Agroindustry in Lao PDR after Regional Economic Integration: Promoting Cluster Growth in Export Sectors

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This is the abstract for the paper that I am going to present at ICIRD 2015 at Mahidol University, Salaya Campus in July (http://www.icird.org).

Agroindustry in Lao PDR after Regional Economic Integration: Promoting Cluster Growth in Export Sectors

Abstract

Since agriculture remains an extremely important industry in the Greater Mekong Subregion, the impacts on it of the changes being brought about by regional economic integration under the ASEAN Economic Community will be of critical importance to the region. In particular, Lao PDR lacks a large scale manufacturing industry to counteract the reliance for the majority of the population on agriculture and it also lacks much of the necessary infrastructure to create a successful processing and export industry. However, change is coming in the country as the construction of the Asian Highway Network promotes cross-border connectivity and encourages higher levels of investment to take advantage of the special economic zones and low labour cost competitiveness within the economy. Certain sectors within the industry have shown potential for rapid growth and the state of productivity and change within the industry overall is examined through the case studies of various vegetables and other products. In particular, attention is placed on the possibility of forming clusters of complementary firms in actual or potential agricultural export sectors and the difficulties and opportunities associated with this approach. It is found that cluster formation is difficult but manageable in cases where certain pre-existing conditions are met and can be promoted in such cases. However, in other cases, the approach seems unlikely to be successful. Implications are drawn from this and recommendations made for policy at the national level.

Keywords: agroindustry, clusters, Laos, organic rice, vegetables

Malaykham Philaphone, Nittana Southiseng and John Walsh

Malaykham Philaphone is an official at the Economic Research Institution for Trade (ERIT), Ministry of Industry and Commerce, Government of Lao PDR.

Dr. Nittana Southiseng is SME Development Adviser, Regional Economic Integration of Laos into ASEAN, Trade and Entrepreneurship Development (RELATED Project), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Vientiane, Lao PDR.

Dr. John Walsh is Director, SIU Research Centre, School of Management, Shinawatra University, Thailand.

Recalibrating Asymmetric Relationships through Economic and Business Development: The Case of Lao PDR

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Walsh, John and Nittana Southiseng, “Recalibrating Asymmetric Relationships through Economic and Business Development: The Case of Lao PDR,” Journal of Social and Development Sciences, Vol.5, No.3 (September, 2014), pp.145-54, available at: http://ifrnd.org/Research%20Papers/S5(3)4.pdf.

Abstract:

Poor and land-locked, communist-ruled Laos began opening its economy to capitalist methods at the end of the 1980s. With a sparse population and very limited technical capacity, the country’s principal economic activities involve foreign investors building dams for hydroelectricity or mining for minerals that are destined for export. The local economy is dominated by small and uncoordinated enterprises operating in mostly undeveloped and unsophisticated markets. Laos is in the process of becoming more integrated into the Mekong Region by virtue of the building of parts of the Asian Highway Network across its territory and some opportunities arising from the planned single market of the ASEAN Economic Community which reaches a new phase in 2015. The vision is for Laos to become a bridge for economic development. However, it is not clear that the mere presence of infrastructure will be sufficient for Laotian companies and institutions to receive benefits on a substantial and sustainable basis. Principal difficulties are (i) underdeveloped public human resource capacities and institutional support systems, (ii) lack of industry clusters and facilities that can provide SMEs access to regional and global value chains and (iii) limited endowment of resources, logistics, finance and limited capabilities to meet market demand. This paper examines the conjunction between ability of Lao actors to participate in emergent economic activities and the country’s ability at government level to articulate its own developmental priorities and attempt to achieve these through negotiation with other states. This requires seeking to recalibrate hugely asymmetric relationships with China, Japan and Thailand, among others.
Keywords: Recalibrating, Asymmetric Information, Economic Development

Special Economic Zones in Laos and the Factory Asia Paradigm

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Alors, I am back from:

Walsh, John, “Special Economic Zones in Laos and the Factory Asia Paradigm,” Invited Intervention at the Research Week for Development 2014 held at the Institut Français, Vientiane (October 13th-15th, 2014).

Summary:

The Lao government will supplement its current economic policies with the Factory Asia paradigm (import-substituting, export-oriented, low labour cost competitive manufacturing) which will mostly be guided to certain special economic zones. This presentation examines the implications of this change.

Economic development in Laos has historically relied upon resource extraction (i.e. mining) and hydroelectricity generation. This has led to an outbreak of Dutch disease (success in one economic sector inspires negative consequences such as inflation for all sectors) and little extra employment.

To counter this, the government has begun the country’s trajectory along the Factory Asia paradigm : this involves import-substituting, export-oriented manufacturing based on low labour cost competitiveness. Low labour costs are ensured by moving workers from agriculture to manufacturing and when the point of equality between supply and demand for labour is passed (i.e. the Lewisian point) through suppression of workers’ rights, collective bargaining and right to organise.

This paradigm has been followed or is in the process of being followed by all other members of the Greater Mekong Subregion and the leader in this regard, Thailand, has reached the limits of what it can provide and is now seeking different means of exiting the Middle Income Trap (although the new government seems to be retreating from this change).

Most if not all of the activities of the paradigm take place in special economic zones (SEZs), which are time and space-limited geographical areas where different laws and regulations exist as a means of encouraging domestic and international investors to locate manufacturing activities there. A number of SEZs already operate in Laos and more are planned. They act as magnets for migration and are mostly located near the capital Vientiane and where good transportation infrastructure allows convenient linkages between places of production (SEZs) and places of consumption (markets such as cities).

Building SEZs like this has significant implications for Lao society generally : the creation of an industrial working class, changes in gender relations as women enter the labour force in large numbers and potential alienation among workers as well as conflicts with investors and the state (which may be expected to side with the investors, at least most of the time).

Ultimately, this manufacturing paradigm will work to lift the country from low income to middle income status. However, i twill not be sufficient to lift the country to high income status. Asian countries which have escaped this trap, such as South Korea, did so by trusting the people and democratization. This will pose a threat to a monolithic government which will need to be negotiated. Effective political management of a high income state has been effected in Singapore but this needs careful planning.

SEZs more tightly bind a country with international markets and this will be intensified by the continued construction of the Asian Highway Network. Once these connections have been created, they will be difficult if not impossible to halt in the future.

The Characteristics, Motivations and Satisfaction of Thai Tourists Who Visit Luang Prabang Province, Lao PDR

The Characteristics, Motivations and Satisfaction of Thai Tourists Who Visit Luang Prabang Province, Lao PDR

Sithixay Xayavong

Abstract:

There are three major objectives of this study: (1) to understand and explore the demographic characteristics and travelling behaviours of Thai Tourists; (2) to study the motivations of Thai Tourists who visited Luang Prabang; and (3) to investigate the Thai tourists’ satisfaction towards the destination. This study uses a ‘push and pull’ approach to find 23 push motivation factors and 22 pull motivation factors for travel. This study found that, firstly, the majority of Thai tourists were middle class, who came from the major cities of Thailand such as Bangkok, Chiang Rai, Chiang Mai and Khon Kaen. About half of the respondents were entrepreneurs and employees. Thai tourists preferred to travel with organized groups, friends, as a couple and with family members. They stayed in Luang Prabang between three and four days and spent relatively high amounts, approximately 1,950 Baht (67 US$) and 1,507 Baht (52 US$) per day for accommodations and for food & drink, respectively. Almost all of the Thai tourists visited and were satisfied with visiting Wat Xieng Thong and the National Museum of Luang Prabang. Also, the activity that most of Thai tourist participated and felt most satisfaction in was almsgiving. Consequently, it is suggested that religious tourism (it is known as Buddhist tourism in Thailand) could be one of the potential tourism segments to draw Thai tourists into Luang Prabang. Secondly, Thai tourists strongly agreed that doing and seeing destinations,’ ‘unique things and ‘going to places I have never visited’ are “knowledge seeking” factors which were the most important push factors causing them to visit Luang Prabang. These were followed by ‘unique or different ethnic minority or indigenous people’ and ‘experience a simpler lifestyle,’ which are “novel experience” factors. On the other hand, historical, archeological buildings and places’ was the most important factor to motivate Thai tourists to visit Luang Prabang, followed by friendliness, politeness and hospitality of local people,’ ‘interesting rural countryside’ and ‘outstanding natural scenery and landscape.’ Furthermore, after their trip, Thai visitors felt high satisfaction.

Keywords: behaviour, Luang Prabang tourism, push and pull model satisfaction, Thai tourists

Read the full paper here.

Korean Wave in Laos: Trade and Investment

Korean Wave in Laos: Trade and Investment

Nittana Southiseng

SME Development Specialist

Mekong Institute, Khon Kaen, Thailand

 Abstract

LAOS, the Land of Ample Opportunities and Success, is abundant in natural resources, including coal, hardwood timber, hydropower, gypsum, tin, gold and gemstones. It is the fifth lowest labour cost country in Asia with a daily minimum wage of 3USD$. These all play significant roles in inducing foreign investment into the country. This study uses information drawn from secondary sources aiming to review the situation and prospects for Korean trade and investment in Laos, and cooperation areas for trade and investment promotion between the two countries. Korea ranked fourth most important investment partner for Laos in 2010 after Thailand, Vietnam and China (The Ministry of Planning and Investment of Laos, 2010). From 1989-2012, Korea’s FDI inflow to Laos included 287 projects with a value of US$748 million. The Government of Laos (GoL) sees that the prosperity and welfare of Lao people can be enhanced through prosper trade facilitation and promotion policies to attract foreign businesses to boost the domestic market and increase exports. Korea has been targeted as a source of investments in Laos. The GoL has made efforts to enhance bilateral economic ties with Korea and extend larger cooperation with Korean institutions to increase Korean investment in the country. By July 2012, more than 18 Korean firms have opened in the capital Vientiane capital to seek business opportunities and expand their business operations. The Korean automobile industry is one of the success stories and it has 37% of the market share in Laos. Laos seeks the support of advanced technology and wishes to learn more the experience of Korea’s development to maximize an exploitation of resources and jointly conduct various trade promotion activities and industrial cooperation projects for sustainable economic growth.

This is the abstract for another of the papers to be delivered at the forthcoming International Workshop on Korean Trade and Investment in the Mekong Region to be held at SIU on November 1st and 2nd, 2013.

Human Resource Management in the Telecommunications Sector of Laos

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Announcing: Southiseng, Nittana and John Walsh, “Human Resource Management in the Telecommunications Sector of Laos,” International Journal of Research Studies in Management, Vol.2, No.2 (2013), doi: 10.5861/ijrsm.2013.235, available at: http://www.consortiacademia.org/index.php/ijrsm/issue/current.

Abstract:

This paper presents quantitative outcomes regarding human resource management (HRM) in telecom companies in Laos. A total of 73 valid responses from managers and 396 from employees were obtained as part of a self-completing personally distributed survey, using questionnaires. Analysis of the results showed that the management team seemed not to have a great deal of impact in terms of strengthening the companies’ human capital development (HCD). Employees felt that the more the HRM practices were put into practice, the more that employees’ performance improvement, perceptual development and satisfaction were improved. Factor analysis grouped HRM practices into three categories: (1) compensation management and information exchange, (2) training and development (T&D) management and (3) needs assessment. It is apparent that HRM in the telecom industry of Laos is not yet properly executed and executives involved in it had low attention in managing and developing their human resource. There was unclear understanding of how to execute HRM effectively, as a result, the variables of the compensation management and information exchange had been fallen into the same aspect. With such findings, the recommendations have been proposed to the telecom companies of Laos to firstly gain higher awareness from the top management, to have precise HRM policies and adequate supports, and to include the HRM, HRD and T&D in either formal or informal curricular of the education system in Laos.

Keywords: human resource development, Laos, telecoms

Recalibrating Asymmetric Relationships through Economic and Business Development: The Case of Lao PDR

I will be attending a workshop at City University in Hong Kong in a couple of weeks and the title of the paper (written jointly with Dr. Nittana Southiseng) is Recalibrating Asymmetric Relationships through Economic and Business Development: The Case of Lao PDR. We adopted a neo-Gramscian perspective for this paper, which had the advantage of bringing into focus those issues which we considered important to analyse and avoids the rigidity of the structural dependency and world systems approaches.

The full paper was submitted the other day and the organisers consider it promising for publication in African and Asian Studies in due course. Given the speed with which the peer reviewing, revising and publishing process takes place, I imagine it should be due some time in 2013.

In the meantime, here is the abstract:

Poor and land-locked, communist-ruled Laos began opening its economy to capitalist methods at the end of the 1980s. With a sparse population and very limited technical capacity, the country’s principal economic activities involve foreign investors building dams for hydroelectricity or mining for minerals that are destined for export. The local economy is dominated by small and uncoordinated enterprises operating in mostly undeveloped and unsophisticated markets. Laos is in the process of becoming more integrated into the Mekong Region by virtue of the building of parts of the Asian Highway Network across its territory and some opportunities arising from the planned single market of the ASEAN Economic Community of 2015. The vision is for Laos to become a bridge for economic development. However, it is not clear that the mere presence of infrastructure will be sufficient for Laotian companies and institutions to receive benefits on a substantial and sustainable basis. Principal difficulties are (i) underdeveloped public human resource capacities and institutional support systems, (ii) lack of industry clusters and facilities that can provide SMEs access to regional and global value chains, and (iii) limited endowment of resources, logistics, finance and limited capabilities to meet market demand. This paper examines the conjunction between ability of Lao actors to participate in emergent economic activities and the country’s ability at government level to articulate its own developmental priorities and attempt to achieve these through negotiation with other states. This requires seeking to recalibrate hugely asymmetric relationships with China, Japan and Thailand, among others.