MANOTHONG VONGSAY

I N V E ST M E N T P R O M O T I O N D E PA RT M E N T, M P I , L A O P D R

P E I R E G I O N A L M E E T I N GB H U TA N, A U G U S T, 2 0 1 2

Attracting and Negotiating for Quality

Investments in Lao PDR

Lao PEI Phase I (2009-2012) Some Key Achievements

Poverty-Environment issues are included in the 7th National Socio-Economic Development Plan

Local level green growth planning is initiated for two pilot districts in Saravan and Houaphan

Draft National and Provincial Investment StrategiesField monitoring of all investments in the 4 PEI provinces. New investment database is used at central and provincial

level. Technical guidelines for EIA report writing, for EIA/IEE

review and for monitoring procedures Increased Capacity of ESIA staff at central and provincial

levels to review EIA and IEE reports Inform NA Members on How to ensure that investments

can benefit the poor and maintain natural capitalstudy on economic valuation for different land use options .

PEI Phase II (2012-2015) Lao PDR

Goal: to strengthen capacity of targeted central and provincial authorities to integrate poverty-environment concerns in development planning for sustainable and inclusive growth

Focus is to: Test, improve and implement developed tools and capacities Increase collaboration and synergies across PEI Outputs Carry out targeted demand-driven research for decision-making Build the evidence base on poverty, environment and climate

implications Create opportunities for local involvement in investment

decisions Coordinate PEI –wide communications Ensure financial sustainability and government ownership

Expand from 4 to 7 pilot provinces

Strong investment and growth trends

Investments have been driving economic growth, average 7% GDP annual growth rate between 2001 and 2010 68% are in the natural resource sectors, over 70% are FDI

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

1000000000

2000000000

3000000000

4000000000

5000000000Other

Services

Industry

Natural resource

A Strategic Approach to Quality Investments

PEI supports MPI to develop a National Strategy for Private Investment Promotion Management in Lao PDR till 2020.

Goal: To increase the proportion of quality investments into Lao PDR that can reduce poverty, enhance development of human capital, have least impact on the environment and support a diversified economy.

PEI’s support is towards institutional capacity to plan and manage private investments to maximize pro-poor and pro-environmental outcomes.

Criteria for Quality Investments

Quality investments are defined as those that: Generate enough government revenues to help

finance social and human development

Create new sustainable jobs and fair incomes to reduce poverty and increase prosperity

Transfer skills to Lao workers and technology for development of the domestic business sector

Safeguard the environmental assets

Practice industry standards and best practices

Strengthening management for quality investments

Stage of investment process

Activities

1. Investment PromotionAttracting the right investors

• Improve transparency and efficiency of OSS• Generate timely information• Identify targeted incentives for quality

investors• Prioritize sustainable investments for Calling

List

Strengthening management for quality investments

Stage of investment process

Activities

1. Investment PromotionAttracting the right investors

• Improve transparency and efficiency of OSS• Generate timely information• Identify targeted incentives for quality

investors• Prioritize sustainable investments for Calling

List

2. Review, Screening and ApprovalChoosing the right projects

• Integrate criteria for quality investments into screening and approval process

• Develop model contract and negotiation skills

• Strengthen ESIA process• Assess social, economic and environmental

trade-offs to inform investment decisions• Strengthen inter-sectoral coordination

Strengthening management for quality investments

Stage of investment process

Activities

1. Investment PromotionAttracting the right investors

• Improve transparency and efficiency of OSS• Generate timely information• Identify targeted incentives for quality

investors• Prioritize sustainable investments for Calling

List

2. Review, Screening and ApprovalChoosing the right projects

• Integrate criteria for quality investments into screening and approval process

• Develop model contract and negotiation skills

• Strengthen ESIA process• Assess social, economic and environmental

trade-offs to inform investment decisions• Strengthen inter-sectoral coordination

3. MonitoringDoing the projects right

• Expand investment monitoring nation-wide • Ensure financial sustainability for long-term• Data analyses and compliance management

Example of quality investment: Stora Enso: Large-scale plantation with environmental & social responsibility in Southern Lao PDR

Local economic benefits: Jobs created in an intentionally labor-intensive (as opposed

to machine use) production process Training program for local farmers for permanent

employmentSocial benefits:

Clearance of UXOs allow for expansion of local farming systems

Design of agro-forestry plantation to allow for local food and cash crops between plantation trees

Compensation to Village Development Funds based on hectares

Environmental responsibility: Created a mosaic of natural forests, local land use, and

plantation plots to support regeneration and maintain local access to NTFPs

The Poverty-Environment Initiative (PEI) in Lao PDR is implemented with:

Ministry of Planning & Investment Investment Promotion Department Department of Planning National Economic Research Institute

Ministry of Natural Resources & Environment Department of Environmental & Social Impact AssessmentNational Assembly

PEI pilot provinces: Oudomxay, Phongsaly, Saravan, Savannakhet, Vientiane province & Houaphan