Lao industries must be ready for AFTA


Photo: Lao garment industry

Small and medium sized industries may be in a difficult position when the government implements the Asean Free Trade Area (AFTA) regulations at the end of this year.

Industrial officials have called on business operators to improve efficiency and be ready for greater competition with their Asean counterparts.

Speaking at the opening ceremony of a training course on cleaner production methods, held in Vientiane yesterday, the Deputy Director General of the Industry Department of the Ministry of Industry and Commerce, Mr Soutchay Sisouvong, said that most industrial units in Laos had low production standards and were not ready to compete in Asean markets.

If these industries do not improve, they will struggle to survive and Laos will be nothing but a market for the goods produced by other Asean nations.

“Business operators must replace traditional production methods with modern techniques and effective management in accordance with the industrialisation and modernisation policy of the government,” Mr Soutchay said.

The Lao government is aware of the potential impact associated with AFTA. But many policy makers say the government will not open all of its industries to free trade, which would give a green light for Asean member countries to export their goods to Laos without tariff barriers, so operators still have time to initiate improvements.

The Lao government will enforce the AFTA agreement on some products this year.

Mr Soutchay said that the department, with support from Switzerland and the United Nations Industrial Development Organisation, established a 4-year project entitled “Cleaner Industrial Production” in 2005, with the aim of giving business operators the skills to improve production.

Project coordinator Vilasak Choundara said that most Lao industries use raw materials wastefully due to inefficient management, particularly sawmills.

He explained that the wasteful practices of Lao sawmills caused major losses of the country's natural resources. He added that in developed countries factories attempt to gain 100 percent output from raw materials.

Poor pollution control mechanisms in processing activities also cause severe damage to the environment and harm local communities, he said.

Mr Vilasak said the project was part of government efforts to prevent business from being impacted rather than fixing problems further down the line, which is not a sustainable path for development.

Instead he urged owners to recycle waste water, explaining that this will also help businesses to save money on their water bills.

According to the organisers of the training course, there are 23,000 small and medium sized industrial units registered in the country.


By Ekaphone Phouthonesy
Vietianetimes