Building the competitiveness of Lao PDR and their entrepreneurs - PowerPoint PPT Presentation

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 anukoonwattaka@un.org

Competition vs Competitiveness • Competition (การแข่งขัน) – A state of market influenced by regulation • Competiveness (ความสามารถในการแข่งขัน ) – At firm level • Ability of a firm to compete in the global market – At country level – 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. In a world of competition, only competitive players remain. ในโลกแห่งการแข่งขัน ผู้มีความสามาถในการแข่งขันเท่านั�นที�จะอยู่รอด ในโลกแห่งการแข่งขัน ผู้มีความสามาถในการแข่งขันเท่านั�นที�จะอยู่รอด

Future scenario • Competition will be more and more intense • Inflows of FDI in mining and electricity industries 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 Skills Business 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 • 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 tourists not backpackers • Invest in people: human resource management – Foreign languages, marketing, IT, design, basic business skills

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, – Investing in human capital (language, marketing, IT, business skills) – Adopting new technology – Systemize the business process • Protecting your IPRs 10

Will Lao PDR be fitted in the “Factory of Asia”?

Value of joining GVCs: Value of joining GVCs: Value of joining GVCs: Value of joining GVCs: opportunities to grow & improve productivity opportunities to grow & improve productivity opportunities to grow & improve productivity opportunities to grow & improve productivity � Increased access to international markets Increased access to international markets Increased access to international markets Increased access to international markets � Support from TNC (training/investment in business Support from TNC (training/investment in business Support from TNC (training/investment in business Support from TNC (training/investment in business process/information sharing etc.) process/information sharing etc.) process/information sharing etc.) process/information sharing etc.) � Technology and knowledge transfer � Technology and knowledge transfer Technology and knowledge transfer Technology and knowledge transfer Technology and knowledge transfer Technology and knowledge transfer Technology and knowledge transfer Technology and knowledge transfer � Long term buyer Long term buyer Long term buyer Long term buyer- - - -supplier relationship supplier relationship supplier relationship supplier relationship � Reputation and brand development Reputation and brand development Reputation and brand development Reputation and brand development � Opportunity to upgrade and move up to the next tier Opportunity to upgrade and move up to the next tier Opportunity to upgrade and move up to the next tier Opportunity to upgrade and move up to the next tier

GVCs in GMS GVCs in GMS GVCs in GMS GVCs in GMS � 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)

Entrepreneur centred development strategies Business Environment Access to Access to Infrastructure Infrastructure Finance Entrepreneurs Business Technology Development and innovation Services Market access

Competitiveness Framework in the world of GVCs Enterprise (internal) - -Contestable market power - Capacity to respond effectively to competitors - Capacity & flexibility to respond to changing environment - Capacity to create new market niches External -Market access - Access to resources - Business related regulatory framework - Supporting services QDC (Quality, Delivery, Cost)

Last but not least… The key role of government

Favourable business climate is key! Ease of Doing Business Ranking 2013 (World Bank and IFC) WB Ease of Country Country Ranking doing business 2005 2008 2013 ranking (135 countries) (183 countries) (185 countries) 1 Singapore 3 1 1 2 Malaysia 25 24 12 3 3 Thailand Thailand 20 20 15 15 18 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

Bad institutions add to business costs and uncertainty Average of 2006-2009

Difficulty of completing trade procedures (2012) Time taken Cost incurred (days) (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 18 619 Source: APTIR (2012)

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. 20

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