Project Case Study
Hydropower and Mining Sector Technical Assistance in Laos PDR
Supporting the Implementation of Mining and Hydropower Fiscal Regimes in Laos PDR
A 2014 World Bank report placed Laos as the fastest growing economy in Southeast Asia, with average growth rates of 7 per cent of GDP over the last two decades. Some 25 per cent of overall growth flows from mining and hydropower.
Laos boasts a wealth of minerals including gold, copper, zinc and lead. Since 2003, there has been rapid development and growth in the mining sector. But without new investment, there is forecast to be a decline in government revenues from mining beyond 2020. New investment would require significant exploration spending by an international mining company with experience and capacity to find a new deposit.
The government would need an environment that enables rapid exploitation of any viable mineral resource, so that production could begin soon after 2020.
Another major revenue-producing natural resource for Laos is hydropower. Hydropower offers affordable and reliable access to electricity – an essential building block for economic growth, poverty reduction and sustainable development. Revenues from hydropower are expected to steadily increase and, indeed, surpass those from mining in the near future.
The objective of the World Bank Group’s Technical Assistance for Capacity Building in the Hydropower and Mining Sectors (HMTA) project was to increase human resources capacity and improve the performance of government oversight institutions in the hydropower and mining sectors.
Whilst there are technical issues that are particular to mining and hydropower, there are common objectives, namely: international competitiveness; simplicity of the fiscal regime; maximization of possible rents; early revenue raising; reliable revenue streams; and effective central-local processes.
- Supported the Inter-ministerial Fiscal Regime Committee, the Hydropower Working Group and the Mining Working Group to analyse, design and institutionalize a transparent and non-discretionary fiscal regime for mining and hydropower, designed to maximize government revenues whilst encouraging investor competition
- Designed an administrative and audit procedure that adheres to internationally accepted accounting and reporting standards and is able to administer the chosen fiscal regimes
- Developed the capacity and processes of the Hydropower and Mining Tax Unit, under the Department of Taxation, and other relevant government institutions such as the Ministry of Finance (MoF), Ministry of Energy and Mines (MEM) and Ministry of Planning and Investment (MPI) to implement, monitor and administer the chosen fiscal regime