Lao businesses plead for protection from influx of cheap foreign goods
Lao businesses plead for protection from influx of cheap foreign goods
Lao businesses are calling on state sectors to prepare regulations to counter the ‘price dumping' of foreign products that are not subject to import tax expected to come with the arrival of the Asean Economic Community (AEC) in 2015.
Price dumping is where a country's government subsidises an industry to make products cheaper and then exports those products to overseas markets where local producers are unable to compete.
“One fear is that with the arrival of the AEC we may face unfair competition, such as through price dumping, which will make product prices low. It will turn high-price product markets into low-price product markets,” Lao Brewery Company Managing Director Mr Kissana Vongsay said on Thursday.
Mr Kissana was speaking as part of a seminar that ran right through the third Made in Laos exhibition last week. The seminar was designed to facilitate the exchange of experiences between businesspeople, students and members of the Lao National Chamber of Commerce and Industry (LNCCI).
“Price competition is based on production cost. They – the producers in neighbouring countries – have larger production capacity with lower production costs,” he said.
The arrival of the AEC will transform Asean into a region with a free flow of goods, services, investment, skilled labour and capital.
In the AEC Blueprint, Asean member states agreed to reduce tariffs, improve frameworks for trade, better enforce compliance with standards and progressively open national service sectors up to cross-border supply and foreign investment.
In 2015 import tax on many products will drop to between 0 and 5 percent, while for other products the drop will be delayed until 2018.
The Ministry of Industry and Commerce and the Ministry of Foreign Affairs have started working on legislation to guard against price dumping “but it has not been concrete or practical,” Mr Kissana said.
“We do not have to wait until it happens and start finding a resolution later.”
The act is designed to help local entrepreneurs and protect local production. All other Asean countries protect their domestic markets in ways that do not go against international regulations.
“So with this issue we have not prepared or made ready,” Mr Kissana said.
The arrival of the AEC will present significant challenges for Laos, especially for small and medium- enterprises.
“We do not have many enterprises and we do not have large-scale enterprises. Neighbouring countries and other countries in Southeast Asia have much greater capacity and potential than us,” Mr Kissana said.
“We have too small an opportunity to compete in the Asean market, with Asean having an overall population of 600 million.
“So we need the state sector to work on the act issue faster. If the act does not work, product price dumping may happen and companies' contributions to national revenue will also drop.”
Mr Kissana said state sectors should set up a working group or organisation with the cooperation of the LNCCI.
“We, the businesses, are pleased to assist the state sectors with funding support to work on the protection of local production. The benefit that we will get will belong to all local businesses,” he said.
“The improvement of quality production and packaging will be our responsibility, but preparing the act will be the state sectors' responsibility.”
vientiane times
