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European Development Partners’ Statement
at the Lao PDR’s 2017 Round Table Implementation Meeting
Vientiane, 23 November 2017
Laos’ European Development Partners – the European Union and the Member States of the European Union together with Switzerland – would like to commend the government's efforts in ensuring swift progress in the second year of the implementation of the 8th National Socio-Economic Development Plan (NSEDP) 2016-2020.
Lao PDR remains one of the fastest growing economies in the region with poverty having steadily decreased over the past 15 years and is projected to fall further. While we congratulate Lao PDR for this remarkable sustained economic growth, challenges remain to translate this into equitable and inclusive growth as set in the 8th NSEDP and along the lines of the ambition to graduate from LDC status.
Development processes have been confronted globally by emerging new challenges, which are well reflected in the 2030 Sustainable Development Goals agenda (SDGs). We have had ourselves to recalibrate our development policy in Europe, to be fully coherent with the 2030 Agenda and be able to respond effectively to the global evolving priorities, through a new European Consensus on Development.
Lao PDR must be commended for its strong commitment to localise and mainstream the 2030 agenda into the NSEDP. We encourage a continuous integration of the SDGs into Lao PDR's own planning and budgeting frameworks, not the least through the approaching NSEDP mid-term review. We look forward to Lao PDR's participation at the July 2018 high-level political forum on sustainable development, in which it will be subject to voluntary national review.
In Lao PDR, European partners are working in an efficiently coordinated and cohesive manner through the European Joint Programming, which has indicatively pledged close to LAK 5 trillion (over 500 million Euro) over the 2016-2020 period of the 8th NSEDP. This underscores the strong commitment of the peoples of Europe to provide a considerable support to the people of Lao PDR and its government towards achieving its ambition to graduate from LDC status.
The graduation roadmap will witness a decisive milestone in 2018, with the triennial LDC review. Perhaps the most challenging of the three criteria for the graduation is the achievement of the Human Assets Index. A recent analysis of marginal contributions of individual components of the Human Asset Index showed that a maximum increase in the HAI value would occur if the nutritional status of the population were to increase. Stunting in early childhood has severe consequences for children’s survival, growth and development, and for the growth and development of Lao PDR. Stunting is associated with suboptimal brain development, which is likely to have long-lasting harmful consequences for cognitive ability, school performance and future earnings. Stunting is a silent national emergency that clearly requires a continued long-term call to action for accelerated progress.
In this context, we would like to highlight the importance that basic social services play in ensuring that the development process benefits all, including populations from remote rural areas and vulnerable groups, in an equitable and inclusive manner.In this regard we welcome that the government of Lao PDR is committed to implement reforms towards introducing universal coverage of social health protection by 2020 and to expand the free maternal and child health care policy. But we regret that Lao remains one of the countries with the lowest public spending on health as a percentage of GDP both regionally and globally. On the other hand, we are happy to acknowledge the high level of political commitment that the Government of Lao PDR has demonstrated, both at the central and provincial level, with a successful 3rd National Nutrition Forum, as well as a series of Nutrition Orientation Meetings for improved Nutrition Coordination organized in provinces across the country. This high level of commitment should be followed up with increased government budget and targeted resource allocations. Using the Government's own, predictable, resources for nutrition specific and nutrition sensitive interventions (including nutrition sensitive agriculture) should be a main objective.
Education plays a key role in contributing to inclusive economic growth and LDC graduation. Quality of basic, secondary and higher education and appropriate vocational training of the Lao workforce is essential in sustaining economic growth. More efforts are needed to provide good quality technical skills which are responding to labour market needs. The improvement in Lao language skills will contribute significantly to reduce the disparities for accessing (and completing) basic education and other social services. The stakes are high with more than 50% of the population under the age of 24. The proficiency in key foreign languages is essential, especially in a context of regional and international cooperation among universities and student mobility, thereby promoting opportunities to further build capacities.
Macroeconomic stability and sound Public Finance Management are essential to a successful development policy and we congratulate recent efforts made by the GoL in these areas. In doing so, the Government should strike a balance between servicing debt and providing the right level of social services to the population. Managing the high debt levels would bring greater confidence by the private sector to invest and would unlock opportunities for more concessional loans by European development banks. Domestic resource mobilisation should increasingly become an important source of financing, and gradually become the recipe for reversing the current disproportional fiscal deficit and mitigating macro-economic vulnerability to external shocks. Efforts made to increase revenues and improve tax legislation and enforcement are commendable and we look forward to our continued cooperation in this area.
Moreover, European partners congratulate the Government for making the budget widely accessible to the public, through the publication of the State Budget on the Ministry of Finance's website. Budget transparency is the best practice for the Government to address financial leakages and corruption. Moreover, it encourages development partners to rely increasingly on country systems, including budget support, offering "additionality" – not "substitution". As such, European partners commend the important steps the Government has taken in the fight against corruption, which hinders economic development, damages private sector integrity and taps off the finances intended to reduce poverty.
We congratulate the GoL on the abolishment of a minimum registered capital requirement for foreign investors in the context of the investment promotion law. Attracting Foreign Direct Investment (FDI) remains a priority for the Government of Lao PDR. However, Lao PDR has slipped further down on this year's index of the Global Competitiveness Report, falling behind most other ASEAN nations. We would therefore encourage the government to take determined measures for creating a sound and enabling business environment.
Effective engagement in support of the SDGs requires innovative and transformative partnerships and concerted joint efforts. This in turn calls for more comprehensive, inclusive and complementary partnerships, bringing together the Government, its development partners, civil society and private sector. Moreover, we welcome the interest on initiatives shown to enhance south-south cooperation and promote triangular cooperation, while further strengthening regional integration.
Civil society organisations are recognised in the Vientiane Declaration and SDG 17 as essential partners in development. As per the Istanbul Declaration, civil society organisations play a key role in supporting not only social services' delivery, but also public participation in the national policies' formulation. Promoting an enabling environment for civil society is therefore vital for development. In this regard, we would like to raise the concerns of the European partners on the new NPA Decree 238 that has just entered into force. While it provides a new, important legal framework for the associations to operate in the country, several articles would deserve more clarity on the way – for example – the NPAs registration process shall be conducted. The lengthy process the NPAs are now requested to go through on a yearly basis, at local and national levels, may indeed make even more complex the environment in which many NPAs work. We would like to express our hope that the present situation, where almost no NPAs have been registered over the past five years, can be overcome soon. We confirm our commitment to support awareness and dissemination initiatives, as well as to increase the capacity of the civil society to interact with the authorities.
The European partners welcome the on-going consultations on the formulation of the new ODA Decree that should help in better defining and regulate the development assistance's flows. While we support the government in its endeavour to make development cooperation flows more efficient, effective and better benefitting national priorities and the people of Lao PDR, we also note that several important questions remain unclear. We, for instance, refer to the integration of ODA through the national treasury accounting system or the participation of development partners in steering committees. We furthermore strongly encourage the government of Lao PDR to include civil society into this consultation process as the Decree will also apply to them allowing in particular INGOs to effectively work with, and support, NPAs under their programmes.
We commend Lao PDR on the progress experienced in the Voluntary Partnership Agreement negotiations with the EU, which formally started earlier this year. This has been thanks to a sound multi-stakeholder process, which has been conducted in an inclusive and consultative manner. We are confident that the progress made in developing a Timber Legality Definition, in line with the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan, will support the implementation of the reform process strengthening sustainable and legal forest management, improving governance and promoting trade in legally produced timber.
We also encourage the Government to continuously engage with the CITES mechanism to combat wildlife illegal activities. We strongly encourage and support Lao authorities in translating the commitments made at the CITES COP17 into actions. We hope that the recent changes in the institutional set up would not prevent a more action oriented effort to tackle this critical issue that affects the international reputation of Lao PDR.
We acknowledge progress made towards the implementation of the National Determined Contribution linked to the Paris Agreement and the mainstreaming of Laos' climate change related priorities into national sectoral policies. However, we encourage further progress including the adoption of the National Strategy and Action Plan that will guide and steer the NDC implementation. Efforts towards achieving SDG 13 will at the same time benefit many other goals. Lao PDR was still a net sink of CO2 just two decades ago and is well placed to reverse the greenhouse gas emissions to contribute meaningfully to climate action by integrating principles of ‘green growth’, environmental protection, and resilience into development planning.
In Lao PDR, European partners are engaged to support the efforts put in place by the government to become a ‘Rule of Law State’ by 2020. We note with satisfaction the progress made so far in this regard. At the same time, we also note the importance to pursue key reforms and ensure that domestic laws are in line with all international treaties and human rights standards the country has committed to. We are encouraged by the constructive spirit in which our annual Laos-EU Human Rights Dialogue takes place and we call for continuous engagement by the Government in taking forward the concrete action points that are agreed during the dialogue. In this regard, the recent visit of the Special Rapporteur on the sale and sexual exploitation of children is a positive sign of Lao PDR's will in further engaging in related international mechanisms.
We congratulate the GoL on the “Resolution of the Party’s Central Committee on the Enhancement of Land Management and Development”, which reflects at large the positions of the Land Subsector Working Group on improving land governance and the land tenure security of the Lao people. We encourage the GoL to swiftly finalize the revision of the National Land Law, as it is crucial for the national development process. In this context, we recommend Lao PDR to follow the FAO Voluntary Guidelines on Responsible Governance of Tenure of Land, Forest and Fisheries as internationally agreed guidelines for responsible land governance. We invite the GoL to use these Guidelines as the main reference for the revised National Land Law. We also support the intention of the Prime Minister to address “complications and mistakes surrounding land use and management” like “illegal occupation of land and other disputes” which have occurred during the past years. We furthermore appreciate the Government’s pledge to ”establish a committee in charge to negotiate fair compensation for properties of local people impacted and displaced by domestic and foreign investment projects”. Alongside improving legislation, the GoL shall further ensure that land rights of local people are strengthened, by securing customary land rights for all Lao people, preferably through issuing titles, and ensuring gender equality, safeguards and proper compensation for land acquisition in lease and concession agreements.
To conclude, we welcome the efforts made to hold this RTIM outside the Vientiane area as, despite the logistical challenges, it underscores the importance that needs to be given to the decentralized Government administrations, which after all should be the primary actors in the sustainable and inclusive socio-economic development of Lao PDR. We look forward to our constructive and fruitful continuous discussions on the key issues being discussed at today's – 2017 RTIM.
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