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Japan shares SME development experience
Laos needs to import technology from developed countries if it wants to develop its small and medium sized enterprises, according to a Japanese business development specialist.
Mr Tatsuya Hoshino yesterday made a presentation on SME development in Japan, saying most countries, including Japan, have to import technology to develop their smaller business units before they can develop their own technology.
“In the past, people asked if Japanese goods were made by technology from Europe or the US but now they ask if the technology is Japanese,” he said.
Mr Hoshino was speaking at a seminar on the promotion of industrial development, especially SMEs and the role of foreign direct investment, held at the Japan Human Resource Development Institute in Vientiane.
The seminar was supported by the Japanese Embassy to Laos, aiming to provide opportunities for economic and business management students to learn how small and medium sized enterprises in Japan develop.
Mr Hoshino said foreign direct investment plays an important role in the development of smaller enterprises in Laos. Overseas investors not only invest in factories and businesses but also provide important technology and transfer knowledge to local people so they can operate factories.
Laos needs to establish SMEs to produce more goods. Not only will this reduce the need for imports, it will create jobs, and when people have jobs they become wealthier, Mr Hoshino said.
Domestically produced goods would be cheaper than imported products, while increased consumption of domestic goods would prevent the outflow of foreign currency.
Mr Hoshino said many countries in Asia including Vietnam previously imported motorbikes but now they are making their own vehicles for the domestic market. Laos should learn lessons from other nations on how to develop small and medium sized enterprises.
Mr Hoshino was asked whether Laos had enough SME development potential amid strong competition from other economies. Would Lao businesses be unable to compete with foreign rivals when the Asean Free Trade Area comes into full effect?
He said Laos has SME development potential including a cheap labour force, agricultural produce, and six million consumers. “What Japan has is enthusiasm,” he said, adding that it is not easy to set up a business and produce goods that win the hearts of consumers.
It is impossible for one country to stay isolated because the region will become a single production base and market, and businesses need to improve so they can accommodate the challenges.
“Japanese farmers encountered a setback when the country joined the regional free trade area but it is impossible for a country to stay isolated,” he said.
The Lao government's policy is to strengthen SMEs as it believes these enterprises play an important role in sustaining economic growth. But Laos needs to develop SMEs that can produce goods not only for Laos but also the region, since the domestic market is limited
Laos also needs skilled managers and workers so they can run factories effectively.
Vientiane Times
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