OPENING REMARKS: Theme 2: Human Capital, Multi-Stakeholder Taskforce to study the impact of COVID-19 to support a Determination of the 9th NSEDP and SDG Localization in Lao PDR

Distinguished co-Chair, Mme. Phonevanh Outhavong,

Esteemed partners from line ministries and Government institutions,

Distinguished Ambassadors and development partner representatives,

Dear Colleagues,

Ladies & Gentlemen,

• It is an honour for me to welcome you to this third meeting in our series of thematic policy dialogues under the Multi-stakeholder Taskforce to examine the implications of COVID-19 and support a determination of the 9th NSEDP.
• In case we could be in any doubt, our first two policy dialogues on the macroeconomic context and trade & value chains have both underlined how profound the impact of the COVID-19 has been and how the core assumptions behind the NSEDP made as recently as  February have changed. It is becoming ever clearer that we need to plan for the pandemic casting a long shadow, with major implications playing out for several years.
• We are now faced with the challenge of adjusting our expectations to the new circumstances and finding ways to maintain progress towards our development goals in spite of it.
• Countries around the world are grappling with the same problems. COVID-19 has affected every country on earth - a tiny number of countries have not recorded any confirmed cases, but none have escaped the economic crisis that is on a scale we have not seen in close to a century.
• Every year since it was created, the Human Development Index, which tracks progress in health, education and living standards, has told a story of life getting better for people on a global scale. 2020 is now projected to become an exception, a year in which we will see an unprecedented reversal.
• For Lao PDR, the scale of the implications of the pandemic became clear part-way through the drafting of the 9th NSEDP. In response, MPI took the step to request the support of a Taskforce to provide advice on necessary adjustments to plans whilst they are still being developed.
• This Taskforce has been convened in response to that request, and is charged with:

1. working to identify a set of core assumptions about how the development context for Lao PDR will change over the coming 5 years - what we can expect, and therefore what needs to be planned for; and
2. developing a clear set of strategic policy recommendations for consideration by the relevant Ministries and Sector Working Groups in the development of the NSEDP.

• I emphasized in the inception meeting and the dialogues since, that our purpose here is not to duplicate the work of the NSEDP drafting process, nor the Sector Working Groups with their expertise and broad engagement in developing detailed plans and policies based on clearly defined targets, goals and indicators.
• It is to take a step back to look across key sectors, on the potential tradeoffs between sectors as well as where areas for synergy can be established, and ask critical questions about what the implications of COVID-19 are, and against these changing parameters, discuss and agree on the key strategic direction that can help institutions determine how policies and priorities will now need to be adapted, across sectors in a coherent way.
• Following initial consultations, we landed on the 5 workstreams that you will have seen in the ToRs:

1. The Macro-Fiscal Framework and Financing for Sustainable Development, on which we had our first Thematic Policy Dialogue last week, co-chaired by Vice Minister of Finance, His Excellency, Dr. Bounleua;
2. Trade and private sector, value chains and tourism, also discussed last week, co-chaired by the President of the Lao National Chamber of Commerce and Industry, Mr. Oudet Souvannavong;
3. Human capital, including health and education which we will discuss here today, co-chaired by Mme. Phonevanh Outhavong;
4. Managing changes and enhancing policy preparedness for decent work reflecting changes in the labour market and migration; and
5. Green growth, resilience and risk management;

• During that first policy dialogue, we had a frank discussion about some of the challenges Lao PDR will need to overcome during the coming years, in the post-COVID environment, to continue progressing towards the achievement of our collective development goals. This included addressing some pivotal questions about what the main drivers of economic development can and will be - recognising that the limits of capacity to borrow to fund heavy investments in infrastructure, mining and hydropower have already been reached.
• The financial situation was already challenging, but the damage done by COVID-19 will force tough decisions about spending priorities and impose an even harder constraint on investment options over the coming years.
• We also discussed how the growth model used until today has not been sufficiently inclusive. The reliance on large-scale investments that create too few jobs and have too few linkages to the broader economy, has not delivered enough benefits for a larger part of the population.
• In the second dialogue, on trade and value chains, we reflected on the need to find new ways of supporting economic development that reach the informal sector and Small- and Medium-sized Enterprises (SMEs) from which most Laotians earn their livelihoods, if we are to genuinely live up to the commitment of the 2030 Agenda of a sustainable and inclusive development that leaves no one behind.
• Significant investments in roads and railways will connect Lao PDR better to its neighbours and beyond, as part of the longstanding vision of transitioning from ‘landlocked‘ to ‘land-linked’, using greater regional integration to drive growth and progress.
• But COVID-19 has delivered a shock to the regional trade and investment patterns first envisioned, which now forces us to reconsider what is possible over the coming years.
• Foreign investment inflows to developing Asia are expected to fall by 45% in 2020. Global merchandise trade could fall by up to one third, with all of Lao PDR’s key destination markets seeing major growth decelerations.
• We do not know when international travel will start to ease, but the International Air Transit Association has predicted that passenger traffic will not reach pre-COVID levels until 2024.
• The improvements we are seeing in infrastructure connectivity are a necessary and promising start. But it is evident that it will not be enough for Laos to become a real player in trans-national value chains, and take advantage of the opportunities that lay ahead – opportunities, that are all the more important given the shock caused by the pandemic.
• Many other elements need to be put in place, and COVID-19 has made many of these additional requirements both more challenging to achieve, and more urgent to address.
• A requirement sine qua non, is the investment in human assets and in ensuring the right kind of human capital. That is, for those already in the workforce to upgrade their skills and for those entering into the workforce over the coming 5 years, and beyond, that they have the right capabilities to capitalize on employment and livelihood prospects. And, that these employment opportunities, at scale, can drive an inclusive and sustainable economic growth.
• As underscored by the motto of Vice-Minister Bounleua “no revenue, no spending”, the current fiscal constraint makes it more important than ever that the right spending is prioritised to ensure that the situation can be stabilized. This needs to be done without compromising achievement of the SDGs, and the broad economic development that can solidify government finances over time whilst leaving no one behind.
• In today’s policy dialogue, we hope to carry elements of this conversation forward. We will explore Lao PDR’s current human capital and the value of its experience and skills against the backdrop of the future demography and prospects for economic development, what we know about the implications of COVID-19, and what that means for the 9th NSEDP - both for the assumptions behind it, and the plans within it.
• You have all been invited here today because of your specific expertise and roles in designing relevant policy responses. We are consciously a smaller group, with participation from across sectors, in order to facilitate a new and open discussion. With this dialogue, we hope for a genuine conversation that builds on all the analytical work that has already been done.
• We do not expect easy answers to any of the questions that we are asking through this series of dialogues. We do hope, however, for a sincere conversation, that can help us move towards a shared understanding of the key issues, and the direction of sensible responses that could help guide the prioritisation process in the finalisation of the 9th NSEDP.
• As the penholder of the NSEDP drafting, we are joined throughout the series by a strong team from MPI, and Vice-Minister Kikeo, has been and will continue to look closely at the outcomes of our discussion.
• We are counting on you for your active, candid participation. In all of these dialogues, I emphasize that we do not need to agree on every point discussed, but we cannot afford to miss the opportunity we now have to engage in a discussion that will inform decisions with development consequences for years to come.
• Tuk-tuk khon, hedt viek, kiang bah, kiang lai.
• Thank you very much.