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NEWS UPDATES Asean Affairs        28  May 2011

Foreign investment must lead to job creation: UNDP

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The United Nations Development Program has urged the Laos government to ensure that jobs will be created when considering whether to approve a foreign investment project.

UNDP Laos Chief Resident Economist Robert Glofcheski said the key criteria for selecting worthwhile foreign investment was the creation of jobs and income for Lao people so they could improve their living standards.

Mr. Glofcheski made the comment during a presentation on high quality investment selection criteria at the National Investment Strategy Workshop held last week at the International Cooperation and Training Centre in Vientiane. The workshop was part of a UNDP-funded project to enhance the capacity of the government in selecting investment projects.

The government has approved more than 760 domestic and foreign investment projects with a value of about US$9.7 billion over the past five years. Most investment went into electricity generation (US$2.9 billion), followed by mining (US$2.7 billion) and the service industry (US$1.2 billion).

Although foreign investment has boosted GDP growth to an average of 7.9 percent over the past five years, many Lao people still have trouble getting jobs because foreign investors are generally reluctant to employ Lao nationals as they consider them to be unskilled.

According to the UNDP sponsored National Human Development Report 2009, Laos still faces challenges with respect to improving employment and livelihoods despite the continuous and strong growth of the economy.

The report shows that more than 75 percent of Lao people continue to be engaged in agrarian livelihoods - a clear indication that economic growth has not created jobs. The high growth and high productivity sectors, including electricity, have not deployed workers in any significant numbers.

Mr. Glofcheski said quality foreign investment must ensure skills and technology transfer to Lao workers and businesses so that people can find jobs with foreign projects and learn how to run development projects in the future.

Several foreign investors are obliged to hand over hydropower plants to the Lao government when their 25 year concession agreement expires, so Lao nationals should be able to operate the plants without the need for overseas technicians.

Mr Glofcheski said another important criterion for high quality foreign investment was that projects enhance and safeguard the environment .

The environment plays an important role in the livelihoods of Lao people as most earn a living from natural resources. The destruction of the environment will push vulnerable people into poverty.

Other criteria for selecting investment are meaningful net revenue for the government, and the reputation of the investor in Laos and other countries. Improvement of institutional and human resources and appropriate incentives for officials to select quality investment also play an important role in attracting worthwhile investment, Mr Glofcheski said.

Laos also needs to enhance the transparency of its investment decision-making process and negotiating positions to maximise the benefits for Lao people and the country.

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