Laos Natural Resources

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Laos has adopted the concept of its New Economic Mechanism as its policy on economic reform. The policy allows the application of a capitalistic system with the socialistic economy. The reason behind this adoption is the decision for Laos to develop its economy gradually under conditions that maintain decent living standards for its people as well as protect its national identity.

The following is an overview of the country's natural resources, which are the foundation of economic development.

Agriculture, Forestry and Livestock

Cultivated land covers only 8.000 square kilometers of the 80.000 square kilometers of potentially cultivable land. Rice growing accounts for 85% of the area planted. About 1.65 million tones of rice were produced in 1994 and 40% of the total output came from Savannakhet, Saravane and Champasak. Another portion was produced in the Vientiane Municipality.

Other crops cultivated in Laos are maize, sugarcane, root crops, beans, tobacco, cotton, fruits, tea and coffee. Coffee produced in the south is among the best quality in the world. Coffee cultivation is currently being promoted in Champasack, Saravane and Sekong.

Agriculture is still practiced predominantly by traditional means and simple aimed at subsistence farming. The agricultural methods have been applied and improved for utilization of planted areas. The department in charge of agricultural development has tried to solve these problems by increasingly diversifying the current mono-culture agricultural structure. Intensive farming has been encouraged to replace extensive farming.

Since 1987, forestry has played an important role in the country's economic system. Forests cover 55% of the nation's land area and are certainly a crucial resource. Business connected to forestry and forest products, however, has not effectively expanded. This is the result of policies and regulations on timber exports, difficulties of access and lack of transportation, all of which have, however, been improving.

Coupled with government policy to maintain the balance of nature, commercial utilization of this resource has been reduced. Operational conditions are other constraints affecting such utilization.

Laos is economically self-sufficient in animal husbandry, not only breeding livestock as a source of food but also as a commodity and for labor. It is therefor important to the economy.

With 80% of its area being pasture, animal husbandry plays a major part in the country's economic development and is scattered throughout the north in provinces such as Huaphanh, Luangprabang and Xayabury. In 1994-1995, the Lao Government encouraged cultivation of rice in both large and small paddy fields in every province as part of its economic development plan. First priority was given to the lowlands in Vientiane Province, with emphasis on the expansion of both cereal crops and agro-industrial crops to supply manufacturers and to support the processing of agro-products. Another goal was to provide a better view of the economic structure of the province. The target set for rice production in 1995, 1.7 million tones, was achieved. 18,500 hectares and the irrigated area expanded the rice-cultivated area also increased to 150,000 hectares. 4,000 hectares expanded low-grade rice fields as well.

The manufacture of goods in appropriate areas was promoted, with marketing support provided to manufacturers through the establishment of a project to plant agro-industrial crops to serve factories directly. Output of the project includes tobacco, sugar cane, wheat, cotton, kapok, cashew, pineapple, beans and white mulberry, grown to raise silkworms. The project area covered Vientiane Municipality and provinces nearby. Livestock breeding has been promoted as a viable business and the number of veterinarians in breeding areas increased to serve it. Furthermore, the number of plant seeds and animal species available was also increased and a survey of the area utilized for animal husbandry was conducted.

Laos has planned to end deforestation and slash-and-burn farming to conserve forests and waters resources. To achieve this it seeks to survey and allocate forest resources by clear zoning as well as employing natural reforestation methods. Priority is given to previously damaged areas, in particular upstream watershed areas.

The Lao forestry industry originally aimed to serve the domestic market. Strict control of export of logs by the government has been strictly enforced and tended to reduce the volume of exports gradually. The only forest zones allowed to be exploited were areas to be covered following the construction of hydropower dams irrigated areas and during the construction of roads.

In promoting coffee growing, Lao Trade Ministry announced the establishment of the Lao Coffee Exporters Association in Champasack, Saravane, Sekong and Attapeu. The association has controlled over the distribution and export of coffee. In the south, six companies have already registered as members of the association.

Members of the association must abide by the terms set; for example, a member has to possess a license to trade coffee seeds and offer loans to farmers who grow coffee in Laos.

Minerals

Minerals are important natural resource in the future economic development of Laos. The country still has ample sources of gemstones, coal and iron ore. Plenty of iron ore has been found near Xiengkhuang; anthracite in Vientiane and Savannakhet; tin in Khammuane and gypsum in Savannakhet.

More than 40 types of minerals have been found in Xiengkhuang covering around 150 square kilometres. In addition, several important rivers of the northeast region as well as in the Mekong River are sites for gold prospecting. Surveys to search for oil and natural gas have been conducted in the south.