Garment industry has growth potential but lacks labour
Laos’ garment industry still has growth capacity to boost exports but the issue of supplying labour has slowed investors’ expansion plans, according to officials in the sector.
The number of garment factories in Laos exporting to the European market was stable this year as a shortage of Lao workers had stymied garment industry growth, the Association of the Lao Garment Industry reported recently.
At present, there are 98 garment factories operating in the country, mainly in and around Vientiane with 12 of these solely owned by Lao businesspeople while Japanese investors controlled 28 percent followed by Thai investors with 22 percent.
The number of factories actually decreased by 12 from 2012-2014. Prior to that Laos experienced a boom in garment factory construction from 1990 to 2005 as the country began exporting to the EU.
An official working in the local garment industry commented that they needed more than 10,000 tailors each year to supply garment factories, but there is still a lack of skilled labour in the country.
Some investors are weighing up plans to open new garment factories as they are still concerned about the supply of local tailors.
He pointed out the lack of domestic workers would negatively impact on investors’ decisions to open new factories despite Laos attracting investment as it received special rights on exports as a developing country making them tax exempt in importing nations.
He added it was important that concerned authorities cooperated with factories to provide employment information to young people living in rural areas.
For example, young workers in provincial areas still can’t access information on vacant factories positions in Laos, so they continue to travel to work in Thailand to seek better work opportunities.
An economist commented that the cost of labour in Laos was lower than neighbouring countries which was one of the main reasons driving Lao workers to Thailand.