AUDIT REPORT : INDUSTRY DEVELOPMENT

PROJ PROMOTES DEVELOPMENT OF PRIVATE INDUSTRY, IN PARTICULAR FOREST INDUSTRY DVLP AND MECHANIZED FARMING ACTIVITIES, AND ASSISTS THE DEVELOPMENT BANK OF LAOS (DBL) DEVELOP THE CAPABILITY TO SERVE AS INTERMEDIARY FOR THE FLOW OF LOAN CAPITAL TO PRIVATE INDUSTRY AND AGRICULTURE. AUDITORS REVIEWED USAID AND DBL PROJ RECORDS AND DOCUMENTS, AND HELD DISCUSSIONS WITH USAID AND ROYAL LAO GOVT OFFICIALS. ALTHOUGH PROJ NOT OFFICIALLY TERMINATED,USAID CONSIDERS IT SO AND INTENDS NO FURTHER ASSISTANCE. THE MISSION HAS CONCLUDED THAT WHILE PROJ HAS HELPED LAY BASIC GROUNDWORK FOR DVLP OF LAO FOREST RESOURCES & PRIVATE INDUSTRIES,THE PRECARIOUS SECURITY SITUATION AND THE SERIOUS SHORTAGE OF ESSENTIAL MGMT PERSONNEL WILL SEVERELY HAMPER THE RAPID GROWTH OF PRIVATE INDUSTRIES AND MECHANIZED FARMING IN LAOS. AUDITORS CONCUR WITH THIS MISSION EVALUATION. TO DATE USAID HAS OBLIGATED $1,258,652 AND KIP 175,115,186 IN LOCAL TRUST FUNDS FOR THE PROJECT. ALL BUT $1,586 AND KIP 84,610 HAVE NOW BEEN EXPENDED. AUDITOR"S REVIEW REVEALED THAT ALLOCATED FUNDS FOR INDUSTRIALIZED AND MECHANIZED FARMING AND FOR SWINE PRODUCTION HAVE NOT BEEN LOANED BY THE DBL TO PROSPECTIVE CUSTOMERS,DUE,ACCORDING TO DBL OFFICIALS,TO THE COUNTRY"S UNCERTAIN ECONOMIC AND POLITICAL CLIMATE. USAID AND DBL ARE CURRENTLY EXPLORING USE OF THESE IDLE FUNDS FOR AGRICULTURAL PROJS THROUGH THE AGRICULTURAL DEVELOPMENT ORGANIZATION. AUDITORS ALSO HAVE LEARNED THAT THE ASIA DVLP BANK HAS APPROVED PROVISION OF TECHNICAL ASSISTANCE TO THE DBL. AUDITORS MAKE NO FORMAL RECOMMENDATIONS. USAID PROMISES IMMEDIATE PREPARATION OF PROJECT COMPLETION REPORT.