Lao garment industry can survive European crisis
Lao garment industry can survive European crisis
The garment industry, one of Laos' major export industries, will survive despite the negative impacts of the ongoing European debt crisis, according to an industry representative.
“Despite the impact of the European debt crisis, the Lao garment industry will be able to live on,” President of the Lao Association of Garment Industries, Mr Onesy Boutsivongsakd, said on Friday.
He made the comment in response to the concerns of many businesspeople and policymakers that the European crisis would hurt the Lao garment industry, as most of the garment products manufactured in Laos are exported to the European Union.
Garments are among the top five export commodities of Laos. Mr Onesy said the Lao garment industry continues to receive orders from European markets despite the crisis, as the main buyers are from Germany and France, which are largely unaffected.
“The crisis is happening in Europe but not all of the countries face the same problems. We do not take orders from Greece or Spain, which are severely affected,” he said.
He admitted that the crisis will have some negative impacts on the Lao garment industry, which doesn't expect to receive orders as large as it has in the past. However, the European Union's market problems will not have a huge impact, he said.
The Lao garment industry has shifted its focus to the Asian market in recent years, he explained, including Japan, where there has been increasing demand for Lao garment products over the past few years.
A number of Japanese businesses have moved their production bases from China to Laos because labour costs in China are increasing. Increasing Japanese investment in the Lao garment industry has helped the expansion and growth of the industry.
Mr Onesy said a number of foreign companies have expressed interest in investing in Laos, hoping to supply garment products to Asian markets. However, one of the main challenges is that the government must secure a sufficient supply of labour.
The industry is finding it hard to source sufficient labour, which is one of the main obstacles to further expansion and boosting output, he said.
Mr Onesy also said the government should waive value added tax (VAT) for investors who import machinery and equipment to build garment factories, as neighbouring countries such as Cambodia do, in order to increase business competitiveness.
The Lao Association of Garment Industries expects the total export value of garments to increase by 10 to 15 percent this year. In 2011, the total export value of garments was US$220 million.
vientiane times
