Vientiane, March 28, 2013 – The Government of Lao PDR and the World Bank signed today the financing agreement for the Second Trade Development Facility (TDF-2) project. The agreement was signed by H.E Mr. Santiphab Phomvihane, Vice Minister of Finance for the Lao PDR and Ms. Keiko Miwa, Country Manager for the World Bank to Lao PDR. The project aims to support the implementation of the government’s trade and integration priorities outlined in the 2012 Diagnostic Trade Integration Study Roadmap, and in particular to contribute to improved competitiveness and diversification, focusing outside the natural resource sectors.
The US$14 million project is financed through a multi donor partnership including an International Development Association (IDA) grant of US$4 million, and a Multi Donor Trust Fund grant of US$10 million with contributions from the Australian Agency for International Development (AusAID), the European Union, the Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ) and Irish Aid. A US$ 7.5 million grant has been committed in today’s signing ceremony while the remaining commitments of US$ 6.5 million will be appended as the project progresses.
TDF-2 builds upon the results achieved under the US$ 7.6 million First Trade Development Facility (TDF-1) implemented by the Ministry of Industry and Commerce during 2008-13, which focused on trade facilitation reforms, core support to WTO accession negotiations, trade related research and policy analysis; and sector investments in competitive sectors. As a follow-on to TDF-1, TDF-2 will have a deepened focus on ensuring that Lao PDR is able to fully take advantage of the opportunities provided by increased international integration, while also carefully managing the risks.
“Improving competitiveness and connectivity is vital for sustainable and inclusive growth of Laos, and trade plays a critical role in it. This is one of the key objectives of the World Bank Group's Country Partnership Strategy 2012-2016 in Lao PDR. The TDF-2 builds on the successful TDF-1, and we aim to cement our commitment to support the Government of Lao PDR's agenda on trade and regional integration.We value the constructive collaboration with our development partners in the Second Trade Development Facility,” said Keiko Miwa, Country Manager for the World Bank to Lao PDR.
The ultimate beneficiaries of TDF-2 are the firms, entrepreneurs, employees and consumers who stand to gain from an enhanced and more competitive business enabling environment. The project seeks to address the binding constraints to increased integration by Lao PDR into the regional and multilateral trading system by supporting trade facilitation and policy activities that will improve transparency, predictability and lower associated compliance costs for traders. At the same time, the grant will focus on diversification and competitiveness by supporting private sector capacity to compete more effectively in international markets. In addition, it will strengthen technical skills on trade and private sector development within the Ministry of Industry and Commerce to support stronger implementation of trade programs in Lao PDR, as a part of a movement towards a program-based approach for trade and private sector development.
“This grant financing is a key contribution in support of Lao PDR’s trade and integration program. A key priority for TDF-2 will be to progressively shift from a pre- to post- WTO accession agenda, with an increased focus on implementing reforms and following through of commitments at a level that directly benefits the private sector,” said Richard Record, World Bank Senior Trade Economist and Team Leader for the project.
The project is also a key part of continuing efforts to improve the efficiency of development assistance for Lao PDR, by pooling resources from the World Bank, Australia, the European Union, Germany and Ireland into a single program. This results in increased efficiency of implementation, reduced transactions costs and greater impact on-the-ground.
The Second Trade Development Facility is an important part of the World Bank Group’s new 2012-2016 Lao PDR Country Partnership Strategy (CPS), which in turns is closely aligned with the Lao government’s 7th National Socio-Economic Development Plan (NSEDP). The CPS aims to enhance competitiveness and connectivity, sustainable natural resource management, and inclusive development through strengthening public sector management, while the 7th NSEDP also outlines clear and specific objectives for increased international and regional integration as a means of achieving economic and social development targets.