Completely reopen Laos to boost the economy,  economist advises

The full lifting of Covid-19 restrictions is key to addressing the financial and economic difficulties that Laos currently faces.
Fluctuations in currency exchange rates, the steady rise in the price of fuel and the continuing threat of Covid-19 are the main factors limiting growth and driving up the cost of food and the overall cost of living.
Associate Professor and Dean of the Faculty of Economics and Business Management, Dr Phouphet Kyophilavong, told Vientiane Times recently that a move to fully reopen Laos might help in the management of foreign currencies because if more people are allowed to enter the country, travellers and business operators will bring in much-needed foreign currencies.
Since the virus outbreak began in Laos in early 2020, the government has imposed strict measures to control the situation. The tourism industry and airlines have been massively impacted as a result.
But when the situation improved, many restrictions were eased in order to revitalise the economy. Trading within the country rebounded so that there was greater demand for foreign currencies, especially the US dollar and Thai baht, so that people could import goods.
The stronger demand for foreign currencies is driving the continuing depreciation of the kip.
According to exchange rates at the Banque pour le Commerce Exterieur Lao Public, on April 26, one US dollar bought 12,102 kip, up from 9,282 kip on January 4, 2021, while one US dollar sold for 12,127 kip, up from 9,301 kip.
For baht, it cost 387.67 kip to buy one baht on April 26, up from 330.75 kip on January 4, 2021, while the sale rate was 390.59 kip per baht.
In addition, the Ministry of Industry and Commerce has increased the price of fuel on 12 occasions and lowered it only a few times.
The year-on-year inflation rate jumped to 7.3 percent in February, the highest figure recorded in Laos since January 2016.
The surge in consumer prices has been driven by the spiralling cost of fuel and other imported products due to the continuing depreciation of the kip, according to the Lao Statistics Bureau.
Dr Phouphet said the relevant government bodies have made a concerted effort to manage foreign currencies. If Laos is fully reopened, the management of currencies would improve because more foreign investment would flow into the country, bringing in more foreign currencies, which would then be spent within Laos.
The economist observed that the severe virus outbreak is now weakening. It is now necessary to allow people to enter Laos but using a simple process such as ‘test and go’. It is believed that people coming to Laos already have undergone medical screening in their home country before going abroad.
Dr Phouphet said that these days fewer people are concerned about the severe impact of Covid because most have been vaccinated. This means that if a person does contract the virus they can take care of themselves at home. When they recover, they can continue to live life as normal.  
However, he suggested that before making the decision to reopen Laos, the government should first observe the lessons learnt by other countries.
Economic pressures tend to affect urban dwellers more heavily than people living in rural areas because townsfolk rely on a regular income and have to cope with rising prices, while people living in the countryside can obtain their food from nature, he said.
Dr Phouphet believes that although Laos’ economy is facing difficulties, steady growth will be maintained by the end of this year or early next year because the virus threat is weakening and oil prices are expected to fall slightly.

By Times Reporters
(Latest Update April 28, 2022)