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Laos: Global Economic Crisis Will Affect Garment Exports and Development of SSEZ.

  • Buasawan Simmala
  • Dara Baccam

Lao officials acknowledge that construction of the Savan-Seno Special Economic Zone, or SSEZ, is progressing very slowly. They say this year’s particularly heavy rainfalls in the area have impeded construction of the infrastructures necessary to the zone’s development. Construction is expected to be further delayed by the fact that many parties involved in the development of SSEZ will inevitably be affected by the current global financial crisis.

The Lao government has licensed a Thai company, todevelop an infrastructural system on a 270-hectare area of the SSEZ since 2007. The Thai company, TACS, expected to invest about US$ 48 million in the development, which so far has not yet begun. Under the circumstances, some 200 foreign investors who have expressed interests in investing in the zone are reluctant to make clear commitments.

Despite this, Lao officials stress that they have made every effort to ensure that foreigninvestors understand the problems, and that the development of this economic zone will progress as planned.

Meanwhile, Mr. Onesy Boudsivongsack, President of Lao Garment Manufacturing Association, acknowledges that the current global financial crisis, which originated in the United States and is affecting economies across the globe, will inevitably have an impact on Laos’ garment manufacturing sector. This is because the drop in the dollar’s purchasing power will result in a decrease in garment imports from Laos. He noted that the U.S.A., which imported about 50% of Laos apparels worth almost US$160 million last year, was the second largest market for Laos’ garment products. Laos' exports to the European Union, its largest market accounting for 80% of its total garment exports, will similarly decrease because of the current economic situation there. Consequently, Mr. Onesy estimates that orders for Laos’ garments from the United States and EU countries will drop at least 15% in 2009.

Listen to Songrit's report for more details in Lao.

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