From poverty to sustainability: People at the center of inclusive development

Oct 17, 2011

This year's International Day for the Eradication of Poverty focuses on people and their right to live with health, dignity and hope for the future. Lao PDR's recent record in improving living standards is impressive, with poverty rates falling from 46 percent of the population in 1992 to 27.6 percent in 2008.

The current economic boom, averaging 7.9 percent growth annually over the last five years, provides an opportunity to further eradicate poverty. But to realize this, the investments fueling this growth must be sustainable and benefit the people.

Helen Clark, UNDP Administrator, highlights the importance of this in today's message where she says, “Truly sustainable development for present and future generations must safeguard ecosystems while also enabling economic and social progress.”

The fast-growing economy of Lao PDR is driven by Foreign Direct Investment (FDI) primarily in the natural resource sectors. This growth places pressure on natural ecosystems and can lead to dramatic changes in land use. With the large majority of rural Lao people depending on natural resources for their food and incomes, these changes can have a significant impact on their livelihoods.

In Lao PDR the joint UN Development Programme (UNDP) and UN Environment Programme (UNEP) Poverty-Environment Initiative (PEI) works to improve the ability of the government to include environmental and social concerns in investment planning and to effectively manage investments through the use of practical tools. The overall goal is to ensure that private investments generate maximum benefits for local economies and that social and environmental safeguards are in place to minimize potentially negative impacts on local communities.

According to Dechen Tsering, the Deputy Regional Director of Asia and the Pacific for the UN Environment Programme (UNEP), it's critical that there is an open dialogue about the development of the country. “I think what's really important for the people of Lao PDR is for them to determine the kind of growth they want, the kind of quality and the livelihoods that they want for themselves. I am increasingly encouraged that the government is working closely with the people so that they are a meaningful partner in this process.”

In May 2011, the Investment Promotion Department of the Ministry of Planning and Investment (MPI) presented their new national investment strategy and a 2011-15 action plan. The strategy provides a framework to promote quality investments for Lao PDR and to strengthen coordination between all ministries for effective management of domestic and foreign investments.

The plan emphasizes the need to mobilize investments that will generate sufficient government revenue to help finance social and human development, create sustainable jobs and incomes, transfer skills and technology, create linkages with the domestic business sector, and safeguard the environment.

Speaking at the launch of the strategy, Minh Pham, UNDP Resident Representative, reiterated the importance of assessing and monitoring FDI, “Foreign direct investment clearly has a valuable role to play in the future development of Lao PDR. But ensuring that FDI contributes to and at least does not harm the country's development is of course not automatic. This will very much depend upon the quality of FDI selected and approved by the government.”

For Manothong Vongsay, the Deputy Director General of the Investment Promotion Department, MPI, looking at the experience of other nations is vital. “To ensure the sustainability of growth we have to be very careful and try to learn from the mistakes that other countries have made and try to avoid these, especially as Laos is heavily dependent on natural resources.” He added that quality investments will generate job opportunities, transfer skills to local workers and have minimal impact on the environment.

Ultimately quality investments will play a crucial role in ensuring Lao PDR makes the jump from poverty to sustainability through contributing to the implementation of the government's 7th National Socio-Economic Development Plan. The 7th development plan underscores the importance of, ‘achieving the Millennium Development Goals (MDGs), protecting the environment, maintaining political stability and peace, having an open economy integrated into the regional (ASEAN community) and world economy, and focusing on the quality of growth.'

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