Officials of the Lao Ministry of Industry and Commerce are developing a strategic plan on export promotions, aimed at mitigating the impacts of implementing the ASEAN Free Trade Agreement or AFTA. Officials say the plan will be completed and submitted to their government for approval in the near future.
This strategic plan is seen as crucial to Laos’ export sector for it to be competitive in the world market, especially when ASEAN starts implementing its free trade agreement which requires Laos to abolish all tariffs by 2015. Meeting this requirement will inevitably have an impact on Laos’ manufacturing sector if its products cannot compete, both in price and quality, with goods imported from abroad .
According to a high ranking official at the Ministry of Industry and Commerce, the new strategy will give priority to sectors such as mining, garment, wood processing, energy, agricultural products processing, handicrafts, tourism, banking, intellectual property and skills development.Government supports will include providing low-interest, long-term loans to those sectors, as well as business tax exemption to both domestic businesses and foreign investors.
However, Lao officials acknowledge it will be very difficult for them to develop their manufacturing sector to the level that it can compete with big international businesses, as 99% of the estimated 130,000 production units across the country are of small or medium scales. The only large scale industrial production units are state-owned enterprises, and these face problems stemming from both funding shortages and ineffecient management. Therefore, Lao authorities stress that their new strategy will focus on supporting the development of small and medium scale manufacturing units, while promoting joint-venture with international business in the development of the larger scale industrial units, especially in the hydro-electric power sector to reach Laos’ goal of becoming the battery of Southeast Asia in the future.
Listen to Songrit’s report for more details in Lao.