2020 Volume 19 Article ID: 19.004
Timber production and processing have the potential to significantly contribute to the economic development in “low-income” countries such as Lao PDR, which have suitable land and access to markets. Processing investment can include smaller-scale furniture or veneer manufacturing or large-scale, capital-intensive industries, such as pulp and paper production. A 300,000 tonne/yr bleached hardwood kraft pulp mill has recently been constructed in Savannakhet Province, Lao PDR and began operation in 2018. The pulp mill represents a potentially significant contribution to both regional and national economies and has changed the plantation wood market environment in Laos. To date, there has not been an investigation of the full economic impact of a pulp mill, and the potential flow-on benefits to the regional and national economy. This paper examines the impact of this mill on provincial and national economies using an input-output modelling approach. Input-output models provide a framework for analysis of the inter-relationships between sectors within an economy. The modelled scenario was a dramatic change in the wood industry sector exports due to the products from this pulp mill. Regional level analysis revealed that the gross outputs for all sectors of the economy are likely to increase by 39% (an equivalent of US$ 294 million), largely due to the impact of the pulp mill on demand from wood industry sector and other related sectors. The greatest beneficiaries from the mill are industries in other countries which purchase and use the pulp. At the national level, the gross production output of the national economy would increase by 2.3% (US$ 351 million). Currently, the log raw material for the mill is mostly coming from plantations in neighbouring Vietnam and Thailand. There is considerable potential for timber plantations on degraded land in Laos, that would greatly enhance the economic contribution of the mill to the local community. Increasing sustainable timber production from plantations in Laos needs enforcement of forestry and other laws, and supporting policies, guidelines and codes of practices relating to planted forests to ensure that forest processing industries are environmentally responsible and consistent with international best-practice standards.
