Lao PDR and the Integrated Framework

1. Lao PDR and the Integrated Framework MR. BounsomPhommavihane Director general Foreign trade policy department Ministry of industry and commerce, laopdr

2. Overview of Presentation • Provide the history and context of the IF in Lao PDR • Go through some Key IF related programmes / projects • Highlight key success factors, challenges and opportunities

3. Context • Lao PDR joined the Integrated Framework (IF) in 2004 and since then has been an active member of the IF process. • The Diagnostic Trade Integration Study (DTIS) and Action Matrix (AM) were validated during the National Validation Workshop, on 12 September 2006, following extensive stakeholder consultations. • IF Focal Point is Mme. Khemmani Pholsena, Vice-Minister of the Ministry of Industry and Commerce • The Donor Facilitator has been Australia, although we are now in the process of appointing a new DF.

4. DTIS 2006 • In depth research and documentation of key constraints • Led by a team from the World Bank • The DTIS (2006) identified five priority areas for development assistance for Laos: • Export Competitiveness, • Trade Facilitation, • Business Environment, • Trade Policy, Trade Agreements and Global Opportunities, • Trade Opportunities for the Poor

5. IF Window II • $1m approved in 2007 and closed in June 2010 • Very successful in the 4 focus areas, namely: • (a) Institutional strengthening of the IF National Implementation Unit ‐ IF Coordination and Implementation Structures • (b) Capacity building and technical support to Laos in the WTO accession negotiations (Component 4 of the Action Matrix). • (c) Improving the capacity of Lao garment companies and shift from CMT to FOB and strengthening the capacity of Association of Lao Garment Industry (Component 1 of the Action Matrix). • (d) Strengthening capacity to negotiate and administer Rules of Origin requirements (Component 4 of the Action Matrix).

6. IF Window II project cont... • The project has laid the base for long term mainstreaming of trade in Laos through the establishment of the National Integrated Framework Governance Structure (NIFGS) and the IF National Implementation Unit (NIU) • We will hear more this from the Director responsible for the NIU in a following presentation

7. Trade Development Facility (TDF) • $6.8m Multi-Donor Trust Fund, financed through the European Union and Australia, and managed by the World Bank • Signed on the 8th of August 2008 and scheduled to close in 2012 • Implemented through the NIU and National IF Governance Structure established • Has seen the NIU grow in strength • Also leveraged extra financing from other Donors on a project basis • Has provided Lao PDR with the appropriate resources to effectively tackle some key trade constraints.

8. EIF Tier 1 • Project approved in December 2009 and MOU on February 2010. • Key to continuing to build the capacity and strength of the NIU • Total value of $899,999 • This will focus on • Continuing to strengthen the NIU, • Developing proposals for Tier II projects • Laying the base of the pending DTIS update.

9. SECO – Laos UN Cluster Programme • Programme in design stage • Financed through Switzerland as part of a Global UN Trade Cluster Initiative • Involves UNCAD, UNIDO, ILO and the ITC. • $4m project implemented through the four UN agencies in conjunction with the Lao PDR National IF Governance Structure • Laos will be the first SECO UN Cluster programme to be implemented

10. DTIS Update • Lao PDR’s DTIS is now 5 years old and needs to be updated • Key role to play • in defining mainstreaming trade and defining Government Strategy for the trade sector in our National Socio-Economic Development Plan (NSEDP 7) from 2011-2015. • Developing a trade SWAp approach for Lao PDR • Will be led by the Government of Laos (GoL), with close participation of Development Partners • Requesting resources from the EIF to enable GoL leadership and control of the process.

11. Success Factors • The key success of the IF Process in Lao PDR can be attributed to the MOIC and the Development Partners progress in the following main areas: • • Strengthening the institutional framework for coordinating Trade Related Assistance (TRA) i.e. NIFGS; • • Mobilizing substantial ODA through the set up of a multi‐donor trust fund, the Trade Development Facility and other sources of bilateral and multilateral funding; • • Moving to greater reliance on Government financial management and accountability systems • • Stronger Government/development Partner coordination

12. Challenges • A key challenge is ensuring effective participation and coordination of line ministries. • Increased workload on government staff, particularly at middle and senior levels • Coordinating various Development Partner programmes & projects in the trade sector • Different reporting and operational requirements in Development Partner Projects. This is key and we need to work towards more common approaches • Undertaking a new approach to the DTIS update

13. Successes and Opportunities • Good progress on implementing projects and opportunity to move towards a trade Sector Wide Approach • Continuing progress in establishing the Institutional Set-up for trade mainstreaming • Significantly enhanced Government ownership and alignment of trade mainstreaming and development partners assistance • Further opportunity to develop this through the DTIS update and Tier II projects. • EIF workshops and coordination provide a great opportunity to learn from our neighbours

14. Thank you for your attention and support