 Laos has one of the lowest per capita incomes in the world. Most of the people are dependent on subsistence farming. Starting in 1979, the Communist government lifted the ban on private trade and farmers were given incentives to increase production; further reforms were instituted in the late 1980s. Self-sufficiency in food has remained an elusive goal. Rice is the chief food crop. Corn, wheat, vegetables, fruit, cotton, and tobacco are also raised, mainly for household consumption. The opium poppy has been a major cash crop of the Hmong and Man hill tribes. Fish from the Mekong and its tributaries and from local fish ponds provide an important source of protein. Manufacturing is virtually nonexistent, limited to small-scale production of a few consumer items by primitive means, and economic development has been hampered by inadequate transportation. There are no railroads, and roads are often impassable during the rainy season. The main travel artery is the Mekong River, which is navigable between Savannakhet, Vientiane, and Luang Prabang. International traffic has moved through the Vietnamese port of Da Nang and the airport at Vientiane, and, increasingly, through Thailand, which lifted its restrictions on "strategic items" in 1991. The 1986-90 development plan called for investment in transportation, management training, and small- and medium-scale industrial projects. Electricity from the Nam Ngum dam, exported to Thailand, is the leading source of foreign exchange. Tin, mined near Muang Khammouan (Thakhek), and small amounts of forest products are also exported. Laos has a chronic trade deficit and is heavily dependent on foreign aid. In 2006, the Asian Development Bank provided Laos with a US$10 million (AUD$13.3 million) loan-and-grant package to develop forest plantations to stimulate jobs and income in the poor country. The funding consists of a US$3 million (AUD$4 million) grant and a US$7 million (AUD$9.3 million) loan, carrying a 32-year-term. During an initial eight-year grace period, the loan will carry a 1 percent interest rate, which then rises to 1.5 percent. The government of Laos will select land that can be developed into forest plantations and help some 2,000 households establish small plantations covering 9,500 hectares (23,475 acres) in the capital, Vientiane, and the Bolikhamzay, Saravan and Champassak provinces. The Asian Development Bank also said the government would provide technical, financial and other support to medium-sized plantations and help facilitate the entry of big firms to the project, which will be overseen by the Ministry of Agriculture and is expected to be completed around the end of 2011. |
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