Lao businesses struggling in AEC
Play
Vientiane - Lao business sector must improve the level of professionalism to survive the rising tide of competition, leading entrepreneurs have suggested.
The establishment of the Asean Community on December 31, in particular the Asean Economic Community (AEC), introduces the free flow of goods, services, investment and skilled labour, and a freer movement of capital across the region.
As a result, many businesses in Asean nations have expanded their operations to Laos, but only a small number of Lao businesses have set up shop in other Asean countries.
Many business operators say they are not yet in a position to expand into other countries. At this stage they aim to maintain their business presence in Laos and learn from others to develop their strength and expand in the future.
Vice President of the Lao National Chamber of Commerce and Industry, Ms Valy Vetsaphong, told Vientiane Times on Monday “As we know, the AEC provides us with both opportunities and challenges and I think our SMEs will face more challenges than opportunities initially.”
“But how can our businesses survive? We can survive by partnering with entrepreneurs from other Asean countries who are looking to set up joint ventures with local companies. But we have to improve our professionalism given that all businesspeople want to partner with those who operate businesses professionally.”
Valy stressed that the government and the business sector need to work closely to understand the problems of the business sector and discuss ways they can be resolved.
“The business sector must be included in policy making processes so that it enables businesses to grow,” she said, adding that another significant thing is to encourage Lao people to do business honestly.
She said those who run a business fairly by paying taxes and fulfilling their corporate social responsibilities should be rewarded.
A senior economist from the National Economic Research Institute, Dr Leeber Leebouapao, said the AEC will mean there will be no protection for local products. It's like playing a sport - those who are stronger will emerge as the winners.
“We have t o acknowledge that some of our businesses may not survive and others may struggle just to survive in this era of economic competition,” he said.
“I think the most important point is product quality, while prices must be low to enable us to be competitive. I agree that the enthusiasm and capability of some of our entrepreneurs must be enhanced to catch up with others in the region.”
Asean is a market of more than 600 million people which will attract more trade, investment and tourism to the region.
The AEC also offers an opportunity for intra-Asean trade and allows member states to refocus their trade efforts with one another.
The underdeveloped infrastructure in Asean offers many opportunities for foreign investment. China has decided to invest in a railway linking Vientiane to the Chinese border.
This year Laos is the chair of Asean and will host the Asean Summit in September, which will further enhance the country's international reputation.
Laos has been on track in implementing its AEC commitments, particularly in cutting tariffs, but the country will have to work harder to maintain its current high rate of economic growth.
