Laos cuts import tariffs after AEC integration
Laos cuts import tariffs after AEC integration
Laos has abolished more than 8,000 commodity items out of a total of 9,558 under the Asean Harmonised Tariffs Nomenclature (AHTN) after the country integrated with the Asean Economic Community (AEC) at the end of last year.
The more than 8000 product items include seafoods, animal insides and some processed agricultural products, according to the Ministry of Industry and Commerce.
About 697 goods items such as vehicles, petrol, drinking products and spare parts will be postponed to see tariffs removed in 2018, while 265 items including unprocessed agricultural products will be reduced to between 0-5 percent after 2018.
The ministry's Foreign Trade Policy Department official told Vientiane Times this week that this policy is used only for Asean member states or for goods imported using ‘D forms' but imported goods from other countries will be subject to old rules or use other forms depending on cooperation.
The country is currently still collecting about 5-40 percent tariffs for the remaining import goods from Asean member states for which tariff removal has been postponed.
Despite the country combining with the AEC Laos is not ready to cut all import tariffs from Asean member states as some of the postponed products represent main sources of revenue for socio-economic development.
However the country will abolish these remaining items when the end date for full compliance with integration comes.
The AEC presents new opportunities for Laos but it also underlines significant challenges.
The establishment of the Asean Community, in particular the AEC introduces a 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.
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, according to a Lao economist.
They have to acknowledge that some Lao businesses may not survive and others may struggle just to survive in this era of economic competition.
He thinks the most important point is product quality, while prices must be low to enable us to be competitive. He agreed 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.
