April 29,\r\n2015?Policymakers and private sector representatives in Lao PDR recently\r\ngathered to discuss the findings of a survey of businesses? views on the impact of trade\r\nliberalization. Two years ago, Lao joined the WTO and policymakers and\r\ndevelopment partners are eager to find ways to increase trade and to see how\r\nbusinesses are adapting to liberalization. The report that framed the discussion, Business Perceptions Survey: Trade Liberalization in Lao PDR, was released on April 22.

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Nathan Associates, which manages USAID?s LUNA II project,\r\nconducted the survey in cooperation with the Lao National Chamber of Commerce\r\nand Industry. Data were gathered from 287 businesses in four business hubs?Vientiane\r\nCapital, Champasak, Savannakhet, and Luang Prabang?from November 2014 to January\r\n2015.

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Findings

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The most important finding is that a large majority of survey\r\nrespondents are benefiting from international trade. Eighty percent depend on imported\r\ninputs for their business?especially imported equipment, spare parts, and raw\r\nmaterial?and nearly half are already engaging in export sales. Trade\r\nliberalization is also stimulating many firms to improve efficiency and\r\ncompetitiveness.

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Among exporting firms, 46 percent experienced growth in\r\ndirect export sales over the past two years. Respondents say that export sales?\r\ngrowth is constrained by a shortage of\r\nskilled labor and trade financing. Fifty percent say they are facing\r\nimport competition in the domestic market and 14 percent see this competition\r\nas a critical problem.

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Much discussed was the finding that businesses are largely\r\nunaware of national trade policies, international agreements, and government-sponsored\r\ntrade information tools, such as the Lao Trade Portal and the e-Gazette. For\r\nexample, only 8 percent of respondents claim to be well informed about Lao\r\nPDR?s WTO membership. A good number of respondents have problems with\r\ntrade-related paperwork and customs clearance procedures.

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Recommendations

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The survey focused on international trade, but its findings suggest\r\nthat the government can do much in the domestic realm to maximize gains from\r\nthat trade. For example, it can encourage efficient investment, growth in\r\ncompetitive industries, and creation of productive jobs through legal and\r\nregulatory reform, macroeconomic policy, and financial sector modernization.

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The business perceptions survey report specifically recommended\r\nthat policymakers seek to ease adjustment to new trade patterns by reducing\r\nregulatory costs for businesses and providing retraining assistance for\r\ndisplaced workers.

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The Lao\r\nNational Chamber of Commerce and Industry, with support of the USAID LUNA II project, will continue working\r\nwith businesses to raise awareness of trade policies and procedures so that Lao\r\nbusinesses can profit more from international trade.

Download the full survey report

Download a fact sheet summarizing survey findings