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Laos
Index
The organization of the industrial sector prior to 1986
was
centered on the state. Between 1979 and 1984, most
state-owned
enterprises incurred huge losses, and industrial sector
output
decreased by 10 percent. At the same time, gross
industrial
production began to shift slightly, to the private sector:
private
industrial output as a percentage of gross industrial
output
doubled to 8 percent between 1980 and 1983, whereas state
output
decreased slightly from 93 percent to 89 percent. In the
early
1980s, a slow increase in the number of private
enterprises began,
reflecting both the government's newly relaxed policy on
the
private sector and the private sector's greater efficiency
and
profitability compared to that of the state sector.
Following the introduction of the New Economic
Mechanism, the
private sector's involvement in industry increased even
more, as
industrial management was decentralized and most
prices--except
prices of basic utilities, air transport, postal service,
and
telecommunications--were freed from price controls. In
1988 Decree
19 granted state-owned enterprises expanded financial and
managerial responsibilities.
As a result of these changes, some state-owned
enterprises were
forced to curtail production sharply or close down
entirely,
precipitating a short-run drop in manufacturing output. It
was not
until March 1990, however, that the government provided a
legal
basis for the actual privatization of state-owned
enterprises,
through the promulgation of Decree 17. Under this decree,
most
state-owned enterprises were transformed into enterprises
under
other forms of ownership, through leasing, sale, joint
ownership,
or contracting with workers' collectives. Exceptions
included
enterprises deemed necessary to the nation's security or
economic
and social health, such as utilities and educational
facilities.
The extension of credit to unprofitable state-owned
enterprises was
discontinued, and state-owned enterprises were required to
set
prices and salaries at free market levels. By the end of
the year,
the private sector's contribution to
net material product (see Glossary)
had increased dramatically, to 65 percent.
The government reported at the Fifth Party Congress in
1991
that its "disengagement" policy was succeeding; two-thirds
of the
approximately 600 state-owned enterprises have been either
partially privatized or leased to domestic or foreign
parties. The
remaining state-owned enterprises were granted greater
autonomy in
making investment decisions and setting input and output
targets,
in hopes of improving their productivity.
Data as of July 1994
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