to other ASEAN members (Cuyvers, 2019). To
narrow the development gap, ASEAN established The Initiative for ASEAN Integration (IAI)
Work Plan III (2016-2020), consists of the five strategic sectors of food and agriculture, trade
facilitation, MSMEs, education, and health and well-being. This IAI Work Plan III was
designed to assist Cambodia, Lao PDR, Myanmar, and Viet Nam to meet ASEAN-wide targets
and commitments towards realising the goals of the ASEAN Community (ASEAN, 2019).
Although Lao PDR’s economic growth rate was slowed due to the lower commodity prices and
weather conditions that affected its agricultural sector, but, the country is predicted to maintain
momentum over the near future due its low cost of labor, natural resources and improved
governance (KPMG, 2018). So it is necessary to have an action program to suppress this
difference in the future. Like Laos, which is the least developed country category, it also has a
policy issued by the government to deal with this economic problem. The foreign policy issued
by the government are mainly about how to improve its poor infrastructure, low-skilled labor,
policies to support the business sector and foreign investments with the help from other
countries toward the diplomatic relations (Sitthirath, 2018).

2. Responding to the US-China Trade War, what domestic and international policies have been
conducted and practiced by Country X to make its country more attractive for receiving
Foreign Direct Investment (FDI.
(a) For domestic policies, please provide 2 information, using at least 3 sources, and to be ended
with your analysis. Total words: 400-500.
(b) For international policies, please provide 2 information, using at least 3 sources, and to be
ended with your analysis. Total words: 400-500

2A

Located in the centre of the Greater Mekong Subregion, Lao PDR becomes a good
opportunity to invest. Lao PDR is the only country bordering all the other countries in the
subregion with more than 70% of international trade in Laos - except air freight - is cross border
trade (Singhalath, 2012). The position of the Lao PDR which could be a golden opportunity
must also be accompanied by clear guidelines, frameworks and policies for the global and local
investment community to better understand the advantages of investing in Lao PDR to achieve
greater investment growth. The Ministry of Planning and Investment is responsible for the
government and regional administration of Planning and Investment, Researching strategies,
Master plans, Planning for National Socio-Economic Development Plan (NSEDP),
Mechanisms and Policies related to economic management, statistics, the promotion and
management of domestic and foreign private investment of Lao PDR, to attract and seek
assistance Official Development Assistance or ODA and International cooperation (Ministry
of Planning and Investment, 2017). China, Thailand, France, Vietnam, and Japan become the
largest sources of foreign investment to the Lao People’s Democratic Republic. According to
Lao government statistics, mining and hydropower account for 95.7% of Foreign Direct
Investment, and agriculture accounted for only 2% of FDI in 2019 (Sisouk, 2020).
The Lao People’s Democratic Republic established the Law on Investment Promotion,
aimed to promote business sectors and investment incentives,and investment management
mechanisms that aim to better facilitate company incorporation and improve investment
throughout the country. One of the Law on Investment Promotion is Promoted business sectors
with investment incentives, with profit tax exemptions between 3-15 years and concession fee
waivers for 5-15 years will be offered to investors based on whether they invest in sector-
promoted business and status the economy of the zone in which they invest as determined by
the Lao PDR government (Arion Legal, 2017). In following are the companies who are eligible
to claim the incentive are environmentally friendly, activities utilise modern technology,
activities that develop the education, historical, cultural, eco-tourism, and development of
public infrastructure (Arion Legal, 2017). Other than that, the concession investment are the
activities that requiring a concession for use of government-owned land; the development in
Special Economic zones area, mining, development of energy resources and airlines,
communications. The duration of concession investment is depending on the varies of types,
scale, value, conditions and feasibility studies of the project with a maximum possible term of
50 years and the government allows the investors to extend their concession investment term
based on case-by-case basis (Arion Legal, 2017).

2. B

The United States and China trade war occured in 2018 impacting economies in other
countries. Countries are competing to attract investors to invest in their countries by offering
advantages and security. The strategic location as a land-linked country with China, Vietnam,
Thailand and Cambodia can easily attract the Foreign Direct Investments to invest in Lao PDR.
The Lao PDR will be attractive for foreign investors because the country has rich hydropower,
timber, gold, copper potential, along with the abundant natural resources and allows its
neighbouring countries to increase demand for energy (KPMG, 2018). The Lao People’s
Democratic Republic makes its country more attractive for receiving Foreign Direct Investment
by launching international policies for the investors. One of the international policies is One
Step Service. One Step Service government policy is to promote and attract investments from
private sectors in the social-economic development of the country, launched by the Ministry of
Planning and Investment in 2018.
The One Step Service provides all around services and facilities with information,
consideration, consideration and approval processes of investment projects, issuance of
Investment License and other investment notices to the investors (IPD: One Stop Service ,
2018). There are six parts of the One Step Service international policies. The first one is
Business Visa, which has responsibilities in approving entry visas to Lao PDR and multiple
entry-exit visas through the Consular Department and Ministry of Foreign Affairs. Second is
Incentive, to promote Laos as an investment destination, offering investment incentives,
screening investment proposals, collecting investment data and monitoring investment
practices. Third is Investment License, the application for registering the concession
registration certificate including the electricity, mine, agriculture and other activities in
relations to concessions, rights concessions and tactical activities. Fourth is Enterprise
Registration, is the acceptance of lawful enterprise establishment for both domestic and foreign
individual and legal entities, which is established and carries out business operations in Lao
PDR. The fifth is Tax Identity Number, and the last one is Stay Permit Card, the investors can
apply the stay permit card via IOSSO, Investment Promotion Department, MPI to liaise with
concerned sectors, in case the investors receive investment license, concession registration
certificate or enterprise registration certificate at central or Vientiane Capital levels (IPD: One
Stop Service , 2018). In addition, the cooperation between Lao PDR and China in One Belt,
One Road Initiative has also stimulated investors to invest in Lao PDR. So, through the policies
released by the Lao PDR government, it is hoped that Foreign Direct Investment will continue
to enter and have the desire to invest in the country.
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