The Laos government has confirmed its plan to suspend 254 state investment projects will not affect economic growth, forecast at 8 per cent for 2013-2014, asking the parliament to approve the new suspension plan.
The National Assembly (NA) in its last session in July approved the 2013-2014 socio-economic development plan, including the state investment plan with 6,903 state investment projects identified, amounting to 3,300 billion kip (Bt$13.2 billion).
Amid budget tension, the cabinet recognised the need to suspend 254 state investment projects totalling more than 6,024 billion kip including 95 billion kip originally to have been provided by the 2013-2014 budget plan.
The government is seeking approval of its suspension plan from the parliament at the ongoing NA's 6th ordinary session.
Minister of Planning and Investment, Somday Duangdy, yesterday told the session that the suspension will not 'affect the growth forecast'.
He made the comment in response to questions raised by NA members who feared that the planned suspension could affect growth.
The minister justified the situation by advising that the 95 billion kip to be saved from the planned suspended projects, which were seen as less necessary, would be accumulated in the budget to carry out what the minister described as "more important projects".
He said the money saved would accumulate in the budget and finance projects to alleviate poverty and generate rural development.
"The total budget of 3,300 billio n kip will not be cut from this year's budget, but some of what is saved from suspending the new projects will be used to carry out ongoing projects," he said, adding that this will ensure more effectiveness.
In addition, internal state investment represents only a minor contribution to GDP growth.
"The internal state investment of 3,300 billion contributes less than 0.05 per cent to GDP growth," the minister said.
"Private investment, bank credit releases and foreign financial aid including loans are the main driving forces to national economic growth."
Those projects planned for suspension were new projects mainly involving the construction of new state offices.
"Ongoing projects will not be suspended, only new ones that haven't yet been started," he told the parliament.
However, those ongoing projects being carried out without parliament's approval will also be suspended, he said, adding that these projects are contrary to relevant laws and regulations.
The minister assured the NA that those projects planned for suspension were agreed upon by local authorities that had scrutinised them.
Following the amended plan, there are 6,649 state investment projects in the 2013-2014 fiscal year, which will be financed by the 3,300 billion kip.
Of these 801 projects were jointly funded with foreign assistance totalling 145.54 billion kip; 3,428 were ongoing projects totalling 2,135.71 billion kip and 2,420 were new projects totalling 1,018.75 billion kip.
