Siam Kubota opens Lao subsidiary to boost sale
Siam Kubota opens Lao subsidiary to boost sale
Siam Kubota, one of major agricultural machinery makers in Thailand, has expanded its businesses into Laos as the government has a policy to modernise the industry.
The Thai company announced last week that has invested US$937,500 to set up a Lao subsidiary in Vientiane, which will be responsible for marketing and after-sales service for customers in the country. The Thai firm has also set up a subsidiary in Cambodia.
“On market penetration, the company has focused on expanding the networks of distributors, technical service centres and spare-parts distribution centres, as well as creating awareness and demand for farm machinery to develop the agriculture sectors in Cambodia and Laos,” President of Siam Kubota Corporation, Hiroshi Kawakami said as quoted in The Nation.
Siam Kubota believes that the agricultural machinery business in Asean will continue to grow, particularly in Laos and Cambodia, because of the shortage of labour, farmers' competition to reduce production costs and raise productivity, and their governments' support for the expansion of the agriculture industry.
“The problem of labour shortage in Asean has pushed farmers in this region to seek technology as a means of production, resulting in an increase of demand for agricultural machinery and the rapid development of Asean's agriculture sector,” senior executive vice president of Siam Kubota Opart Dhanvarjor said.
The Lao government also has a policy to modernise the agriculture industry so as it relocate labour from the sector into manufacturing and services. At present, about 75 percent of the Lao labour force is employed in the agriculture sector.
Despite the fact that the agriculture sector employs the majority of the Lao workforce, the output of the sector saw little increase due to the low productivity of the labour force. The sector saw only 3.3 percent growth in the 2012/2013 fiscal year, making the price of foods in the country increase as demand rose.
The government hopes that the modernisation of the agriculture sector will not only increase the wellbeing of Lao people but also give a major boost to the manufacturing sector.
Despite the Lao government policy, Opart said that the main market of the company's product was still Thailand. Exports account for only 20 percent of the company's sales. The Lao market absorbs 40 percent of the company's exports while Cambodia takes 15 percent.
Opart expected the company's export volume to increase by 20 percent in 2014 and by 40 percent in five years. He said Siam Kubota will have to invest more because of this anticipated export expansion but did not reveal where their next ventures would be. However, he explained that Myanmar is one of their biggest prospects, since the country has just opened up economically.
Opart also revealed that the Thai company does not have any plan to move its production base from Thailand, and in fact is planning to expand its production base because of the country's excellent supply chain and continuous sales growth. The firm plans to make the country a hub for exporting farm machinery to other Asean countries.
vientiane times
