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Issue 5 - August 2011

Ministry of Industry and Commerce - Foreign Trade Policy Department

MAGAZINE

Import-Export Statistic Update

Opportunities, obstacles, and channels to

access Chinese market

Lao PDR hosts the 17th ASEAN Economic

Ministers Retreat and the Second CLMVEconomic Ministers Meeting

Lao PDR showcased at the Fourth

United Nations Conference on the

Least Developed Countries (LDC-IV)


2/22


3/22

Ministry o Industry and Commerce

Foreign Trade Policy Department

Phonxay Road, PO Box 4107,

Vientiane Lao PDR

Tel/Fax: (856 21) 41 3916Email: [email protected]

Website: www.laosat.org

Supported by: EIF

PAGE 4

CONTENTS PAGE 6Lao PDR hosts the 17th ASEAN Economic

Ministers Retreat and the Second CLMV

Economic Ministers Meeting

The th edition o trade magazine continues to provideinormation on trade in Lao PDR, building on issues highlightedin the previous issue (issue 4) such as the successul 17th ASEANEconomic Ministers Retreat and the Second Cambodia, Lao PDR,

Myanmar and Vietnam (CLMV) Economic Ministers Meeting;Analysis o opportunities, obstacles, and channels on accessingto Chinese market. Furthermore, additional topics in the currentissue include inormation on Trade relations between Lao PDRand the Kingdom o Thailand; the special trade preerencesgranted to the Lao PDR and other recent trade related issues.At the end o this issue, you will see the highlights o theEnhanced Integrated Framework that is being implementedby the Lao Government and highlighted at the Fourth UnitedNations Conerence on the Least Developed Countries (LDC-IV)in Turkey. We also continue to provide a snapshot o some keytrends in Laos trade data.

Finally, we would like to thank to all o you who provided us thecomments on the last issue and hope that you will continue toprovide us your comments on this issue in order to substantiallydevelop our Trade Magazine in both layout and content.

Thank you

Lao Trade Magazine.

Dear reader,We would like to welcome to the th edition o the

August 2011.

Opportunities, Obstacles, And Channels To

Access Into Chinese Market

PAGE 8Trade Relations between Lao PDR and the

kingdom o ThailandPAGE 11

Foreign Trade Policy Department launched

the Inormation Center

PAGE 12

The Foreign Trade Policy Department held

an Inormation Dissemination Seminar

on Regional and International Economic

Integration o Lao PDR

PAGE 13Building Export Competitiveness o Lao

Entrepreneurs and Import Substitution

PAGE 15

Lao PDR Export under the Unilateral Trade

Agreements

PAGE 16

ERIT and the trade capacity building activities

PAGE 17

Lao PDR showcased at the Fourth United

Nations Conerence on the Least Developed

Countries (LDC-IV)

PAGE 18

More Donors Contribute to the Trade

Development Facility

PAGE 19

Mornitoring and Evaluation Indicators

PAGE 20

Update o Import Export Trends

PAGE 22

Top 5 Export and Import Markets 2010


4/22Lao Trade Magazine Issue 5 - August 20114

Between the 25th and 28th o February 2011 Lao

PDR was honored to host the 17th ASEAN Economic

Ministers Retreat and the Second Cambodia, Lao PDR,

Myanmar and Vietnam (CLMV) Economic Minister

Meeting at Lao Plaza Hotel, Vientiane Capital, Lao

PDR. More than 100 delegates attended including

ASEAN Ministers, the ASEAN General Secretary and

representatives rom ASEANs Embassies to Lao PDR.

The 17th ASEAN Economic Ministers Retreat

The meeting discussed a series o important issues

including the approval agreement on the report o the

high level meeting o ASEAN Economic Cooperation

(AEC) Score-Carding System Report; the issues that

block implementation o ASEAN Commitments

and Agreements, especially procedures and steps

in various ASEAN countries that are still delaying

implemetation o the AEC. Also discussed were the

development gaps between old and new ASEAN

members as well as the Small and Mediam Enterprises

(SMEs), Dr Nam Viyaket(Minister o Industry and

Commerce o Laos) proposed the ocial letter on that

issue to each ASEANs Minister during this meeting

and many ASEANs Ministers as well as the ASEAN

General Secratery agreed to support or the proposal

rom Lao PDR especially with the ocial letter that

was submited rom Lao PDR by assigning or HighLevel Task Force (HLTF); CLMV Senior Ecomonic

Ocials Meeting (CLMV SEOM); ASEAN Secretariat

and Indonesia as the Chair to prepare a proper

implementation plan and documents. The meeting

also accepted the proposal o SEOM on including

negotiations between the government and Business

sector to each SEOM meetings agenda to discuss and

exchange ideas or better eectiveness. The meeting

agreed or the AFTA unit / CCA Unit to become a

coordination unit or the proposals rom private

sector and questioniars rom ASEAN countries. It

also agreed to have AEM Private sector dialogues

input to the AEM annual meeting. These dialogues

are not only or the general ASEAN chambers o

Commerce but also to meet the business sectors

that are in ASEANs priorities. Regarding to this issue,the meeting proposed to the ASEAN Secratariat to

sumarise the dialogue plan between the AEM and

Business sectors in 2011. During the meeting, Lao

PDR also reported an update o the progress o WTO

accession or Lao PDR and also expressed thanks to

the ASEAN Countries to support Lao PDR in WTO.

The ASEAN Countries agreed to continue supporting

and to cooperate with Lao PDR in the preparation o

accession to the WTO.

The Second Cambodia, Lao, Myanmar and

Vietnam (CLMV) Economic Ministers Meeting

Along with the AEM Retreat, Lao PDR also hosted

the CLMV Economic Ministers meeting. On the

Cooperation and Coordination system ramwork or

the CLMV the meeting agreed to have an exchange

o inormation system and strengthen economic

development coordination between CLMV countries

such as: organising trade exhibitions in each

CLMV country, exchange lessons, expreience and

inormation on trade and investment regulations to

increase the trade valume between CLMV countries.

Regarding the the implementation o 2011 CLMV

Lao PDR hosts the 17th ASEAN Economic Ministers Retreat and

the Second CLMV Economic Minister Meeting

TH

,

8

By: ASEAN Economic Cooperation Division, Foreign Trade Policy Department


5/22Lao Trade Magazine Issue 5 - August 2011 5

Action Plan: the meeting agreed on drating an

action plan. The action plan will be included 15 work

plans orcusing on trade, investment cooperation

and human resource development. In terms o the

Cordination and Trade Cooperation Machanisim

between CLMV and according to the previous

high level meeting o CLMV that assigned Vietnam

as a Permanent Coordinating country or trade

Cooperation and Investment or CLMV, this meeting

also raised this mechanism. This is because the

mechanism organisation and reporting system in

each countries are dierent. Vietnam suggestedthat the report o this meeting must be reported

to the high level meeting o the CLMV meeting

through thte CLMV Senior Ocicials Meeting

(CLMV SOM), as diculties still occured during the

implementation process such as the duplication

o the implementation o CLMV SEOM and SOM.

Moreover, the implementation mechanism o SOM

meetings will be organised only 2 times per year.

In this context, the meeting suggested to each

country to report to their leader in reviewing their

coordination mechanisim.



Opportunities, Obstacles, And Channels To Access Into Chinese

Market

Opportunities for access to the Chinese market

Since 2010, 329 new Lao products are now able toenjoy unilateral preerential tari treatment rom

China. These products were added into the tari

reduction schedule under the ASEAN-China Free Trade

Agreement, implemented in 2010. The agreement

was the successul result o bilateral meetings

between Lao-Chinese high-level leaders, ocials

and businessmen in recent years. The agreement has

increased the coverage o products with a tari rate

o between 0-5% to 95% o all tari lines under the

ASEAN-China reciprocal tari reduction schedule..

There is a good opportunity or Lao businessmen to

trade with China as trade relations between Laos

and China have been expanded deeply and widely.

Furthermore, a high speed railway project connecting

Laos and China to be completed in 2014 will urther

enhance Laos geographical and locational advantage

in trading with China, currently ranked as the worlds

second largest economy with massive purchasing

power. These avorable circumstances and conducive

environment provides a good opportunity or Laos to

urther develop its social-economic goals in the near

uture.

Barriers to enter into the Chinese market

In the midst o this avorable environment and

opportunities many problems and obstacles still linger

in trade relations with China,. As you know, China is

a very large country and consists o many provinces,

ethnic groups, belies, and understandings. Thereore,

young Lao businessmen oten have inadequate

experience in getting into the market. They acemany

challenges, trade problems and obstacles in accessing

the Chinese market, such as nationalist preerences

or local products rom local businesses. Channels

in accessing to the Chinese market by the Laoentrepreneurs on their own are limited because most

importation o products is dominated by Chinese local

businessmen or major importers receiving import

quotas rom the Chinese government. In addition,

the import regulations and procedures o China

are numerous and diversied, with many non-tari

barriers and measures such as producer protection

measures, quality inspection, and customs procedures,

etc. There are also many levels o import regulations,

such as at the central, provincial, and local levels,

creating complicated import procedures which assist

in protecting Chinese local producers.

Additionally, Lao products sold in China must compete

with products locally produced and those imported

rom other countries such as Vietnam, Thailand,

Malaysia, and so on, not only in term o quality, but

also price and design. Furthermore, essential key

barrier or Lao businessmen is poor understanding o

the Chinese market. Regarding Lao products, in the

meantime, Chinese people oten have the perspective

that Lao products are expensive, low quality, and not

unique. Together with this, now China is enabling to

produce almost every type o products without any

dierences rom Lao products and their prices are

cheaper.

The signing ceremony or the exchange o notesbetween H.E. Mrs Khemmani PHOLSENA, Vice Ministero Industry and Commerce, Chie o WTO NegotiationTeam o Lao PDR and H.E. Zhong Shan, Vice Ministero Trade, Vice Chie o International Trade NegotiationTeam o China, on assisting and supporting bilateral

trade relation and WTO accession o Lao PDRVientiane, 25 February 2011

Courtesy Meeting between the Ministry o industry andCommerce o Lao PDR and Ministry o Trade o China,

Vientiane, 25 February 2011

By: Bilateral Trade Policy Division, Foreign Trade Policy Department



Some suggested ways in entering Chinese market

In order or Lao products to have a market share and

expand more in the Chinese market, some suggested

modes in entering into the Chinese market that Lao

exporters should consider are as ollows:

1. Prior to getting into the Chinese market, Lao

exporters should do market analysis including

thoughts and behavior o consumers in choosingproducts in order to produce products in accordance

with consumers demand. The potential products or

export or which there is interest in China include

agricultural and wood products such as cereals

made o Jobs tear, maize, rice; resh ruits; medical

plants; handicrat, and other urniture made o

wood used or home decoration.

2. Lao exporters should apply an appropriate

pricing strategy on the products in order to have

a competitive advantage in price comparing to

imported products rom other countries with similar

price. For instance, Lao exporters on handicrat

and wood products should maintain its quality

equivalent to price, because these Lao products can

access the Chinese market relatively well.

3. Selling and distributing products in China, Lao

exporters must put in place sta with an expertise

in Chinese. In addition, creating good relations

with Chinese importers or trading companies who

are middleman in selling and distributing products

in order to conveniently and promptly expandingmarket or Lao products in China. Particularly,

exporters should ocus on Yunnans market as a

whole market o China because lots o products are

imported through Yunnan, but distributed to other

areas in China as well.

4. Lao exporters should have a direct contact with

importers who are also the sellers o products in

Yunnan province because they are buyers indeed

not just a dealer, which mostly are mega department

stores in cities.

Boten-Mohan, Lao-Chinese International Checkpoint



Trade Relations between Lao PDR and the Kingdom of Thailand

Lao PDR and the Kingdom o Thailand established

diplomatic relations in 1950 and concluded a bilateral

trade agreement on 20 June 1991. The Lao-Thai

relations today revolve around our actors, namely:

national boundaries, similar customs and cultures,

mutual economic interests, and cooperation inregional and sub-regional organizations. These our

actors signicantly contribute to the closer relations

between the two countries. In terms o trade, Thailand

is a core market or Lao PDR. It is not only an a key

source o products into Lao PDR, but also a major

destination or Lao PDRs products as well. When

taking a closer look at the previous history o trade

relations between the two countries, a trend o trade

development is positively upward in spite o some

diculties and constraints. The remarkable milestone

is a breakthrough o a targeted trade value set by the

two governments in 2006, i.e. to increase the bilateral

trade value rom USD 1 billion in 2006 to USD 2 billion

in 2010, in which Lao exports to Thailand must be

tripled. Statistically, the total trade value between the

two countries reached USD 2,885 million, increasing

by 37.35% compared to that o 2009. Exports to

Thailand achieved USD 750 million, increasing by

62%. Receiving great contribution rom the operation

o Nam Theun II Hydropower Dam in 2010, electricity

is the most highlighted exporting sector, having its

exports to Thailand sharply accelerated rom USD 93

million in 2009 to USD 277 million in 2010. In the rstquarter o 2011, the total trade value stood at USD

906.67 million, up by 23.70% compared to that o

2010. Meanwhile, exports rom Lao PDR to Thailand

also increased by 52.89% about 237 USD million.

Main products imported by Lao PDR include uel,

vehicles and components, iron-steel and articles

thereo, machinery and spare parts, textiles, chemical

products, beverages, cosmetics, plastic and articles

thereo, consumption goods, etc...

Main Lao products exported to Thailand are mining

(copper, lignite), electricity, wood and wood products,

rattan and bamboo, orestry products, garment,

agricultural products (cabbage, maize, dried Jobs tear,

soy beans, bananas, tamarind, dried mulberry bark,

palm seeds, ginger, broomcorn, sesame seeds, andleather), and others.

Lao PDR and the Kingdom o Thailand established

mechanisms covering various areas o cooperation.

The core mechanism at the national level is the Lao-

Thai Joint Committee Meeting (JC), or which the

16th Meeting was held in October 2010 in Bangkok,

Thailand. At the provincial level, there is the Meeting

o Governors o Provinces along the Lao-Thai Border,

or which the 8th Meeting was organized in Luang

Prabang province, Lao PDR in March 2011.

As or the trade sector, the two countries have builttwo signicant cooperation mechanisms. The rst

mechanism is the Cooperative Plan Meeting between

the Ministry o Industry and Commerce o Lao PDR and

the Ministry o Commerce o Thailand, having its third

meeting held in June 2010 in Vientiane. The second

mechanism is the Cooperative Plan Meeting between

the Departments o Industry and Commerce and the

Oces o Commerce along the Lao-Thai Border, or

which the ourth meeting has recently taken place

in February 2011 in Khammouan province, Lao PDR.

The two Meetings serve as a foor or the seniorocials at central level and the provincial level to

discuss and ormulate cooperative plans, which aim at

intensiying and enriching the bilateral trade relations

both horizontally and vertically. The meetings also

give an opportunity to both sides to seek solutions

on minimizing barriers to trade and trade problems.

Noticeably, the Third Cooperative Plan Meeting

between the Ministry o Industry and Commerce o

Lao PDR and the Ministry o Commerce o Thailand

adopted a new target trade value to be achieved in

2015, i.e. doubling trade value to approximately 4

billion dollars and tripling the Lao PDRs export toThailand.

To achieve the above goals, the two governments

have designed mechanisms and activities to promote

H.E. Mr. Vitavas SRIVIHOK, Ambassador o Thailand pre-sented his Letters o Credence to H.E. Mr. ChoummalySAYASONE, President o the Lao PDR on May 4, 2010

By : Bilateral Trade Policy Division, Foreign Trade Policy Department



trade. Organizing annual Lao-Thai trade exhibitions

together with business matching activities in

Vientiane and in other potential provinces is also one

o the very important tools to boost up bilateral trade.

Moreover, the Thai government provides assistance to

Lao companies and manuacturers to participate in 8

international trade airs organized in Bangkok annually.

It also provides technical assistance to strengthen

the capacity o human resources in both public and

private sectors, such as organizing workshops on

Towards the AEC in 2015, trainings on agricultural

product processing (jute), sanitary and phytosanitary

(SPS),standards, marketing, and so on.

As or investment by Thai investors in Lao PDR, in

accordance with an accumulated value o investment

by Thailand rom 2000-2009, Thailand is the largest

investor in Lao PDR, having a total o 241 projects

valued approximately USD 2,650 million. The main

sectors o investment are hydropower, services (hotels,

restaurants), processing industry, mining, export

plantation, and other.

The sustainable development o bilateral trade

relations between Lao PDR and Thailand in a new

era, particularly when the six ormer ASEAN countries

including Thailand have ully entered into the ASEAN

ree trade Area in 2010 and moved towards the ASEAN

Economic Community (AEC) in 2015, is acing new

challenges, which require straight aord and special

attention rom the two governments in seeking

solutions, securing mutual benets. Some challenges

are as ollows:

1. The implementation o mechanisms on coordination

and notication under a bilateral arrangement, as

well as the ASEAN trade cooperation agreements

has not been eectively carried out. In some cases,

the execution o new measures by one party

without notiying the other in advance or seeking

a consultation regarding eects arising rom the

imposition o such measure sometimes happens. For

instance, a measure restricting months o imports o

a particular agricultural product rigorously aects the

export o Lao PDR.

2. The aord in providing more convenient and speedy

acilitation to imports and exports inspection at the

border checkpoints aces challenges in term o legalbasis and experience in the implementation, such as

the establishment o Single Stop Inspection under the

GMS cooperation at the Savannakhet - Nakonphanom

International Checkpoint, or which Thailand is now

amending a law allowing Thai competent authority to

perorm its duties outside Thai territory.

3. The cooperation on contract arming between

Lao producers and Thai investors in promoting crop

plantation or export still lacks legal instruments by

the two countries. These instruments will signicantly

be a basis or eective and unied implementation othe contract arming throughout the country, securing

the mutual benets o both parties.

4. When exporting products to Thailand, benets

rom preerential tari under AFTA has not been ully

maximized yet because some Lao exporters still have

limited knowledge and understanding on this matter.

5. The majority o goods exported to Thailand are

products without sucient processing to add up their

value. Although the Thai market has been already

open and tari barriers has been brought down, the

strict SPS/TBT regulations imposed by Thailand, theimporting country apparently aect the export o

some Lao agricultural products, causing diculties or

Lao products to increase their market share in the Thai

market.

6. Illegal trade along the Lao-Thai border remains

occurs. However, the situation is now getting better

comparing to the situation in the past.

Despite the above challenges and diculties, the

governments o the two countries always put much

eort to intensiy and strengthen their bilateral

relations and cooperation. Regarding the trade sectorin particular, the two governments constantly improve

and develop mechanisms on trade promotion to make

them more eective. This is to ensure that targets and

goals set by the two governments be realized and to

guarantee the achievement in establishing the ASEAN

Economic Community in 2015.

H.E. Mrs. Khemmani PHOLSENA, Vice Minister o Indus-try and Commerce o Lao PDR and H.E. Mr. Alongkorn

PONLABOOT, Vice Minister o Commerce o Thailand at theOpening ceremony o Lao-Thai Exhibition 2011

held on 26 January 2011, Vientiane, Lao PDR



The Fourth Cooperative Plan Meeting between the Provincial Departments o Industry and Commerce and theProvincial Oces o Commerce along the Lao-Thai Border,

21-22 February 2011, Khammouan Province

: . l l l

1,311

1,776

1,642

2,135

470

617

463

750

1,781

2,393

2,105

2,885

500

1,000

1,500

2,000

2,500

3,000

3,500

2007 2008 2009 2010

Inthousand

USdollars

Source:MinistryofCommerce ofThailand

LaosThailandTradePerformance

Imports

Exports

Total



Foreign Trade Policy Department launched the Information

Center

On 12th May 2011, the Foreign Trade Policy

Department (FTPD), Ministry o Industry and

Commerce (MOIC) has ocially launched its

Inormation Center and introduced the so called FTPD

website. The opening ceremony was chaired by Mr.

Bounsom Phommavihane, Director General o FTPD,

MOIC, and witnessed by around 150 guests rom

the oces, institute and departments o MOIC. The

representatives rom line-ministries/authorities and

private sector together with the mass media were also

in attendance. The Inormation Center was supported

by the USAID/LUNA-LAO Project, Trade Development

Facility (TDF); UNDP and WTO, and this Inormation

Center is located nearby the MOICs Conerence Room.

The purpose o this Center is to provide and disseminate

inormation related to the Roles o the Foreign Trade

Policy Department in terms o oreign trade policies

o Lao PDR; economic cooperation, legislativedocuments such as domestic and international laws,

procedures that are related to international trade; trade

agreements that Lao PDR is party to; the on-going

trade negotiations and trade preerences that Lao

PDR receives rom the trading partners under various

scopes including bilateral, regional and sub-regional,

ASEAN, multilateral/WTO, Ocial Development

Assistance or industry and commerce sector o Lao

PDR. The Center also assembles, among others, the

inormation related to the implementation process o

the agreements and trade projects that are under theresponsibility o the FTPD.

At the same time, the FTPD also ocially introduced

their new website at http://www.laotpd.com which

provides another channel or public to access the

above-mentioned inormation.

For more inormation, please contact:

Planning and General Aairs Division

Foreign Trade Policy Department, Ministry o Industryand Commerce

Tel/Fax: (021) 450066

E-mail: [email protected] ; kingsadone.p@

laomoic.org

www.laotpd.com

By: Planning and General Aairs Division, Foreign Trade Policy Department



The Foreign Trade Policy Department held an Information

Dissemination Seminar on Regional and International

Economic Integration of Lao PDR

Based on the Foreign Trade Policy Departments

2011 Annual Work Plan, on 23rd-24th May 2011, the

Inormation Dissemination Seminar on Regional and

International Economic Integration o Lao PDR has

been convened. This Seminar was held in Bolikhamxay

Provinces Administration Oce, and was chaired by

Mr. Bounsom Phommavihane, Director General o

Foreign Trade Policy Department (FTPD), Ministry o

Industry and Commerce (MOIC), with joint openingremarks by Mr. Vanhvilay Danephoulouang, o the

Provincial Party Committee, Head o Provincial

Administration Oce. There were 50 participants rom

the related departments o Bolikhamxay Province. The

representatives rom the private sector also attended

the seminar.

The purpose o the seminar was to disseminate works

that are related to regional and international economic

integration o Lao PDR under various scopes such as

Bilateral Cooperation, Regional and Sub-regional,

ASEAN, Multilateral/WTO and Ocial Development

Assistance or the industry and commerce sector.

At the Seminar, the ocers rom divisions o FTPD

presented their papers based on seven topics

including:

1) The progress update on bilateral trade

cooperation with key trading partners o Lao PDR;

2) Economic Integration with the Asia-Pacic Region

and the Asia-Pacic Trade Agreement - APTA;

3) ASEAN Economic Cooperation and the progress

o establishing the ASEAN Economic Community;

4) Integrated Framework- IF, with ocus on updatethe Diagnostic Trade Integrated Strategy (DTIS) o

Lao PDR;

5) The WTO Basic Principles and Agreements;

6) The progress update on Lao PDRs accession to

WTO; and

7) Introduction to the FTPD Inormation Center and

its website.

Ater the presentations, the attendees and speakers

openly exchanged their views, experiences and also

discussion on the above issues. There was seen to be a

very ruitul and successul seminar.

Based on the report on the result o this seminar, the

Minister o MOIC has issued an instruction re.: 1100/

MOIC.FTPD.BTPD dated: 09 June 2011 to Oces,

Institute and Departments o MOIC; Provincial

Departments o Industry and Commerce, and Vientiane

Capital; and Lao National Chamber o Commerce and

Industry to nd the appropriate ways and means to

keep it implemented, in order to improve and acilitate

the business operation.

By: Planning and General Aairs Division, Foreign Trade Policy Department



Building Export Competitiveness of Lao Entrepreneurs and

Import Substitution

The Department o Trade Promotion and Product

Development (TPPD) plays a vital role to promoteexport o Lao products as well as to build export

competitiveness o Lao Entrepreneurs. This will

contribute to poverty reduction and capacity or

import substitution.

Under the TDF-Component C: Building Export

Competitiveness and Business Environment, a Scoping

Study on Agribusiness, Trade, Food Production and

Service Sector Linkages was conducted in Luang

Prabang Province in February 2011. The study mission

was led by Deputy Director General o TPPD and

consisted o government ocials rom TPPD, NationalImplementation Unit (NIU) and a team rom the World

Bank comprised with a regional agricultural marketing

and agribusiness development specialist.

The objective o this scoping study was to investigate

current and potential market linkages between the

tourism and service sectors in Luang Prabang province

and ood products suppliers in the surrounding areas.

The reasons why Luang Prabang was selected are

numerous. Among them is that Luang Prabang

is a central area or cultural, social and economic

development o 9 Northern provinces; in addition, it

has been selected to be one o the Worlds Heritage

Cities, thus the number o oreign and domestic tourists

increases each year providing a act growing market

or ood products. In act, Luang Prabang registered

237,683 visitors in 2009 and an estimated 300,000

visitors in 2010, while tourist arrivals increased by 26

percent during the rst hal o 2010 when compared

to the same period in 2009. In order to serve thisimportant number o tourists, hotels and restaurants

are also multiplying; currently there are 44 hotels; 260

guest houses and 117 restaurants in Luang Prabang.

Moreover, there is a huge number o students since

Luang Prabang as it is also an educational centre o Laoscontributing to building a skills. Developing the labor

orce is an important issue, to contribute workers or

hydro power construction, and anticipated manpower

to be employed or the Rail Way Construction Project.

Finally, as has been notied by the Lao National

Assembly the railway construction project will start

by mid 2011 and is oreseen to be completed by

2015. The railway link, 421 Km long, starts rom Boten

passing through our Northern provinces o Laos.

Luang Prabang is one o those and thousands o

workers will be employed in Luang Prabang duringthe construction period. This will lead to increased

demand or ood supply and the supply especially o

agricultural products will sharply increase. Thereore,

Luang Prabang was considered or this study.

The nding rom the scoping study shows that in

surrounding provinces approximately two thirds o

ood products are being imported rom neighboring

countries to serve an increasing number o tourists,

students and workers, and only about one-third

o their vegetable needs were supplied rom local

sources. Moreover, the hygiene and saety o existingvegetable in market cannot be ensured.

Several Luang Prabang hotel and restaurant managers

and ches indicated they would increase their purchase

o local vegetables i they could be assured that they

were sae. In addition, some o the ches stated that

they would be willing to pay more or local ood

products that had been inspected and certied as

sae. Although organic products were preerred, they

do not require that all vegetables be organic; but all

must be sae.

On the 2009 statistical report on tourism in Laos

shows that the level o tourist satisaction with

tourist products and services o Lao PDR, hotels and

restaurants were rated 3.6, out o maximum 5. It

indicated that there is room or improving the quality

o hotels and restaurants, or which both sae and

quality ood are an important actor.

Thereore, in order to meet the requirement o sucient

sae ood supplies as well as to increase the amount

o agricultural products to be supplied to the huge

number o tourists, population and workers; several

interventions are highly needed. As a result o the

scoping study, the ollowing potential interventions

are suggested: (i) several trainings on clean and sae

agricultural production; (ii) vegetable marketing

By: Trade Promotion and Product Development



to increase the volume and productivity o locally

produced vegetables and decrease dependency on

imported ood products rom neighboring countries;

(iii) Food quality and ood saety; (iv) strengthening

institutional capacity and (v) logistics improvement.

Ater the proposed interventions are considered and

approved by related authority, several activities will be

designed to address the current problems.



Lao PDR Export under the Unilateral Trade Agreements

By: Department o Export and Import

Unilateral Trade Agreements are economic agreements

whereby one country (usually Developed), reduces or

eliminates taris imposed on another country or group

o countries (usually least developed or developing

countries).

Lao PDR is a party to Unilateral Trade Agreements

with 39 countries including 27 countries in EU, Russia,

Japan, Switzerland, Norway, Canada, Australia, Turkey,

Belarus, India, China, China-Taiwan and S Korea.

Unilateral Agreements with these countries help Lao

PDR in attracting the investment rom oreign countries

in many areas. Foreign Direct Investment in Lao PDR

is increasing, particularly with regard to investment in

the export sectors. This investment provides jobs or a

large number o Lao people and also helps to increase

export value or Lao PDR.

Export sectors covered under these agreements

include production rom light industry, handicrat,agriculture and minerals, including products such as

clothes, shoes, silk products, wood products, orestry

products, copper, and coal,etc.Most o these are

exported to the European Union and Japan. Lao PDR

export value beore the Unilateral Trade Agreements

in 1996/97 was USD217.45 million and ater 1997

when Lao PDR implemented the Unilateral Trade

Agreement, the export value increased to USD251.05

million in 1997/98 o which USD101.73 million was the

export under the Unilateral Trade Agreements o 1997,

equating to 40.52% o the total export o Lao PDR.From that point, export o Lao PDR has increased every

year. In 2007, the export value o Lao PDR in the scal

year 2006/07 reached USD 9,225.56 million o which

USD 343.15million (37.07% was rom export under the

Unilateral Trade Agreements) .

From 2007 onward, the export value under the

Unilateral Trade Agreements has decreased slightly

because some exporters turned to export under

Free Trade Agreements such as export under the

ASEAN-Japan Comprehensive Economics Partnership

Agreement (Export to Japan), ASEAN-China (Exportto China), and ASEAN Korea (Export to Korea).

The below table shows the export value under the

Unilateral Trade Agreements in 2008 2010

Year Total Export (USD) Total export under

the Unilateral Trade

Agreements (USD)

Including in percentage

2008 1,364,824,863 (In scal

year 07/08)

322,638,467.46 23.63

2009 1,065,806,476 (In scal

year 08/09)

330,895,114,98 31.04

2010 1,670,972,200 (In scal

year 09/10)

299,454,667,17 17,92

Source: DIMEX Statistics, MOIC

I you need more inormation on the Unilateral Trade Agreements or Free Trade Agreements between Lao PDR

and other countries, please contact the Certicate o Origin Division, Department o Import and Export, Ministryo Industry and Commerce as below address: Phonxay Road, Saysetha District, Vientiane Capital, Tel/Fax: 021-

450255 Email: [email protected]



ERIT and the trade capacity building activities

The Economic Research Institute or Trade (ERIT) was

ounded in 1999 and is the rst purely economic

research unit within the Ministry o Industry and

Commerce (MOIC). Since then ERIT has played a

signicant role in providing economic advice to the

Minister and other departments. It also actively takes a

lead in various training programs which are unded by

the scal year o the government and international aid

under bilateral and multilateral cooperation between

Ministry and the international donors.

In line with the economic research work that is the

main unction, ERIT is also regarded as a training centreo the Ministry where several training courses on trade

capacity building or the ocers in the Ministry and

rom the provinces are regularly held. Many courses

are aimed at developing and improving knowledge

and skills o participants in both internal and external

trade in order to prepare or eective integration into

the world economy.

ERIT playing a very signicant role in building trade

capacity or MOIC, economic sectors and other

government or private agencies either at central or

provincial level. Undoubtedly, the implementationunder ERITs responsibilities will pave a solid way to

have a good preparation or ull integration in regional

and international trade blocs such as, a complete

implementation o ASEAN ree trade area (AFTA) in

2008 and joining WTO in the upcoming years.

Since 2008 ERIT has progressively organized 80 training

courses with 1,500 participants, 3 research orums.

ERIT has also organized 3 research capacity training

events or the Departments o Industry and Commerce

(DOIC) in the Southern, Middle and Northern parts o

the country with 165 participants. In addition, thereare some activities under the Trade Development

Facility (TDF) project, which help ERIT in building up its

research capacity on international trade and support

the dissemination o research works, these include the

construction o new trade curriculum on oreign tradeand the Lao trade Research digest (published every

six months). The rst volume o Lao Trade Research

Digest was launched in December 2010 and the

second volume is scheduled to be launched in June

2011. There will be two papers out o a total 5 papers

written by ERIT researchers in the second journal.

From this year onward, the scope o capacity building

related to trade and economic opportunities will be

broader and have more depth. With support rom the

TDF project, ERIT has begun the joint development o

the short term trade training curriculum with the EsteyCentre or Law and Economics in International Trade,

Canada. This is the rst time the MOIC will have a ull

trade curriculum which is expected to complete in July

2011. The rst pilot training course will be launched

in August this year. The curriculum is being developed

based on a thorough needs assessment o the MOIC

and 17 departments o Industry and Commerce (DOIC)

in the provinces with regard to knowledge and skills

on international trade. The rst phase o training

will be held in the orm o training o trainers where

participants will be selected rom ERIT and otherrelevant departments in the MOIC and some selected

trainers in DICs. Thus, the next phase o training will be

delivered by ERIT and the MOIC team who completed

the training rom the rst period.

By: The Economic Research Institute or Trade



Lao PDR showcased at the Fourth United Nations Conference on

the Least Developed Countries (LDC-IV)

The Fourth United Nations Conerence on the LeastDeveloped Countries (LDC-IV) took place between

the 9th and 13th o May 2011 in Istanbul, Turkey. The

purpose o the conerence was to assess the results

o the 10-year action plan or the Least Developed

Countries (LDCs) adopted at the Third United Nations

Conerence on LDCs in Brussels, Belgium, in 2001; and

adopt new measures and strategies or the sustainable

development o the LDCs into the next decade.

The UN General Assembly convened the First United

Nations Conerence on the Least Developed Countries

in Paris in 1981, to respond to the special needs o theLDCs. To continue the ocus on those countries needs

or special measures, the General Assembly convened

the Second United Nations Conerence on the Least

Developed Countries, also in Paris, in 1990. The third

conerence was held in Brussels in 2001.

At the conerence, Lao PDR has called or the world

community to step up assistance to least developed

countries so they can achieve their development goals

and shake o poverty and continue to implement the

programme o action, and honour the commitments

that the signatories agreed to in Brussels.

During last ew years, Lao PDR has been successul in

implementing the Brussels Programme o Action and

has been able to maintain national economic growth

and reach poverty reduction and social development

goals by adding the action plan goals to the national

socioeconomic development plan - and its rm

commitment to implementing the Brussels programme

and as well as made a great successul progress in

operation o the Enhanced Integrated Framework (EIF)

programs that support trade mainstreaming withinthe country and projects to assist Laos in becoming an

active player in the global trading system by tackling

supply-side constraints. This is critically important as

Lao PDR is in the nal stages o negotiation or WTO

accession.

In recognition o Lao PDRs progress in the EIF, Laos

included in a new promotional lm on the EIF that was

launched at the Fourth United Nations Conerence on

the Least Developed Countries (LDC-IV). A new EIF

country prole was also created or Laos and is available

on the website www.laosat.org. In the preparation orshowcasing o EIF program in Lao PDR, the EIF team

visited Lao PDR in March 2011 with a lm production

company rom Italy to lm content to contribute to the

EIF lm. During this visit, the team conducted a serieso interviews with the Lao Government, donor, private

sectors and people who have benets rom trade

related projects.

Enhance

dIntegratedF

ramew

ork

Country profle LAO PDREnhanced Integrated Framework (EIF)for trade-related assistance for Least Developed Countries (LDCs)

Enhance

dIntegratedF

ramew

ork

E

IF

E

IF

E

IF

E

IF

By: National Implementation Unit, Foreign Trade Policy Department



More Donors Contribute to the Trade Development Facility

The Trade Development Facility (TDF) is a multi donor

trust und with initial nancing rom Australia and the

European Union which ocus on nances technical

assistance, capacity building and provision o goods

in ve components that cover (i) Trade acilitation

simplication and automation o procedures

(other than customs); (ii) Sanitary and Phyto-sanitary

Standards (SPS) and Technical Barriers to Trade (TBTs)

strengthening legal and regulatory rameworks; (iii)

Export competitiveness and business environment

market-driven interventions to improve productivity

in key sectors; (iv) Capacity building, trade policy and

agreements technical assistance to support local

policy analysis capacity, particularly with reerence toongoing trade negotiations; and (v) strengthening o

the National Implementation Unit the anchor unit or

the Trade SWAp.

The TDF project has just undergone the Mid-term

Review (MTR) with a team rom the World Bank,

AusAID and the EU. The outcome o the review has

been positive and overall implementation progress

o the TDF is considered Satisactory. This shows

that the project has made considerable progress in

achieving its objective throughout the rst hal o its

implementation. Due to delays in the start-up process

the MTR recommended the extension o the TDF

project or a urther 13 months to end March 2013.

The MTR highlighted the progress in supporting

the establishment and sustainability o the National

Integrated Framework Governance Structure (NIFGS)

and strengthened national capacity in managing the

Trade Related Technical Assistant (TRTA). There has also

been increased willingness o other donors to align

with this process highlighted through a signicant

scaling up o unds channeled through the TDF.

Recently the TDF received an additional $1.8 million

grant rom the World Bank administered Japan Social

Development Fund (JSDF) to support sustainable

silk production partnerships in rural Lao PDR. This

grant will allow silk rms to train and contract ruralarmers or silk production or our years project

under National Integrated Framework Governance

Structure (NIFGS) as part o eorts to improve export

competitiveness and integrate Lao PDR into the

global market. Furthermore, the German International

Cooperation Agency (GIZ) through the Monterrey

Fund will contribute a urther EUR 280,000 to enhance

the capacity o the TDF to ocus on regional and sub-

regional trade issues and other $4 million rom the

Government o Switzerland (SECO) on addressing

our areas including: 1. development o a competitiveand sustainable tourism industry; 2. strengthening

o backward linkages o handicrat (especially silk)

and organic agriculture to the tourism industry; 3.

Facilitating exports to regional markets and meeting

international requirements or target sectors and 4.

Addressing cross-cutting issues concerning cleaner

production, strengthening the local trade related

orums and Aid or Trade Structure (NIFGS).

M O I C

En

hanced

IntegratedFrame

work




Mornitoring and Evaluation Indicators

The table below shows the high level Project Outputs and Intermediate Outcome Indicators Lao PDRs trade

programme (including the TDF and EIF projects). A more detailed results ramework is maintained by the NIU,

however, the table below provides a short summary o developments in key indicators.

Arrangements for Results Monitoring

Project Impact

Indicators

Baseline 2009 2010 2011 Source Comment

1. Trade/GDPratio

69% 63.2% 1 62% 66.3% WDI Database Although bothimports (21%) and ex-ports (37%) increasedin 2010, strong GDPgrowth has led to asteady all in the ratioo Trade/GDP.

2. Progresstowards WTOaccession

On going New lawsand regula-tions andthe rstbilateralagreement

Completedbilateral goodsand servicesagreementwith Japan andChina

Completedbilateral goodsand servicesagreementswith Australiaand ChineseTaipei

FTPD reports,WTO newslet-ters

There has beensteady progresstowards WTO acces-sion particularly onthe bilateral agree-ments ront, withbilateral agreementsstill outstanding onlywith the EU, Ukraineand USA

Project out-

comes indica-

tors

Baseline

(2008)

2009 2010 2011 Data sources Comment

1. Growth innon-resourceexports

28.8% 2 16.6% TBA UN Comtradedatabase

Product level data or2010 not yet available

2. Growth intrade in ser-vices

10.2% 3 7% TBA WDI database Data or 2010 not yetavailable

2.1 Reductionin time o ship-ping rom keypoints in Laos

to major trad-ing partners

50 days 0% 0% -4% Doing BusinessIndicators, WB

The World Bank docu-ment Doing Businessin Laos 2011 showsan improvement in

time o shipping romkey points in Laos tomajor trading part-ners in which time toexport decreased by2 days or 4% between2010 and 2011.Despite progress intiming, the cost oshipping appearsto have remainedthe same or the lastthree years against10% reduction in costexpectation.

2.2 Reductionin cost o ship-ping rom keypoints in Laosto major trad-ing partners

$1750/container

6% 0% -

1. Data rom East Asia and Pacic.2. Exclude exports of minerals, hydro-electricity, and wood and wood products. Source: UN Comtrade Database3. World Trade Indicators 2009/2010 (World Bank)




Update of Import Export Trends

Export Trends

Ater alling in 2009 due to the eect o the global economic crisis, particularly on exports to Thailand, exports

rebounded strongly in 2010 growing by 37% year on year. This growth was led by export growth o more that60% over reduced 2009 levels to each o Thailand and China (Figure 1). Exports to China in 2010 peaked in Q2

where China became the largest export market or Laos in that period (Figure 2). However, a reduced rate o

growth in exports to China in later quarters, and sustained growth to Thailand meant that Thailand remained the

largest export market or Laos in 2010. Exports to the US and EU increased slightly, while exports to Vietnam

have remained fat or 2010.

Figure 1

Figure 2

Source: IMF

Direction

o Trade

statistics

Source: IMFDirection

o Trade

statistics




Import Trends

As with exports, the rate o growth o imports accelerated in 2010 with an overall growth o 21%, ar eclipsing

the 2% growth in 2009. Imports rom Thailand continue to dominate and contribute 67% o total imports or

2010. Hence, Thai imports are separated rom those o other countries in the chart below (Figure 3). Imports rom

Thailand increased by 30% in 2010, ollowed by a 27% increase (rom a lower base) in Chinese imports. However,

imports rom both the EU and Japan contracted by 31% and 18% respectively in 2010, eectively cancelling out

growth gains seen in 2009 (Figure 4).

Source: IMF

Direction

o Trade

statistics

Figure 4

Figure 3

Source: IMFDirection

o Trade

statistics


22/22

Country Exports Imports

World Total $2,088 $3,500

Thailand $690 $2,348

China,P.R.: $511 $524

Vietnam $232 $191

European Union $204 $98

United States $56 $13

Japan $34 $68

Top 5 Export and Import Markets 2010: US$m

Source: IMF DOT, 2011

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