Laos faces significant challenges to benefit from AEC
Laos faces significant challenges to benefit from AEC
Although the Asean Economic Community (AEC) has resulted in increased economic activity between Laos and other regional bloc countries the nation still faces numerous challenges to benefit from regional economic integration.
Speaking to Vientiane Times last week, independent and experienced economist Dr Mana Southichak highlighted several challenges which Laos needed to promptly address so it can continue to benefit from the AEC.
As a landlocked country Laos has a very small and relatively fragmented domestic market with poor infrastructure, Dr Mana said.
The poor infrastructure, notably roads, placed Laos in a disadvantageous position as it delayed transportation of goods and made the cost of transport relatively higher.
“Another thing I don’t understand is that I’ve seen many large Thai trucks carrying goods to Laos, but Lao trucks cannot enter Thai territory. Lao goods need to be transferred to Thai trucks when being transported in Thailand. These issues need to be urgently addressed,” Dr Mana said.
Secondly, the accountancy system in Laos is not synchronised with those operated in other Asean countries, making it difficult for cross-border business activities.
Thirdly, the cost of internet access is expensive and it plays a significant role for small and medium-d enterprises. Expensive and slow internet speeds will make it difficult for the SME sector to grow.
Another challenge for Laos is the lack of a seaport to serve the import and export sector.
Dr Mana said he supported construction of the historic railway linking Vientiane with the Chinese border over the distance of 417 km. The almost US$6-billion project which will complete over the next five years will not only reduce costs but also serve as the key route for facilitating economic and tourism development.
“I also support the railroad project linking Savannakhet province to the Lao-Vietnam border and the route linking Vientiane to Vung Ang Port in Vietnam. These projects will help make the cost of transport in our country cheaper,” he said.
However, Laos had a great opportunity to become more integrated into the regional and global markets, financial and economic systems, he noted.
This is especially important for Laos, given that it is a landlocked country with domestic market- constraints, as the AEC effectively makes Asean a single market of over 600 million people.
To survive, prosper and lead in a more competitive environment, businesses owners and executives need to learn and understand the changing environment, find ways to improve efficiency and reduce costs, innovate and improve product and service quality, and be able to differentiate themselves.
For firms that are followers, they want to be the same as the leading firms, but they also need to be efficient and attentive to quality.
This may require some changes in the way of thinking and doing business, and paying more attention to and caring more about human resources.
