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Lao Firms Ready for Free Trade Competition |
| Source: |
laovoices.com |
| Source Date: |
Wednesday, February 23, 2011 |
| Focus: |
ICT for MDGs
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| Country: |
Lao People's Democratic Republic |
| Created: |
Feb 28, 2011 |
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Lao businesses are braced to take on the competition that will result when the country becomes a member of the World Trade Organisation (WTO).
"If the government is ready to become a WTO member, we are also ready," Lao National Chamber of Commerce and Industry Vice President, Mr Oudeth Souvannavong, said yesterday.
His comment came as the government amends legislation to bring the country in line with WTO membership requirements.
However, Dr Oudeth urged the sectors concerned to streamline export procedures as soon as possible, so that Lao exporters can more easily ship their products to world markets.
Another chamber vice president, Mr Sananh Chounlamany, said businesses that use domestically sourced raw materials won't have a problem, while businesses that import raw materials will have trouble surviving.
He said cement makers will be able to compete with foreign firms as the price of raw materials and labour in Laos is relatively low. But steel makers, who import iron bars, will face tougher competition due to their higher production costs.
Lao businesses should start now to prepare for free trade, as it is impossible for the country to remain isolated. Dr Sananh said it was government policy to join the WTO in a bid to boost foreign investment.
He said Laos would benefit from WTO membership once businesses had enhanced their capacity to produce goods for overseas markets.
"To produce goods for foreign markets, you have to work harder. You can�t continue in the same mode as at present."
Lao Cement Producer Group Secretary General, Mr Inpone Phanthanoulack, said Lao cement makers weren't concerned about competition when the market opened up because they could source raw materials locally.
"Lao cement is cheaper than that made in other countries so we're not worried," he said, adding that demand for cement in Laos continued to rise.
"There are 20 hydropower projects and now the Laos-China railway will require cement. This project alone will need about 3.5 million tonnes."
According to a report from the Lao Cement Producer Group, there are six cement factories in Laos with a total production capacity of about 1.2 million tonnes annually. This meets only 60 percent of the nationwide demand for cement.
Provinces that share borders with Thailand and Vietnam import cement for domestic consumption.
Manufacturers that import raw materials often complain about illegally imported goods. Steel makers in particular say cheaper imports undercut their own products and this makes it difficult for them to compete in the marketplace.
They urge the government to put a stop to illegally imported construction materials, pointing out that they pay tax to the government while importers avoid paying tax. This is one of the reasons why importers can sell their products more cheaply.
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