GMS Phnom Penh Plan for Development

Management-Alumni Lecture Series

09 September 2009, ADB LRM, Vientiane

Trade Situation in Laos:

Opportunities and Challenges

Latthana DOUANGBOUPHA
Deputy Division Director,
FTPD, MOIC
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Contents:

‡ Recent trade developments

de elopments
‡ Trade development strategies
‡ Opportunities
‡ Challenges

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Overview on recent trade developments
6th NSEDP (2006-2010)
‡ Recognized the importance of Trade and International Integration as a gateway to economic growth
and poverty alleviation.

‡ Merchandise export growing by 18% annually – pro poor growth engine and import growth by 8.8%.

„ Within 03 years (2006-2008)

‡ average annual growth of export 31.17%

‡ average annual growth of import 19.93%

‡ Manufacturing sector expected to growth at 11.52% annually

„ Within 03 years (2006-2008) growth at 12.60% contributed by the expansion of key industrial
sectors: construction material, beverages, garment, wood processing, agricultural processing,
equipment & machinery for farming, electronic parts & accessory, food processing, medicine
etc. 3

Lao PDR exports by country FY 2007-2008

Oth e r
15%

T hailand
30%
S .Ko re a
7%

A us tr alia
11%

US A
3%
V ie tn am
12%
S w itz e rlan d
11% C h in a
Fr anc e Malays ia
3%
3% 5%

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Lao PDR imports by country FY 2007-2008
Franc e J apan
US A
0.91% 2.28% Othe r
0.42%
5.75%
S .Kore a
2.89%

C hina
7.39%

V ie tnam
8.36%

T hailand
71.99%

Lao PDR exports by products

800,000,000
G arments
700,000,000

600,000,000 Ag ric ultural produc ts

500,000,000
Wood & wood produc ts
400,000,000

300,000,000 Mining

200,000,000
Other
100,000,000

0 E lec tric ity

2005‐2006 2006‐2007 2007‐2008

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 Lao PDR imports by products

400,000,000
F oods

350,000,000 A pparel

300,000,000 C ons truction materials

250,000,000 V ehicles

200,000,000 R aw materials  for

garment
F uel
150,000,000

Imports  for projects
100,000,000
Other
50,000,000

0
2005‐2006 2006‐2007 2007‐2008

Components of trade development strategy

Trade development strategy

Trade Trade International

Promotion Infrastructure Trade Relations

Export Import Trade Facilitation Trade Bilateral Multilateral

Promotion Promotion System Finance Relations Relations

Supply Chain Regional Trade

Infrastructure Relations

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Trade Promotion
„ Trade and production promotion
‡ Trade fairs and exhibitions in Laos and abroad
‡ Marketing campaigns
‡ Information through economic/commerce offices overseas

„ SME development and promotion strategy

‡ SMEPDO collaboration with LNCCI with joint initiative by ADB and
other development partners (GTZ, JICA)
‡ Enterprise baseline survey
‡ Streamline trade procedures

Trade Infrastructure
Improving business climate:
‡ E t
Enterprise
i L Law iin 2005
‡ Implementation Decree of Enterprise Law in 2006,
‡ Negative List adopted in April 2008,
‡ On July 28, 2008 issued notification No.1238 on
simplified enterprise registration procedures,
‡ Launch the enterprise registration office in August
2008,
‡ Others: Tax, customs, land, labour and investment
laws

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Trade Infrastructure: Trade facilitation
Import and export regulations have been simplifying:
„ Prime Minister’s Decree no. 205/PM on Administration of Export and
Import (2001),
„ Notification no. 1376/MOIC.DIMEX on the list of controlled goods for
import and export (2006)
„ Ministerial Order on import export facilitating procedures (2007)
(removed trade officials from border checkpoints)
„ The following regulations were repelled in 2008
‡ annual export-import
p p p
plan requirements
q
‡ Licensing requirements for all goods outside the revised control list
„ Revised list of prohibited goods for import and exports and goods
subject to import export license currently awaits approval by the
Minister

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Business registration process under the enterprise law

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Trade Diplomacy
Bilateral:
‡ Signed bilateral trade agreements with 16 countries
Regional:
‡ AFTA:
„ 95-98% of goods subject to 0-5% duties (Inclusion List),
„ Only IL and GEL (86 items, 8 digits)
„ 2015 free flow of goods
‡ AFAS
„ As of 2009, Laos opened 9 services sectors (66 subsectors)
„ 2015 free flows of trade in services
‡ ASEAN with dialogue partners
„ ASEAN-China (ACFTA): goods, services, investment
„ ASEAN-R. Korea (AKFTA): goods, services, investment
„ ASEAN-Japan (AJFTA): goods
„ ASEAN-India: goods, services (on-going), 13
„ ASEAN-CER goods, services, investment

Trade Diplomacy (con’t)

‡ Asia Pacific Trade Agreement (APTA)
„ 6th members: Bangladesh, China, India, R. Korea, Laos & Sri
Lanka
„ 4th round of negotiations (goods):
„ Negotiating and to sign 3 additional framework agreements
on: trade facilitation, investment, and services.

Multilateral: WTO accession

„ Applied in 1997 and completed 5 working party meetings
„ Submitted legislative action plans and their revisions:
‡ Customs valuation, SPS, TBT, TRIPS

„ Improving trade related laws/regulations in compliant with

WTO Agreements
(http://www.wto.org/english/thewto_e/acc_e/acc_e.htm)

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Opportunities
‡ Export opportunities in emerging and
dynamic economies:
„ ASEAN
„ ASEAN-Dialogue partners (China, R. Korea etc)
„ APTA
‡ General Systems of Preferences
„ EC (EBA) and from other developed countries
‡ Special Preferential Treatment
„ Granted by China, India, R. Korea
„ AISP

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Opportunities (cont)
‡ WTO accession as a means for:
„ Trade policy reform,
„ Improving business environment,
„ Legislative reforms, put in place courts and tribunals, ensure
effective law enforcement, including at provincial level
„ Building capacity and institutionalization to adjust necessary
trade regime and economic policies
„ Exploring private sector to ideas of competition and structural
adjustments
‡ Mobilize resources from trade related technical
assistance for institutional and capacity building.
‡ Turning Laos from a landlocked to landlinked
country under the support from ADB/GMS.

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Challenges
‡ Addressing ‘supply-side constraints’

„ Market access opportunities worthless without

effective exports

„ Meeting NTB requirements (e.g. SPS) in exporting

markets is a major concern

„ Improving transport infrastructure and access to

fi
finance

‡ Taking full benefits from integrating into regional

and multilateral trading system
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Challenges (con’t)
‡ Priority is to be attached to well-coordinated
trade-related
trade related policy formulation and
implementation
„ Vertically: among line ministries
„ Horizontally: relationship between central and
provincial authorities

‡ Need to keep stakeholders informed of trade

opportunities and ensure proper public-
private sector dialogue

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Thank You for your attention!

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