Laos struggles to shore up economy amid inflation and less investment

DW (English)

The small Asian nation is battling a weak currency and a dip in foreign investment. Local business owners say their country needs to boost local production and exports if it wants to jumpstart the economy.

Transcript

00:00Chicken feet are a bestseller at this market in Laos' capital, Vientiane.

00:07But in her 24 years in the meat business, shopkeeper Buamani Sipubong says these are

00:12the hardest times she's faced.

00:15The price per kilo of imported chicken feet has jumped from 70 cents to over 2 euros in

00:22recent years.

00:24Technically she's making more money, but that money has lost value.

00:32When the currency was stronger, I could buy more products with the same amount of money.

00:40But now, not only am I losing, my customers are buying less too.

00:49Many of those customers have turned to the black market to get foreign currencies at

00:54a cheaper rate.

00:56But that only fuels inflation, driving up the cost of imported goods even more.

01:02High inflation also makes it tougher for Laos to pay back foreign debt.

01:07Like the 6 billion US dollars China-Laos railway project.

01:12China is Laos' biggest creditor, holding nearly half of its public debt.

01:18Some debt relief from China has been granted, but more negotiations are ongoing.

01:25This local businesswoman believes that in the long run, Chinese investment will pay

01:30off.

01:31She thinks the bigger issue is local production.

01:35Most of the trade on the railway is one-way, goods coming from China into Laos.

01:43The government is trying to boost exports, but Laos just doesn't produce enough.

01:48There are hardly any local products.

01:50They need to support local businesses to get things going.

01:57These pipes are one of the few items made locally.

02:02Everything else is imported from Thailand or China, meaning the family business has

02:07to pay for them in foreign currencies.

02:14Back at the market, shopkeeper Sipu Wong is paid in Thai baht.

02:18A bit of good news, since almost all her meat is imported from Thailand, like most products

02:24here.

02:25For now, they arrive via a bumpy road.

02:29But plans are underway to extend the railway from Vientiane across the Mekong River into

02:35Thailand.

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