A study on the foreign direct investment in the telecommunications sector in lao PDR

1 ACKNOWLEDGMENT The author would like to express his sincere gratitude to the supervisor Assoc Prof Dr Bui Anh Tuan for this precious guidance, fully supported and valuable suggestions throughout the research study Thanks are due to and advisor: H.E Hiem Phommachanh, Dr Thansamay Kommasith, Assoc Prof Dr Lai Phi Hung, Assoc Prof Dr Hong Van Cuong, Assoc Prof Khampheuy Phommachanh, Mrs Phonephet Miphenglavanh MBA, Mrs Khamkieng Phothirath, Mr Phakavanh Phothirath, Mr Ketsavanh Phothirath, Mr.Bounsaleumxay Khennavong MBA, Mr Oudasack Lasoukanh MSc, Mr Somlith Phouthonsy, Mr Snith Xaphakdy MSc, Mr Hoang Quoc Khanh, Mr Phung Huy Tam, Mr Doan Hieu, Miss Phuong Tran Linh for their valuable contribution in serving as committee members, as well as for precious suggestions and comments on the research study Thanks are also extended to committee council of the national level as: Prof Dr Tran Tho Dat, Assoc Prof Dr Ta Van Loi, Prof Dr Nguyen Thi Thanh Minh, Assoc Prof Dr Bui Huy Nhuong, Dr Nguyen Thi Nguyet, Assoc Prof Dr Le Quoc Hoi Thanks General Director and Deputy Director of The National University of Laos are also extended to professors and General Director and Deputy Director of The National Economics University of Vietnam, and are also due General Director and Deputy Director of Telecommunications in Laos and Vietnam Special thanks are expressed to the Minister of Education and Training of SR Vietnam and Minister of Education and sports of Lao PDR for providing access to different departments and different companies to support and collect data Lastly, the grateful the Laos and Vietnam Government, for giving cooperation program to upgrade our knowledge furthermore and to obtain a prestigious Ph.D degree from two Universities as the National Economics University of Vietnam, Hanoi, Vietnam SR and the National University of Lao, Vientiane capital, Lao PDR ABBREVIATIONS ADB Asia Development Bank AFTA ASEAN Free Trade Area ASEAN Association of South East Asian Nations BCC Business cooperation contracts BDS Business Development Services BMO Business Membership Organization BOT Build, operate and transfer BPO Business Process Outsourcing Industry BTA Bi-lateral trade agreement CSA Civil Society Associations CPI Consumer Price Index EBS Enterprise Baseline Survey (2005) ES Enterprise Survey (2007, 2009, 2011) ETL Enterprise of Telecommunications Lao EXIM Export-Import Bank FDI Foreign Direct Investment HRDME Human Resource Development for a Market Economy GDP Gross Domestic Product GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH GoL Government of Lao PDR GNI Gross national income ISIC International Standard Industry Classification ICT Information and Communications Technologies IPT Institute of Posts and Telecommunications ISP Internet service provider IT Information Technology ITU International Telecommunications Union IXC Internet exchange carrier Lao PDR Lao People’s Democratic Republic LeG Lao PDR e-Government LTC Enterprise of Joint Venture of Lao Telecommunications LDC LBF Least developed country Lao Business Forum LNCCI Lao National Chamber of Commerce and Industry MPT Ministry of Posts and Telecommunications MST Ministry of Science and Technology MOT Ministry of Trade MPI Ministry of Planning and Investment MDGs Millennium Development Goals MNE Micro and Nano Engineering MAI Multilateral Agreement on Investment MoES Ministry of Education and Sports MoIC Ministry of Industry and Commerce NGPES National Growth and Poverty Eradication Strategy NSEDP National Socio-Economic Development Plan NUoL National University of Laos NIPTS National Institute of Post and Telecommunications Strategy NPEP National Poverty Eradication Programme NICTA National ICT Association OoG Office of Government OSP On-line service provider OECD Organization for Economic Co-operation and Development SME Small and medium sized enterprises SOE State owned enterprise SMEPDO The National Small and Medium-Sized Enterprise Promotion and Development Office PPP Provincial Public-Private TRIMS Trade Related Investment Measures TFP Total Factor Productivity TNC Trans National Corporations USD United States Dollar VAS Value added services VoIP Voice over Internet Protocol WB World Bank WTO World Trade Organization IIA IPA international investment agreement investment promotion agency LISTS OF TABLE Table 1.1: Internalization advantages 29 Table 1.2: different types of FDI can be distinguished .29 Table 2.1: ICT spending on services and hardware, 2013 87 Table 2.2: Fixed-line subscribers and market share in 2014 90 Table 2.3: Mobile subscribers and annual growth, 1995-2014 91 Table 2.4: Postpaid and prepaid mobile subscribers by operator, 2014 93 Table 2.5: ICT Development Index results for LAO PDR .103 Table 2.6: FDI’s Telecommunications sector by partner, up to 2014 108 Table 2.7: Telecommunications sector Revenue Summary year 2008 to year 2014 .109 Table 2.8: Telecommunications sector Revenue Summary year 2014 to 2020 .110 Table 2.9: The Company’s establish of FDI 120 LISTS OF FIGURE Figure 1.1: Porter’s National Competitive Advantage Theory 13 Figure 2.2: The international connection point 79 Figure 2.3: Fixed lines in service, 1995 – 2014 82 Figure 2.4: Fixed-line subscribers and market share in 2013 83 Figure 2.5: Mobile subscriber’s growth, 2014 85 Figure 2.6: Mobile subscribers and market share, 2014 86 Figure 2.7: Internet users, 1998 – 2014 89 Figure 2.8: Overview of the ICT Development Index 95 Figure 2.9: FDI’s Telecommunications sector by partner, up to 2013 .101 Figure 2.10: The companies’ share of FDI 114 Figure 2.11: Telecommunications sector facility 122 Figure 3.3: Strategic human resource development serves as the key link between the overall strategic plan and human resource management 146 INTRODUCTION Rational of the research The Lao People’s Democratic Republic (Lao PDR) is developing country, it is facing critical changes Recently, this has evolved to the stage of adopting a so-called “New Economic Mechanism” for economic reform that attempts to transform its centrallyplanned economy toward a market-oriented one Foreign Direct Investment has played a very important role in the development of the telecommunications sector in Lao PDR but inflow of Foreign Direct Investment still small and going down in the period from 20002010 Party focuses on enhancing its leadership role (Choummaly Sayasone, Party Secretary General of Lao revolution people) Party Secretary General will focus on bolstering the leadership of the Party and closely monitoring the country’s top priorities to realize the resolution of the 9th Party Congress approved in March, 2011 The commitment was made at the 2nd session of the 9th Party Central Committee convened in Vientiane from 16-20 May, 2011 chaired by Party Secretary General Choummaly Sayasone The leaders have seen the need to boost Socio-Economic development based on the potential of various areas The session proceeded as the entire Party, army and society are focusing on formulating action plans to realize the Resolution of the 9th Party Congress and the Seventh (7) Socio-Economic development plans for 2011-2015 and all these efforts can lay the foundation for Lao PDR to rise above least developed country status in year 2020 [14] Foreign Direct Investment (FDI) has played a very important role in the development of the Lao’s telecommunication sector in Lao PDR The Government has formulated policies to attract FDI to this sector But FDI inflow to Lao’s telecommunications sector is not enough as expected This issue has affected the development of the sector as well as the economic development of the country The results, starting from an extremely low base, were striking - growth averaged 6% per year from 1988-2008 except during the short-lived drop caused by the Asian financial crisis that began in 1997 Laos' growth exceeded 7% per year during 2008-13 Despite this high growth rate, Lao PDR remains a country with an underdeveloped infrastructure, particularly in rural areas It has a basic, but improving, telecommunications system, and limited external and internal land-line telecommunications Laos' economy is heavily dependent on capital-intensive natural resource exports The economy also has benefited from high-profile foreign direct investment in telecommunications, logging, and construction though some projects in these industries have drawn criticism for their environmental impacts Lao PDR is in the process of implementing a value-added tax system Simplified investment procedures and expanded bank credits for small companies and small entrepreneurs will improve Laos' economic prospects The government appears committed to raising the country's profile among investors, but suffered through a fiscal crisis in 2013 brought about by public sector wage increases, fiscal mismanagement, and revenue shortfalls The World Bank has declared that Laos' goal of graduating from the UN Development Program's list of leastdeveloped countries by 2020 is achievable, and the country is preparing to enter the ASEAN Economic Community in 2015 This dissertation needs to be fulfilling the following tasks: to analyses the development of the telecommunications of Lao PDR from 2003 to 2013; to analyses and evaluate the role of FDI to develop the telecommunications sector in Lao PDR in the period 2003-2013; to investigate the main drivers of improve FDI to the telecommunications sector in Lao PDR in the period 2003-2013; to give the solutions to attract FDI to develop the telecommunications sector in Lao PDR in the period is better of 2015 to 2020 This study aims to analyses the current situation of FDI in the sector in the period from 2000 to 2010 and to set up solutions to attract FDI to the sector in the period from 2011 to 2015 in the new context of international economic integration Literature Review The Lao’s Telecommunications development, since then government has encouraged the expansion of foreign direct investment (FDI) The liberalization measure in 1994 has changed with foreign investments radically The inflows will allow multiple benefits such as technology transfer, market access, improvement in voice and data quality and organizational skills It increases the flow of foreign currency and helps in maintaining harmonious relationship with the country from which the investment is made It has been decided to enhance the FDI in telecom services in areas like basic telecom, cellular unified access services, internet and intranet, long distance vast, public mobile, radio service and radio frequency services The above services would be subject to licensing and security requirements, wherever required The FDI is limit increase, any change of investment flowing into Lao PDR and have a magnanimous effect on the telecom sector by way of economic reforms and would also affect the economy as a whole, and would likely have a chain reaction on various other sectors It has been proclaimed by the Finance Minister of Lao PDR that the decision about increasing the FDI in the Lao telecom market has been taken as telecom sector is perceived as the capital intensive and thus the aim is to draw more and more capital investment in this sector Moreover the aim was also to make the whole system in the telecom market lucid and methodical FDI in services responds well to openness especially when it comes to the telecoms sector This is quite evident looking at the recent boom in the Lao Telecoms sector Further liberalization of services involves potential advantages for Lao economy Benefits can arise from increased competition, lower prices, and better quality of services FDI in services like telecommunications provide key inputs to other productive activities that lead to further investment and competitiveness of an economy Efforts should be made towards attracting efficiency seeking FDI through a right policy that expands operation, improve local skills, establish linkages and upgrade technology However, precautions should be taken to avoid the risk of foreign investors outcompeting domestic investors especially in case of infrastructure services like telecommunications Services where domestic investors are not able to cater to the growing demand, or where domestic service-providers not have the ability or capacity to provide the required quality of services To circumvent such spirals it is important for the region to have appropriate domestic regulations or enabling environment in place, which will assure better quality of services at affordable prices Clear domestic regulations increase transparency in the system and encourage FDI To sustain the momentum of growth in services trade in the region, conscious efforts should be made to improve the competitive advantage of the region as a whole Inclusion of trade in services may help attract FDI in services and lead to greater intra-regional trade Access to more efficient services could lead to higher growth in productivity in other sectors, which, in turn, could improve the overall competitive strength of the region Thus it can be concluded that the recent upward swing in the telecommunication sector in Lao PDR is due to the introduction of FDI in this sector by the Lao Government since 1991 but at the same time we must also be careful and not get carried away by this development and should have proper regulations in place to actually utilize this situation to our advantage Laos and Vietnam will struggle strive target for a 20 percent trade growth in two-way trade next year, up from the US$1Billion expected for the year ending on December, 2012 Two-way trade between Laos and Vietnam over the first 10 months of 2013 reached US$817Million In addition, Vietnamese enterprises have invested in 412 projects in Laos totaling US$5Billion, which rank the country second after China [31] To circumvent such spirals it is important for the region to have appropriate domestic regulations or enabling environment in place, which will assure better quality of services at affordable prices Clear domestic regulations increase transparency in the system and encourage FDI To sustain the momentum of growth in services trade in the region, conscious efforts should be made to improve the competitive advantage of the region as a whole Inclusion of trade in services may help attract FDI in services and lead to greater intra-regional trade Access to more efficient services could lead to higher growth in productivity in other sectors, which, in turn, could improve the overall competitive strength of the region Thus it can be concluded that the recent upward swing in the telecommunication sector in Lao PDR is due to the introduction of FDI in this sector by the Lao Government since 1991 but at the same time we must also be careful and not get carried away by this development and should have proper regulations in place to actually utilize this situation to our advantage Research of objectives and tasks The objectives of this study and research aims to identify the important role of FDI related to improve and success of the telecom business performance in the Lao PDR in order to recommend some solution to attract FDI into Lao PDR and suggestions for new potential foreign direct investors The Lao PDR is still young country and telecommunication market is small too, but really wants to be successful in doing business in the world new market management for improving to best for Lao’s economic To meet above objects, this dissertation needs to be fulfilling the following tasks: - To analyses the development of the telecommunications of Lao PDR from 2003 to 2013 - To analyses and evaluate the role of FDI to develop the telecommunications sector in Lao PDR in the period 2003-2013 - To investigate the main drivers of improve FDI to the telecommunications sector in Lao PDR in the period 2003-2013 - To give the solutions to attract FDI to develop the telecommunications sector in Lao PDR in the period is better of 2015 to 2020 Research Questions - How does Lao’s telecommunications sector contribute to the development of Lao’s economy? - How the FDI have played in the development of the telecommunications sector in Lao PDR in the period 2003-2013? - What is the current situation of FDI in the telecommunications sector from 20032013? - What are factors to improve the FDI inflow into Lao’s telecommunications sector? - What and how to improve FDI in to Lao’s telecommunications sector in the period 2015-2020? Research Methodology Overall, the section of this paper is concerned with the social construction and disbursement of rationality and the way in which this rationality affects the power and political structure of organizational functioning through a variety of organizational and sociological theories The organizational and sociological theories utilized are referred to as interpretive perspectives, which also draw from the organizational decision-making perspective Exclusively, a number of organizational and social theories including institutional theory, resource dependency theory, political perspectives, and the sociology of professions are looked at to examine the relevance of interpretive perspectives In summary, "interpretive perspectives of managerial accounting have begun to see managerial accounting practices and information as socially constructed phenomena with the full implications of the power and politics of social construction rather than as a technically rational function driven by and serving the internal operations of organizations." Managerial accounting is seen as being implicated in the social construction of reality rather than as being passively reflective of the reality as depicted in contingency theory Main research methods will be used in this study are desk study and field study, comparative study with figures The field study includes interview, questionnaires and observations Expected Results The economic reforms that the Lao PDR has undertaken from 2011 to 2015 have produced significant progress Over this period, gross domestic product (GDP) in real terms grew by about 8.3% per annum on the average Foreign Direct Investment (FDI) has contributed greatly to changing the economic landscape of the country The telecommunications is also very fast growth and first economic in Lao PDR And also all telecom operators will be convergence to the centralization in the one gateway and also will be develop well for the future Foreign Direct Investment (FDI) plays an extraordinary and growing role in global business It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing For a host country or the foreign firm which receives the investment, it can provide a source of new technologies, capital, processes, products, organizational technologies and management skills, and as such can provide a strong impetus to economic development The direct investment in buildings, machinery and equipment is in contrast with making a portfolio investment, which is considered an indirect investment In recent years, given rapid growth and change in global investment patterns, the definition has been broadened to include the acquisition of a lasting management interest in a company or enterprise outside the investing firm’s home country, such as a direct acquisition of a foreign firm, construction of a facility, or investment in a joint venture or strategic alliance with a local firm with attendant input of technology, licensing of intellectual property, in the past decade, FDI has come to play a major role in the internationalization of business Structure of Dissertation Introduction Chapter 1: FDI Theories framework and the important of FDI attraction into telecommunication sector in Lao P.D.R b The new decree will reconfirm the underlying concepts and overall strategies embodied in Instruction 01 It will also reconfirm the principles that the higher levels of government are responsible for establishing national priorities and development strategies, while the lower levels are responsible for the implementation, management and monitoring units of the Government's policies; c The new decree will effectively build on and strengthen the existing Instruction and reduce confusion about the role and responsibilities of organisations at the local level by increasing the level of detail contained in the Instruction; d Following analysis of organization structures and systems, Central agencies will ensure that functions, decision-making and resources are transferred to local levels for implementation and delivery of services 3.3 Recommendations to Government or Ministry of Post and Telecommunications of FDI attraction into telecommunication sector in Lao PDR In discussion with the Lao partners, we have during a short period of time developed several ideas on potential activity areas These ideas are harmonized with the emerging ICT policy to be discussed in August, as far as can be said at this stage For many of the ideas, we have a good insight in costs and required ambition levels Other ideas are on an earlier development stage, and we have no clear picture of risks, requirements or costs We have decided to include even these to serve as a base for further discussion rather than to exclude “incomplete” recommendations We are prepared to develop the incomplete ideas further but need feedback regarding priorities both from involved Lao partners, as well as an indication of possible funding levels before doing that 3.3.1 Telecommunication Development of a Master Plan -> Action Plan Recommended support: The ongoing national policy process will shortly be adopted and come into effect It will as soon as possible call for the task of translating the policy into actual action items, each with a strategy to reach a specific goal It will become very important tasks to design, assign, implement and coordinate/orchestrate these actions It is an excellent opportunity to: i) take an active part in supporting decision-making with a national impact, ii) get a selection of activity areas in need of support to choose from, iii) support implementation as well as, iv) provide overall coordination support and assist in implementation, v) progress monitoring The current policy development is led by a few individuals at e-Government, and we believe that it is important to generate a broader political engagement to maintain the momentum when the commitments start to become more sizeable Some kind of a strong nucleus needs to be formed and its members must be offered training and study visits to gain further understanding of sector development and impact This nucleus should not only comprise politicians and high-ranking bureaucrats, but also technocrats, representatives from academia and the private sector We believe that such a body should be formed as a network with a certain life time (not another permanent agency) with a clear mandate from the executive power to formulate and carry out the action lines from the-then established and formalized-policy document Individuals at e-Government seem able to gather and head such a network, and if it would show hard to assign actual tasks to the network for political or legal reasons, e-Government could be the implementing agency with the network as a project board team 3.3.2 Coordination of Telecommunication support from the donor community Recommended support: We propose that Ministry of Post and Telecommunications supports a Lao run facility to coordinate donor activities There seem to be a lack of coordination and communication, and it would be a very small commitment - probably with quite some impact - to establish a routine for meetings and information exchange This problem is not new to the donor community and it has shown easier said than done to accomplish long-term coordination Regular round-table discussions held in Vientiane capital four to six times per year would however go a long way Preferably such a facility should be facilitated directly at the Prime Minister’s office rather than at an existing governmental body 3.3.3 Support the establishment of a National Broadband Telecommunication Infrastructure Recommended support: On a Telecommunication infrastructure level, as a platform for projects in the ICT area, we propose that Ministry of Post and Telecommunications supports the deployment of a broadband network consisting of four gigabit Ethernets over the fiber pair that e-Government has at their disposal The network could have a point of presence (PoP) in each district capital along the fiber Organized in a way that supports entrepreneurial development of the Telecommunication area, this will add substantial value to the passive infrastructure and create a necessary enabler for the other projects proposed in subsequent sections The four networks are proposed to be used to establish the following logical networks: i) Government Network connecting provincial government sites to the LANIC network; ii) National Research and Education Network connecting universities, research institutes, iii)vocational schools, teacher training colleges, school campuses; iv)Health network, connecting hospitals and health centers; v) Distribution of LANIC into a distributed IX affordable for small ISPs to connect to Timetable: This support activity could start as soon as a decision is made and proceed in the following five phases: Phase 1: Planning workshops to establish detailed plans and get stakeholders to agree Phase 2: Training in cooperation with National University of Lao and selected Vocational schools and Institute of Post and Telecommunications and other Telecommunication Training Centers Phase 3: Procurement Phase 4: The backbone equipment could be installed Phase 5: Distribution networks to users could start to connect and continue up to depending on availability of human resources and local fiber connections Risks: Risks include: i) Difficulty to reach stakeholder agreement on technology and business models; ii) Potential unavailability of human resources and other resources for operating the backbone, both technically and business-wise; iii)Potential unavailability of local fiber for distribution networks and user organizations capable and willing to connect and pay connection fees; Risk can be minimized by planning milestones so that investments are taken only when the risks are under control Requirements: Human resources and travel expenses, space for training and training equipment, network equipment, fiber and equipment closets Costs: According to the rough estimates discussed below, the costs are: i) Planning workshops for stakeholders; ii) Training of 100 network administrators and 100 entrepreneurs, including teachers, training equipment and training space; iii)Equipment for the broadband backbone network, including distribution switches; iv)Rental of passive infrastructure, including fiber and equipment co-location closets; v) Installation; vi)Operating costs 3.3.4 Regulator’s Technology and technology providers will be improvement We have based the network on the CWDM transmission level technology and Ethernet as link level technology, 1Gbps Ethernet in the backbone and 10/100/1000 Mbps in the distribution networks These technologies are becoming dominant in the broadband market The WDM technology is new but already proven, and has come down in price substantially the last couple of years There are many system manufacturers that can provide WDM technology, both CWDM and DWDM The price pushers are not the incumbent system manufacturers, like Alcatel, Ericsson, Lucent or Siemens, but smaller companies established some 4-6 years ago, often as spin-offs from the incumbents, like Lumentis, Transmode and Wavium in Sweden Their markets have not primarily been the incumbent operators, but the new exploding metropolitan and housing network markets They are now starting to compete also in the incumbent operator market We have used list prices from different providers in order to get an estimation of an upper limit 3.3.5 Broadband Backbone Assumptions We have assumed that GTPA/ETL will make the fiber pair available to implement this proposal and that the fiber is available at each site where a Broadband Backbone PoP is to be installed We have also assumed that, at each site, there is a closet with power and racks where the transmission equipment can be installed and connected to the fiber We have confirmed the possibility to lease such space from ETL but have not yet received the leasing price list 3.3.6 Distribution IX network switches at the PoPs to enough The estimates above include only 1Gbps port for each of the four networks at each PoP They neither include distribution switches allowing more than one network to be connected at each PoP, nor routers at customer premises At each PoP, 1-4 Ethernet distribution switches providing 10/100/1000 Mbps slots for the connection of customer networks should be installed Depending on the size and quality grade The one used to implement LANIC Another generous estimate is that four switches at each of the 25 sites Will provide equipment for 100 switches, four at each of the 10+15 sites, one for each of the four different networks proposed, the government network, the research and education network, the health care network and the distributed IX network 3.3.7 Enhance the Operator’s Backbone Network and Local Network We propose that the link level backbone infrastructure described above, during a 3- year period, is operated by one or more independent operator(s) that is not allowed to provide services on levels above the link level, except such services that are necessary for the operation of the backbone The local switches connected to the backbone at each PoP could be operated by the same or different operators than the backbone operator, depending on the availability of local technical and entrepreneurial expertise This way of organizing the backbone and the local distribution can be expected to stimulate the establishment of new entrepreneurial Internet Service Providers (ISPs) with a strong local connection and knowledge about local economic opportunities to provide access in rural areas 3.3.8 Support Entrepreneurship stimulation programs and Human Resource Development 1) Stimulation of entrepreneurship Recommended support: To speed up the development in the ICT area, it is important to support a positive image and attitude towards the area, especially among the young The marketing strategy of operators is designed in this spirit and is worth studying A method that might stimulate young entrepreneurial minds could be to have a generous policy with respect to IP address management so that anyone interested could get a set of routable IP addresses to use for building networks and set up a business If IPv4-addresses are too expensive to receive from APNIC, IPv6 addresses or a NATed address space could be used Setting up a local ISP should be part of the training in vocational schools as well as at the Institute of Post and Telecommunications (IPT) The fact that there is no charge from LANIC to issue an ISP license supports this scheme The community networks proposed could serve as pilot environments for entrepreneurs to take their services to practice The possibility to combine such a program with the other program could be explored We would recommend a further analysis prior to moving on in large scale to determine actual costs and to conduct a market survey 2) Vocational training Recommended support: We propose that a dedicated human resource development program is designed to run in parallel with the other projects The possibility to extend the activities at existing vocational schools to include programs for computer system and network administrator and programmers should be explored Identified activity areas include training for helpdesk staff, system administration/back office and network operation centers staff as well as technology awareness forums In a discussion with Dr Kongsy Sengmany at the Ministry of Education (MOE), he was very interested in the possibility to introduce a System and Network Administrator program at a technical or vocational school and suggested a first attempt at Pakpasak Technical School in Vientiane capital In a discussion with NAFRI, it is pointed out that there are also six technical schools under the Ministry of Agriculture and Forestry (MAF) The department of Personnel at MAF is preparing a three-year Human Resource and Curriculum Development program for these technical schools, which also includes introduction of ICT 3.3.9 Support an application driven acceleration of the establishment of the Public Administration Network (1) Driving applications: EIA, Public Awareness Raising and Vocational Training of Network and System Administrators - Environment Impact Assessment Recommended support: Development of an interactive web-based national EIA Case Database covering the entire EIA process A plain single-user application is already in use, and there is a great interest among e-Government staff in developing this into an application that enables remote communication and central management (2) Information Dissemination Capacity Recommended support: Information dissemination and awareness building are crucial components in e-Government work, and with an enhanced infrastructure a lot could be done We have not discussed particular solutions, but clearly there are opportunities to piggyback on initiatives with schools and community connectivity centers 3.3.10 Vocational Training of Network and System Administrators Recommended support: Involvement of NUOL and private colleges in the development of curricula, e-learning material and training of trainers for training of network and system administrators, e.g Cisco Academy training, Microsoft training, open source software training 3.3.11 Connect LaoNIC office to the LANIC network (1) Implementation of a e-Government wide LAN and intranet Recommended support: Building upon the proposed strengthening of the national infrastructure, there is a huge potential to rationalize and stimulate increased information exchange and collaboration between e-Government and other stakeholders There is a huge demand for communication, but simultaneously a limited understanding of the potential of the impact of modern ICT applications We therefore believe that it is wise to first set up the infrastructure in order to enable demonstration projects Coordinate with other actors, such as provincial information providers, IUCN, etc., would be an important ingredient 3.3.12 National Research and Education Network (1) Driving Applications: Curricula for Environment Awareness and a National Lao Digital Library Several of the actions suggested in the NREN activity can piggyback on the enhanced national infrastructure For NREN specific costs, we assume that it is generally possible to get academic discounts (2) Environment awareness raising Develop e-learning material supporting EIA courses for primary, secondary and tertiary level education, including IPT, based on material from the NUOL Centre for Environment Impact Assessment Demonstrate distance learning of environment awareness raising courses between NUOL, regional university colleges, teacher training centers and schools 3.3.13 National Digital Library Establish a digital library at NUOL, focusing on the environment with content in cooperation with IPT, NAFRI, IUCN and others 3.3.14 Connect to the Global Research and Education Network We judge that it is very important contribution to the development of the universities to connect the Lao NREN to the global academic network via THAISARN and/or TEIN 3.3.15 Enhance ICT support to Healthcare network (1) Driving applications: Patient Records, Telemedicine and Waste Management Patient records Recommended support: Work with the Ministry of Public Health to develop and deploy a patient record system and deploy at pilot hospitals We have visited several hospitals that did not have the capacity to look up historical data on a specific patient that have been previously treated The problem is generic, and a solution is scalable to serve many hospitals, and also holds capacity building components in terms of process and routines analysis and reengineering Costs: The needs analysis would cost allow Development cost for a stand-alone system to be deployed on a single computer would be enough A network version deployable over a LAN or the Internet would probably cost independently of a ready system was bought or a system was developed from scratch With rights to the software, the actual solution is scalable and costs for deploying at extra hospitals would be limited to infrastructure hardware and software as well as for potential communication, user training and running costs including maintenance Depending on system size and solution, this operating cost could be anything per year and site (2) Telemedicine applications Recommended support: Work with the Ministry of Public Health to implement and demonstrate basic telemedicine applications While piggybacking in the enhanced national infrastructure and with a 100 USD web camera, competent, remote doctors could supervise operations on the countryside (3) Hospital waste management Recommended support: Study the results from ongoing efforts regarding hospital waste management in Vientiane capital and adapt to pilot provincial hospitals 3.3.16 ICT Schools or institutions Community connectivity centers network Recommended support: We propose that support is provided to community connectivity centers These can be hosted at secondary schools or at other institutions depending on local feasibility and resources available A main success factor will be a neutral “owner” of each site that can ensure that the site is being efficiently used and that the facilities are accessible to the public and not blocked by private interests or irrational reasons Further success factors include commercial and technical sustainability Both of these factors will heavily depend on which models are possible in various locations Local initiatives in this direction should be supported, regarding training of entrepreneurs, network and system administrators The model used by LERNET/REN foundation seems to work well and cooperation with LERNET/REN should be considered 3.3.17 Soft infrastructure Knowledge Network and Public Information Services (1) IUCN Environmental Knowledge Network Based on information from IUCN, NAFRI, NUOL, IPT, etc., we know that there is a strong need and a strong will to collaborate and share environmentally related information IUCN is currently heading an initiative in this direction, and is open for additional support that is surely needed (2) Local Content / Public Information Services The governor of provincial has expressed a strong will to enable and support online information initiatives, such as tourist information and stimulation of local content creation We believe that a lot can be done with relatively small means in combination with the development of the public administration and community 3.3.18 Increase the possibility of general comments regarding sustainability Since we in this study are focusing on the public sector and on basic services that citizens normally should be able to demand, the question of sustainability of the proposed projects is important As these functions and services are basic, and normally provided by any government through taxes, we claim that the projects proposed generally are (or should be) as sustainable as any school system, health care system or government infrastructure investment In Lao PDR, it might not be the case that - for example - an agency reimburses another agency for costs for services rendered or investments in beneficial infrastructure It is in that case a breach in the state budgetary system rather than in the model for project implementation Some projects are one-time investments and will hence never become long-term sustainable projects; rather paving the way for new sustainable projects Since there is so little funding available in Lao PDR, discussion on sustainability has been difficult We believe that our proposals are sustainable in the long run, but that it may take some time before some functions will be possible to carry through the normal tax system In a partly circular reasoning; by the actual support we propose and with the increased understanding and capacities it will bring, we increase the possibility to make many of these functions CONCLUSION Foreign Direct Investment (FDI) has played a very important role in the development of the Lao’s telecommunication sector in Lao PDR In the period from 1991 to 2008, the Government has formulated many policies to attract FDI to this sector But FDI inflow to Lao’s telecommunications sector is not enough as expected This issue has affected the development of the sector as well as the economic development of the country The 7th National Socio-Economic Development Plan, which targets the achievement of annual economic growth, requires additional investment of about USD15Billion or equivalent to about 32% of GDP It is expected that the rich natural resources and environment will continue to play a major role in attracting FDI into the country The following points briefly illustrate the plans for selected key economic drivers FDI for Telecommunications sector in Lao PDR has an extensive fiber optic network throughout the country with connections to neighboring countries, e.g., China, Myanmar, Thailand, Vietnam and Cambodia Hence, location-wise, the Lao PDR can promote itself as a link to provide communication services via its network for neighboring countries Domestically, the outlook for the mobile phone and internet business is also promising, with the mobile phone penetration rate rising from 35% in 2007 to 60% in 2010 and that of the internet being around 5% Growth in these internet should be support by a decent rate of urbanization at 5%, indicating demand for all means of communication, including mobile phone and broadband rising affordability of the people from GDP per capita growth at 21%, estimated to reach USD1,972 by 2015 and declining prices of information technology (IT) devices, particularly with low priced devices from China Moreover, the utilization rate is set to grow at a fast pace going forward in tandem with rising investment, particularly from foreign companies The dissertation reviews the theoretical debates about FDI as well as the importance of FDI attraction The material is well handled, the author seeing greater merit in the studies that support a standard model for evaluating the importance of FDI attraction as well as the methods of FDI attractions in developing countries like Laos The dissertation provides an overview of the situation of FDI attraction as well as the success of FDI attraction into telecommunication sector in Lao PDR The dissertation provides some recommendations and conclusions in FDI attraction for the Lao PDR in general and into telecommunication sector in particular Recent development experience, disillusionment with interventionist policies, growing Government sophistication and adverse international economic circumstances, have combined to produce a much more favorable, and less controversial, environment for direct investment flows The maturing of the literature on TNCs in development reflects this shift This maturity is to be welcomed, since many of the heated debates of the past were arid and irrelevant It does not mean, however, that all important issues have been resolved as far as FDI and development is concerned What then are current research issues? Here are some ideas from a development economist who believes that the main need is for research to help developing countries cope with rapid and relentless globalization and with the competitive pressures generated At the most general level, what is lacking is a sound theoretical base: a theory of development that can take market failures into account and suggest practical remedies for structural problems Existing theories are often rooted in equilibrium systems where market failures are absent or trivial They tend to end with simple solutions (liberalize and ‘get prices right’) The proper consideration of TNCs in development requires a more complex framework for analyzing the development process, taking account of market and institutional imperfections and their correction This is clearly an area of future research, considerably broader than FDI but directly relevant to it REFERENCES Mai, Nguyen Thi Tuyet, PhD (2009), “Research methodology for PhD program Viet-Lao” July 2009 Jill 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https://en.wikipedia.org/wiki/John_Harry_Dunning 49 https://wells and wint(1991) 50 https://en.wikipedia.org/wiki/Bertil_Ohlin 51 https://en.wikipedia.org/wiki/Eli_Heckscher 52 https://Anthony P William, Perrewe, L Pamela, Kacmar, Michele ... ownership advantages, locational advantages and internalization advantages A precondition for international activities of a company are the availability of net ownership advantages These advantages can... application and accompanying material, the Department shall examine the application for formalities For a cancellation action, the application shall be examined to determine that it meets the requirements... Internalization theory itself is based on the transaction cost theory This theory says that transactions are made within an institution if the transaction costs on the free market are higher than the