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Managing investment through a poverty and environment lens

Laos’ management of foreign investments in extractive industries has improved since 2009, helping to ensure benefits are spread to communities and decrease environmental impacts.

By Asia News Network

Vientiane, May 23, 2016

The Nation

Like many developing countries in Southeast Asia; Laos’ economic growth is being driven by private investments, bringing the promise of greater opportunities and well-being to the people as well as challenges to environmental and rural livelihoods protection.

The wealth of Laos’ natural resources has attracted huge investment inflows in recent years, with hydropower facilities, mineral exploitation and large-scale agricultural investments leading economic growth since 1985, according to the United Nations Development Programme (UNDP).

In 2013-14 alone, foreign direct investment in Laos accounted for almost US$3.4 billion. With this rate of investment and an annual gross domestic product growth rate of 8 per cent, Laos is on track to meet one of the three key criteria for graduating from Least Developed Country status by the mid-2020s.

Managing the influx of investments so that benefits are spread equally among communities to alleviate poverty, while protecting the natural wealth of Laos’ environment, is a major development challenge.

The UNDP and the United Nations Environment Programme are working closely with the government to improve the quality of planning, promotion and management of investments in extractive industries through the Poverty Environment Initiative. Since 2009, the initiative has been working towards strengthening Laos’ development plan and institutional framework to ensure that investments lead to sustainable development.

Poverty and environment concerns are now integrated into the 8th National Socio-economic Development Plan including in the plan’s monitoring and evaluation framework.

Tools to regulate investment quality have been adopted by central and provincial authorities to more effectively regulate the quality of concessionary land investments, a type of long-term lease of government land by private investors. Working closely with the National Economic Research Institute, the Poverty Environment Initiative has built research capacity to deliver quality data to inform investment management decisions.

The Initiative has also been working with the Department of Environment and Social Impact Assessment and the National Assembly, to improve Environmental Impact Assessments, Initial Environmental Examinations and Public Involvement processes of proposed investments.

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