Govt releases credit to offset high prices

The Lao government intends to release 1.18 trillion kip of credit over the second six months of this fiscal year to help farmers and businesses boost production.

The funds, a 62 percent increase from the same period last year, are part of the government's measures to stimulate progressive economic growth and mitigate the rising cost of consumer items.

Cabinet members discussed the issue at the monthly government meeting in April and at a further meeting earlier this month, said Minister to Prime Minister's Office and Head of the Government's Secretariat Cheuang Sombounkhanh, at a press conference on Friday.

Of the funds 102 billion kip will be used to boost rice production in the coming wet season, 299 billion kip will be allocated to assisting the livestock industry, 331 billion kip will go towards improving production processes in various sectors, and infrastructure development will receive 450 billion kip.

Mr Cheuang said the government planned to promote increased production levels, particularly in the agriculture and service sectors, to stimulate economic growth.

He said the amount to be spent on increasing wet season rice production was a record figure. Seven major plateaus, and 14 smaller ones have been identified as critical areas for additional agricultural production, and will receive improved irrigation systems to assist in boosting crop yields.

To enable increased agricultural production, the government will expand electricity supply to key production areas, Mr Cheuang said.

The government will also ensure that the price of electricity in agricultural areas remains steady. Any area affected by a natural disaster will receive subsidised electricity.

Mr Cheuang said the government was still considering increasing coal excavation in Xieng Khuang province for supply to cement factories, enabling cement plants to increase production levels to full capacity.

Cement factories have previously had to import coal from Vietnam and have often faced coal shortages due to the surge in the price of goods, so they have not been operating at full capacity, Mr Cheuang said.

The government will pay close attention to the management of the price of goods to ensure merchants do not use the ongoing price surge to unfairly increase profits, particularly of food products.

Mr Cheuang warned that measures would be taken to penalise merchants who hoard rice.

The government is considering creating a rice fund to purchase and store rice to ensure that future prices are not too high and the market can be adjusted to guarantee supply meets demand.

The Ministry of Industry and Commerce has issued an order to provincial authorities to gather information on rice production capabilities, ban overseas exports and investigate the illegal trading of rice in their respective provinces.

Mr Cheuang said the government would consider decreasing some taxes and customs tariffs in certain sectors to stimulate production levels and promote increased investment.

He said the government would take strict action in penalising infringers who do not fulfil their tax and customs obligations to the state, an issue which needs to be addressed across multiple sectors.

Although Laos has been affected by the rising price of goods, the government will not ask the National Assembly to adjust annual target figures for economic growth, which have already been approved by the assembly.

By Souksakhone Vaenkeo
(Latest Update May 19, 2008)