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Building the competitiveness of Lao PDR and their entrepreneurs
Workshop on “Lao PDR towards AEC 2015”19 and 21 February 2013,
Laos PDR
Dr. Witada Aunkoonwattaka
Trade and Investment Division, ESCAP
Competition vs Competitiveness• Competition (การแข่�งข่�น)
– A state of market influenced by regulation
• Competiveness (ความสามารถในการแข่�งข่�น)– At firm level
• Ability of a firm to compete in the global market
– At country level• Ability of a country to improve and maintain national well being
• Measured by a combination of factors such as “relative” rates of growth, income per capita exports, investment, job creations, etc.
In a world of competition, only competitive players remain.
ในโลกแห่�งการแข่�งข่ น ผู้��มี�ความีสามีาถในการแข่�งข่ นเท่�าน �นท่��จะอยู่��รอด
In a world of competition, only competitive players remain.
ในโลกแห่�งการแข่�งข่ น ผู้��มี�ความีสามีาถในการแข่�งข่ นเท่�าน �นท่��จะอยู่��รอด
Future scenario
• Competition will be more and more intense
• Inflows of FDI in mining and electricity industries
• Potential to become an export platform of ASEAN (using LDCs status)– Light manufacturing– Agriculture and forestry
Challenges facing Laotian entrepreneurs
• Competitions between local and foreign entrepreneurs– Domestic goods and imports– Local businesses and multinationals
• Will Lao PDR be fitted into the “Factory of Asia”?– Real value is productivity gains
Competition between local and foreign entrepreneurs
Four Success Factors
Entrepreneurship
Management SkillsBusiness Plan
Resources
Those factors translate into five requirements to remain competitive
1. Customer development: identify new market niches/
nurture customer relations
2. Product development: identify shifting market demand
3. Improve productivity: Human resources development and
technology
4. Risk management
5. Cash flow management
Strategies for entrepreneurs (1)
• Market research and understanding international market trends
• Innovation is the key
• Cluster strategies– Strengthening associations within industrial
clusters– Invest in your own R&D, if need be in
partnerships or clusters
Strategies for entrepreneurs (2)
• Branding Lao PDR in high-value products and services– E.g.. exporting furniture not logs, high-income
tourists not backpackers
• Invest in people: human resource management – Foreign languages, marketing, IT, design, basic
business skills
10
Issues for entrepreneurs
• Deepening commercial and contractual relationships with local and foreign partners
• All agreements should be recorded in writing.
• Competitiveness will not occur without investment– Investing in human capital (language, marketing, IT,
business skills)– Adopting new technology– Systemize the business process
• Protecting your IPRs
Will Lao PDR be fitted in the “Factory of Asia”?
Value of joining GVCs: opportunities to grow & improve
productivity Increased access to international markets
Support from TNC (training/investment in business process/information sharing etc.)
Technology and knowledge transfer
Long term buyer-supplier relationship
Reputation and brand development
Opportunity to upgrade and move up to the next tier
Thailand: various GVCs in auto, electronics, high-
tech, agri-business, consumer-goods sectors.
Viet Nam: GVCs under development in garment,
consumer goods, auto and electronics sectors
Cambodia, Lao PDR and Myanmar: Agro-business
and garments; need promotion to attract GVCs
(underdeveloped domestic markets)
GVCs in GMS
Entrepreneur centred development strategies
Entrepreneurs
Access toFinance
BusinessDevelopment
Services
Technology and innovation
Infrastructure
Market access
BusinessEnvironment
Competitiveness Framework in the world of GVCs
-Market access- Access to resources
- Business related regulatory framework- Supporting services
- -Contestable market power
- Capacity to respond effectively to competitors- Capacity & flexibility to respond to changing environment
- Capacity to create new market niches
Enterprise (internal)
QDC (Quality, Delivery, Cost)
External
Last but not least…
The key role of government
Ease of Doing Business Ranking 2013 (World Bank and IFC)WB Ease of
doing business ranking
Country Country Ranking
2005 (135 countries)
2008(183 countries)
2013 (185 countries)
1 Singapore 3 1 1
2 Malaysia 25 24 12
3 Thailand 20 15 18
4 Brunei n.a. 78 79
5 Viet Nam 98 91 99
6 Indonesia 131 123 128
7 Cambodia 142 145 133
8 Philippines 121 133 138
9 Lao PDR 163 164 163
Favourable business climate is key!
Bad institutions add to business costs and uncertainty
Average of 2006-2009
Difficulty of completing trade procedures (2012)
Time taken(days)
Cost incurred(2000 constant
USD)
Lao PDR 26 1683
Cambodia 24 653
Timor-Leste 26 594
Brunei Darussalam
17 562
Thailand 14 527
Indonesia 20 515
Philippines 15 491
Viet Nam 21 477
Singapore 5 353
Malaysia 10 337
Southeast Asia 18 619Source: APTIR (2012)
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Building competitiveness of Laotian entrepreneurs require the government to provide appropriate business climate.
Building competitiveness of Laotian entrepreneurs require the government to provide appropriate business climate.
The priority for the government is to reduce regulatory burdens to make it easier to engage in international trade.
The priority for the government is to reduce regulatory burdens to make it easier to engage in international trade.
Thank you
http://www.unescap.org/tid/publication/indpub2621.asp
http://www.unescap.org/tid/publication/tipub2540.asp
http://www.unescap.org/tid/publication/indpub2439.asp