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Growing Lao garment industry fails to supply goods for domestic market
Laos has become a major exporter of garments to international markets but unfortunately the industry cannot supply clothes, even school uniforms, to the domestic market.
At major markets in Vientiane, traders are now busy selling school uniforms, shoes and belts as students prepare to begin the new school year this week.
Despite the fact that Laos has a growing garment industry, most of the school uniforms on sale in local markets are made in Thailand and Vietnam, which represents several hundred million kip a year in lost revenue for the country.
The lack of domestically produced school uniforms raises the question of why a major garment exporter, like Laos, cannot produce clothing for the local market.
Lao Garment Industry Association President Mr Onesy Boutsivongsackd admitted this week that although Laos has the technology and skilled personn el to make clothes, it is still unable to produce them for the growing domestic market.
He said that a significant barrier for businesses was that garment makers do not have their own brand name. Because most of them receive orders from foreign designers to produce clothes, it is impossible for a factory to copy a design and sell the clothes to Lao consumers, as it would be a breach of contract.
To enable Lao garment factories to produce clothes for the domestic market, businesses need special consideration, including tax incentives, because domestic garment makers are subject to a 10 percent turnover tax, which makes the price of their products uncompetitive in the marketplace, he said
Although imported pro- ducts are subject to the same tax rate, authorities do not collect it from importers as the goods are often imported illegally, which gives foreign produced clothing a competitive edge when compared to Lao produced garments, he said.
Mr Onesy said that the association would like the government to lower turnover tax for domestic businesses that produce goods for the local market or strictly enforce the tax law to ensure fair competition between Lao and foreign made goods.
When asked about the possibility of the Lao garment industry producing school uniforms, as demand has increased dramatically over the past year, Mr Onesy said that he would like to seek cooperation from relevant sectors to approve a design for a national school uniform.
He said that the Lao garment industry could provide the uniforms to schools throughout the country if schools agreed that all students have to wear the same uniform.
Currently, Lao schools do not require unique uniforms but only white long-sleeved shirts, a sin for girls and long shorts and pants for boys.
vientiane times
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