OPENING REMARKS: Theme 4: Labour Markets and Migration, Multi-Stakeholder Taskforce to study the impact of COVID-19 to support a Determination of the 9th NSEDP and SDG Localization in Lao PDR

Excellency Mme. Baykham Khattya, Vice Minister of Labour and Social Welfare,

Esteemed partners from line ministries and Government institutions,

Distinguished Ambassadors and development partner representatives,

Dear Colleagues,

Ladies & Gentlemen,

• It is an honour to welcome you to this fourth thematic policy dialogue under the Multi-stakeholder Taskforce examining the implications of COVID-19 for Lao PDR, in order to supporting a determination of the 9th NSEDP, and the achievement of the SDGs.
• Globally, the statistics on the impact of the pandemic become more alarming every day. There have been nearly 29 million confirmed cases, and over 920,000 fatalities. And if that was not enough, measures taken to stop these statistics have become even more tragic and have preceded the steepest decline in economic output in our lifetimes.
• This policy dialogue initiative was brought about by the realisation that many of the consequences of the COVID-19 will not be short-lived. So rather than hoping for a rapid return to the prevailing circumstances we knew from before the pandemic, we now need to adapt to new circumstances, and revise our plans for years to come.
• We certainly need to respond to urgent imperatives to act quickly in response to the disease. But we also need to look ahead and start building in necessary adaptations to our core planning structures.
• Lao PDR was part-way through the development of the 9th NSEDP when the scale of the implications of COVID-19 became clear. 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.
• 5 workstreams were identified through initial consultations:
  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 discussed yesterday, co-chaired by Director General Phonevanh Outhavong from the Ministry of Planning and Investment;
  4. Managing changes and enhancing policy preparedness for decent work which we will discuss here today; and
  5. Green growth, resilience and risk management- to be discussed on Friday.

• During the first policy dialogue on the macroeconomic prognosis, 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.
• 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.
• Crucially for our policy dialogue today, 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 what it will take to genuinely live up to the commitment of the 2030 Agenda and deliver sustainable and inclusive development that leaves no one behind.
• To achieve that, it was clear that we need to find new ways of supporting economic development that reach those in the informal sector and Small- and Medium-sized Enterprises (SMEs) from which many more Laotians earn their livelihoods.
• The major investments in roads and railways will connect Lao PDR better to its neighbours and beyond, as part of the longstanding vision of transitioning from a ‘landlocked‘ to a ‘land-linked’ country, and it offers the potential to use greater regional integration to drive growth and progress. But COVID-19 has delivered a disastrous shock to the regional trade and investment patterns first envisioned and as outlined as the core assumptions in the draft NSEDP, which now forces us to reconsider what is possible over the coming years.
• One key pre-requisite was discussed at our third dialogue yesterday - 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.
• We agreed that the need to protect investments in health and education was self-evident, in particular as Lao PDR enters a crucial period of demographic change. Over the coming years, the size of the prime working age population relative to overall population will peak - offering the opportunity to leap ahead in terms of development if we can ensure that those entering the workforce have enough productive opportunities and the capabilities to seize them.
• The challenge is how to identify the priorities-amongst-priorities in the highly resource-constrained environment. We need to make sure that we make the smart investments that meet the need to stabilize the fiscal situation and does not compromise the longer-term development potential- and recognise that the smart investments in a post-pandemic environment may be very different and require favouring other priorities that those we would have identified before.
• In the discussion this morning, we hope to carry this conversation forward, but also to introduce new strategic considerations.
• COVID-19 has led to major changes in both the domestic and regional labour market conditions. We have seen many industries disrupted, and in the case of tourism, a whole sector almost entirely shut down.
• With the closure of regional borders, thousands of workers have returned from regional markets, often to rural parts of Laos, and now face uncertain employment prospects. With the economic reports we receive from Thailand, which has for long been a major destination country for Laotian migrant workers, we cannot count on a quick return to the levels of regional employment opportunities that have become important livelihood opportunities and source of remittances back home.
• But with ever-greater regional integration, we need to work to ensure that we have appropriate systems in place to manage the ever-greater human mobility that will come with it.
• All of this underscores the importance of our focus of the dialogue today - how we can enhance policy preparedness to manage the changes we are now going through, better aligning skills development efforts to the needs and opportunities ahead in the post-COVID context.
• 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.
• None of the questions that we are asking through this dialogue series have easy answers. But we have seen through the discussion thus far that creating the space to have a sincere conversation, 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.
• I also take this opportunity to commend the leadership of the Ministry of Labour and Social Welfare in taking forward preparations for this Dialogue, working with partners from across the private sector, labour unions, and the UN. It has been a great example of teamwork, and a case of exactly the type of joint effort that we need to tackle the challenges we now face.
• As the penholder of the NSEDP drafting, we are joined throughout the series of policy dialogues by colleagues from MPI, and we are in regular contact with Vice-Minister Kikeo, who is keeping a close eye at the outcomes of our discussions.
• In all of these dialogues, I emphasize that we do not need to agree on every point discussed, but we now have a precious opportunity to engage in a discussion that will inform decisions with consequences for years to come. Let us make sure we do not miss that chance.
• Tuk-tuk khon, hedt viek, kiang bah, kiang lai.
• Thank you very much.