Clothing and textile production, processing of agricultural products and the manufacture of wood and plastic products are important industrial branches. However, poor communications, competition from cheap import goods and high costs for input goods and transport are factors that hamper industrial development.
After the Civil War 1953–1973 (see Modern History), large parts of the Laotian industrial sector were devastated. Reconstruction was hampered by the inefficient planning economic system introduced by the Communists after the takeover of 1975 and by the fact that a large part of the educated labor flew abroad.
Since industrial production dropped sharply during the first half of the 1980s, the government gave the state companies more freedom. For example, they had to decide for themselves wages and prices and set their own production targets. Corporate freedom was then further expanded and since the early 2000s, industry has grown rapidly.
Nowadays, most government companies have been privatized. The majority of the companies are small family companies, concentrated in the area around the capital Vientiane.
Cigarettes, beer and soft drinks are other products manufactured in the factories, and assembly plants for cars and motorcycles have emerged. There is no heavy industry to speak of, with the exception of cement production, mining and electricity generation from hydropower.
Many dead when dust collapses
A hydroelectric dam bursts in the Xe Pian River and more than 30 people are killed when a tidal wave flushes over seven villages downstream. The death toll is feared to rise as many people are missing after the accident. Thousands of villagers are losing their homes. The day before the accident, a South Korean company finds cracks in the dam and information is provided that villagers should have been warned that the dam could collapse. The dam is part of a large hydroelectric project with several dams, and the system is built by both Lao and Thai and South Korean companies. The accident is a setback for Lao’s investment in hydropower exports to neighboring countries. The regime has launched the country as Southeast Asia’s “battery”. A large rescue effort is carried out with support from, among others, China and Thailand.