Industrial development is rudimentary. There are some small mining operations, charcoal ovens, a cement plant, a few brick works, carpenter shops, a tobacco factory, rice mills, some furniture factories, and more than two dozen sawmills. Industrialization plans center on cotton spinning, garment manufacturing, hydroelectric power projects, brewing, coffee and tea processing, and plywood milling. New resource developments, including the Nam Ngum hydroelectric project and the Vientiane sylvite field, have aided industrial growth. Handicrafts account for an important part of the income of many Laotians. Some villages or areas specialize in certain types of products: silk fabrics, baskets, lacquerware, and gold and silver jewelry and ornaments. Bricks, pottery, iron products, and distilled beverages are made in individual villages. Manufacturing is largely confined to the processing of agricultural—food and natural fibers—and forestry products.
From 1998 to 2001, industry grew at an average annual rate of8.7%. The growth is in large part attributable to governmentsponsored construction projects, particularly hydroelectric power projects. By 2002, hydroelectric power had taken the place of garments as the country's leading industrial export, and its leading source of foreign exchange. Most manufactures, however, continue to be imported; exports regularly only amount to 60% of imports. At the end of 2002 the main industrial project under consideration was the construction of the $1.3 billion hydroelectric dam on the Nam Theum River, the power from which would be exported to Thailand. The project was far from realization, lacking both a purchase agreement with the state agency in Thailand, and the World Bank guarantee for the investors.