Lao cassava powder processors will be able to gain greater footholds in the Chinese market if the product is granted tariff reductions or exemptions.
Officials from the Ministry of Planning and Investment visit a cassava powder production facility in Vientiane.
The Lao Indochina Group Company (LIG), a major producer of cassava powder, raised the issue with officials from the Ministry of Planning and Investment during their visit to the company's factory in Pakngum district, Vientiane, on Tuesday.
“If possible we need to get a Generalised System of Preference (GSP) from China, which will mean zero import taxes,” said company Chairman, Mr Sengmaly Sengvatthana.
Currently the company pays a 10 percent tariff on cassava powder it exports to China. “However, cut and dried cassava is tariff free,” Mr Sengmaly said.
Deputy Head of Office of the Ministry of Planning and Investment, Mr Boua-nguen Chanthabouly, said “Currently we and other state sectors are working on the issue. The issue is not only for exports to China, but also to Vietnam.”
Officials are working on tariff reductions or exemptions on exports of 120 products manufactured locally.
Mr Boua-ngeun said officials from the ministry visited China recently to discuss the issue.
Officials believe macro-level economic policy grants tariff exemptions on all agricultural goods.
“However, policy implementation at the micro-level is still facing some challenges that need to be addressed,” Mr Boua-ngeun said.
Lao cassava powder producers feel they are at a competitive disadvantage because they face high transport costs together with export tariffs.
LIG's products remain competitive in Chinese markets due to their high quality and organic standards.
Local farmers grow cassava without the use of chemical fertilisers. “This is our only competitive advantage,” Mr Sengmaly said.
“Our fertile soil is to the benefit of farmers, and we will encourage them to grow more.”
Numerous Thai traders have expressed interest in the company's product, but the company has entered into contracts to sell exclusively to Chinese buyers.
LIG's plant in Vientiane produces 150 tonnes of cassava powder a day and about 80 percent of its output is shipped to China, with the remainder going to domestic markets.
A cassava processing plant in Meun district, Vientiane province, began production last year and has the capacity to produce about 200 tonnes of powder per day. It primarily exports to Vietnam.
A factory in Champassak province will start production this month with a capacity of 200 tonnes of powder per day for both local and overseas supply.
According to the Ministry of Industry and Commerce, another factory produces cassava powder in Lau-ngam district, Saravan province. It is Vietnamese-owned, and exports to Vietnam and China.
Cassava is an ingredient in noodles, snack foods and seasonings. It is also used in the production of clothes, glue, paint, paper, medicine, false teeth and prosthetic limbs.
