Laos urged to process industrial trees before export
Laos urged to process industrial trees before export
Laos looks set to become locked into being only a supplier of raw rubber and eucalyptus if the government has no clear policy to promote the processing industry, according to an economist.
“There is no clear policy on the promotion of the rubber and eucalyptus processing industry despite the fact the country has large areas of industrial tree plantations,” said an unnamed economist.
“Without the policy, Laos will become simply a supplier of the raw materials to neighbouring countries.”
The economist made the comments after the Ministry of Planning and Investment revealed that the country gave permission for local and foreign investors to invest more than US$1.6 billion to grow rubber and eucalyptus trees on a combined area of 574,000 hectares nationwide.
The government is also looking at the possibility of granting more land concessions for industrial tree plantations after 2015. The move will make Laos a major supplier of plantation materials in the region. Many countries in Asean are no longer expanding their industrial tree plantations due to their limited agricultural areas.
The economist said that Laos should use its advantage as an agricultural country to grow industrial trees for domestic processing and produce finished goods for export rather than just exporting raw materials cheaply.
The National Assembly has approved the amended industrial processing law, aiming to make it easier for local and foreign businesses to invest in the industry.
The law aims to promote the processing industry however a number of law makers and economists said that the new law does not provide details of investment incentives for the processing industry.
Economists want the government to clarify a number of investment incentives including tax breaks and reductions for business people who process agricultural commodities before exporting them in order to add value to goods produced in Laos.
The establishment and expansion of the agricultural processing industry will not only fetch higher prices for agricultural commodities but also create jobs and income for Lao people so as they can escape poverty in accordance with the Party and government policy.
According to observations, most of the companies which grow rubber and eucalyptus want to semi-refine the goods in Laos before sending them off for final processing in factories in Thailand and Vietnam, meaning Laos will gain little in terms of value.
Laos has opened more than 10 special economic zones in a bid to attract more manufacturing however the development of the zones has been very slow due to a lack of interest from outside investors.
The economist said that offering better investment incentives to boost the processing industry will help speed the development of special economic zones.
vientiane times
