MINISTER OF COMMERCE, LAO PDR

26 MAY 2005, CA, USA.

Excellencies,

Distinguished guests,

Ladies and Gentlemen,

It is a great pleasure for me to address in this significant gathering in Oakland. On behalf of the Lao delegation, I wish to express our sincere thanks both to the Rockefeller Foundation and the Fund for Reconstruction and Development for sponsoring our NTR tour trip and to the Trade Office of the State of California in collaboration with a group of Lao American community as well as other organizations and individuals who are organizing this conference and giving us the opportunity to be here today. May I also express our sincere thanks to all of you for your kind interest to our presence here today.

Our presence here today is part of the first NTR study tour for a group of persons from government as well as from the business sector relating to trade investment and tourism business after the establishment of NTR between our two countries Laos and USA.

We are so glad to contemplate the long history of relationship and cooperation between Lao PDR and USA, evolving day by day to a higher and better level. By coincidence August 10^th this year will be the 50^th Anniversary of the continuous Laos-US Diplomatic relations.

The most exciting step in our two nation’s relation is the signing of the BTA at the end of 2003 following by a granting of NTR status by the US congress and US Senate at the end of 2004. Ultimately, the BTA was entered into force in February 2005.

On this auspicious occasion, on behalf of the Lao government and people, I would like to express our sincere thanks to the US government, the US House of Representatives, the Us Senate, American people, American Business Community, and above all the Lao Americans, many of whom are here in California and some are here present today, for their support for the US NTR with Laos. Without their precious support this NTR would not have been possible at all.

This NTR is opening for a new era of numerous business and friendship opportunities. It creates new trust and confidence among people; it also reduces so many challenges and difficulties about trade and business relations between Laos and the USA. With this new era, people from the two countries may perform business activities in a normal manner at equal opportunities and risks as of most of other countries in the world.

In reality, taking in to account the real situation of Laos and the USA, from now on, more than ever, we will still need your continued support and understanding to make the best use of this NTR through Trades Investments and services activities for the benefit of both of our peoples and to foster good and friendly relations between the two countries.

Ladies and Gentlemen:

As for the purpose of today’s meeting, I would like to share with the audience some recent developments in the Lao PDR in the field of trade, investment, and tourism.

As for Trade:

Today Laos has trade relations with more than 50 countries with annual export amounted for US$ 454 millions, growing at 15 percent during 2000-2004 periods. Annual import accounted for US$ 846 millions. Our main trading partners include Thailand, Vietnam, EU, and China. Major Lao export products are electricity, mining products such as gold copper lignite etc, garments, handicraft, wood-products etc. Prospects for new export products to US markets consist off coffee, vegetables, fruits, Lao beer, wood products, special rice, minerals, etc. As an LDC, we import so many things needed for the development and the day to day life of our people ranging from machineries to oil and gas.

At present, Laos has Bilateral Trade Agreement with 16 countries in the world and we are granted Trade Preferences and GSP by 35 countries such as EU, Australia, Japan, Republic of Korea, China and so forth. In terms of global and regional integration the Lao government has a positive policy toward it. As currently our import tariffs are phasing-in reaching 0 to 5% in 2008 in order to comply with regional commitments under AFTA. We are also in the process of WTO accession .Lao authorities are having progress in making the necessary policy and legislative change required under these integration obligations.

Lao current export to the US market averages at US$ 3 million a year while US export to Laos is only about US$ ½ million a year. Optimistically with the NTR status trade values between Laos and the US could (and wait to) be accelerated. It is our firm belief that NTR will help trade based development of our economy.

Despite of land-locked, Laos has considerable potential for trade development as it is surrounded by fast growing large markets of China, Thailand, and Viet Nam. As it is developing a strategy to make Laos a land-linked country which will turn it into a hub of transit trade in the region (to integrate Lao market into the sub regional market) in accordance to the implementation of Greater Mekong Sub regional (GMS) projects. This will make our country part of a larger market and a more attractive place for foreign investment that included China Thailand Vietnam etc.

As for Investment:

Currently Laos has Bilateral Agreement on Promotion and Protection of Investment with 22 countries. Since my country became member of ASEAN we have been working hard to improve our investment policies, procedures and our institutional building capability in order to strengthen the overall investment environment. We also recognize the role played by the private sector in the economic and social development. It can be said that in general with its opened door policy, Laos has been receiving large benefit from FDI.

From 1998 till now Laos has already approved Foreign Investment from 35 countries. In 2004 the total value of Foreign Investment was counted for $ 527 millions. The top five foreign investors are Thailand, Australia, Vietnam, Malaysia, and China. The US ranks 7^th with 59 projects accounted for $ 93 million from 1998-2004. With BTA and NTR we are looking for the US rank of investment in Laos to improve considerably soon.

I would like to also draw your attention on the framework of the Law on Foreign Investment in the Lao PDR. The new investment law permits foreign investors to choose any of the three forms of investment namely joint-venture, wholly foreign owned investment and business by contract. Also, foreign investors may invest in any sector of the Lao economy and any geographical area. Incentives are granted ranging from the exemption or reduction of the import tax for materials, machineries and equipment needed for investment projects to the profit tax exemption or reduction. Necessary facilities needed for the performance of the investors' activities are also provided.

Laos possesses various potentials of untapped natural resources particularly mineral resources where occurrences have been identified in many parts of the country. Those are gold, tin, iron, lead, zinc, precious stones, coal, lignite, limestone, gypsum etc... The Lao government so far has given some concession areas to foreign investors in order to explore and develop different minerals. Sepol gold and cooper mine which is one of the mega mining projects of more US$250 million is now running near to its full operating capacity.

Laos has also substantial potential on water resources for hydro power generation. Many tributaries of the Mekong River offer possibility for construction of dams and reservoirs to produce low cost electric energy. Nam Theun 2 Hydroelectric Project is now entering into its construction phase and its electricity is expected to export in 2009.

In the industrial sector, beside mining and hydro-energy development, light manufacturing industries such garments, wood-based semi and finished products, high value-added goods and handicraft products ( silk, cotton, silver-ware, wood carvings) also offer remarkable opportunities. To cite as example, the Lao Beer Company a joint venture company has great success and extended its markets abroad and recorded and export of 5% of its total production.

Plains and plateaus offer possibilities for development of agriculture and livestock. Coffee, cotton, sugar, fruits of different kinds, vegetables can be grown under good soil and climatic conditions.

Investments in the field of services related to manufacturing, agriculture, forestry, fishery and mining are mostly welcome.

AS for Tourism:

Last year two important ASEAN meetings were successfully organized in Vientiane: The ASEAN Tourism Forum and the 10th ASEAN Summits where 16 Heads of states and government came and had a very successful annual meeting. These have substantially contributed to the attraction of influx of tourists and foreign direct investment into the country.

Eco-tourism is also being promoted. The Lao PDR is becoming a fast new destination for the Asian region and the world. In 2004, 894,000 tourist arrivals were recorded.

Ladies and Gentlemen,

From this narration, my message for you is that on the trade and investment side there are so many opportunities. Even small activities would mean a lot; any initiatives could be of substantial benefit, especially initiatives from Lao Americans who have so much understanding of the ways and means of these businesses. As for tourism, I recognize that more and more Lao American return to Laos for visiting relatives and friends; this is a very much welcome event; I really believe that one should not fear for any risk of bad activities from the Lao government side; it is our interest to have you home feeling happy with Lao people who are the citizen of Laos; more than that, the humanitarian conduct and the good relation of our two countries do not permit any of such bad behavior, they only guaranty for the good behavior that would contribute to the day by day improved relation.

The Lao government, Ministry of Commerce and Chamber of Commerce of the Lao PDR in cooperating with the US Embassies in Vientiane are doing and will do all we can to assist the business community, investors and visitors to take advantage of the opportunities created by the US – Laos BTA and NTR.

Also I truly believe that exporters and business community as well as individuals, especially those from both US and Laos are aware of the opportunities provided by the NTR and are making efforts to turn these opportunities into a reality.

Last but not least I wish to thank all those involved: the US officials, US business organization, US business people, community leaders, especially our Lao-Americans friends who are present here today for their arrangement and hospitality.

Thank you