Group Work Report on Laos SME SWOT in the context of ASEAN Economic Integration “Laos is ready for Business” Mekong Institute, Khon Kaen, Thailand 6-10 September, 2010

I. Country profile, economic performance and investment policy II. SME situation and policy III. SWOT Analysis of ASEAN Economic Integration IV. Impact of ASEAN Economic Integration Presentation Outline ASEAN SME Regional Gateway-GMS SME BIZ Network

I. Country profile

ASEAN SME Regional Gateway-GMS SME BIZ Network

Source: MoIC 2010

ASEAN SME Regional Gateway-GMS SME BIZ Network

23  Definition of SMEs Note: USD 1Kip 8,200 (as of September 2010) Note: USD 1 = Kip 8,200 (as of September 2010)  Classification of SMEs: 3 categories 1.SMEs operating in the production of commercial goods 1.SMEs operating in the production of commercial goods 2.SMEs operating in the trade sector 2.SMEs operating in the trade sector 3.SMEs operating in the service sector CategoryAverage annual No. of employees Total assets in Kip Annual turnover in Kip Small  19  250 million  400 million Medium  99  1.2 billion  1 billion ASEAN SME Regional Gateway-GMS SME BIZ Network

24 < Number of employees Source: National Economic Census 2006 ASEAN SME Regional Gateway-GMS SME BIZ Network % - SME

Source: GTZ/HRDME –ES 2009 ASEAN SME Regional Gateway-GMS SME BIZ Network

Source: GTZ/HRDME –ES 2009 ASEAN SME Regional Gateway-GMS SME BIZ Network

1. Strengths:  Located in the middle of GMS  Rich of natural resources  Large area of fertilize agricultural land  Variety of tourism site  Virtually no damaging disaster  Politically stable  Increasing GDP  Inexpensive labor  Special incentive for CLMV countries ASEAN SME Regional Gateway-GMS SME BIZ Network

2. Weakness:  Land-lock country  High cost of transportation  Low population and competiveness. Little purchasing power. Competition for labor. Lack of knowledge/skill labor. Seasonal shortage of labor  Lack of a business- & investment-friendly legal & regulatory environment framework  Lack of service -orientation of government agencies and related capacities.  Lack of freight infrastructure

ASEAN SME Regional Gateway-GMS SME BIZ Network 2. Weakness ( con’t):  Underdeveloped financial services sector, particularly for long-term credit for small & medium-sized enterprises;  Low level of technology & small-scale of production  Lack of Business Development Service capacities to provide, i.a.., information on markets, standards & technology options, market opportunities and business strategies;  Underdeveloped inter-business linkages and value chains;

3. Opportunity:  Land lock to land link country  Ability development of infrastructure  Battery of ASEAN  Poverty reduction strategy  ASEAN member. Economic community. Education. Healthy, etc…  Better access to supply chain mean more business opportunities. ASEAN SME Regional Gateway-GMS SME BIZ Network

4. Threats:  More competition impacts to small business  Declining of national culture and identity  Over exploitation of natural resources. Environmental issue. Land concession. Etc.  Disparities between urban and rural areas  More rely on foreign currency  Social issues: human trafficking, drug trafficking, etc…. ASEAN SME Regional Gateway-GMS SME BIZ Network

32 Small and Medium Sized Enterprises are an important part of the national economy, able to integrate into the production and trade mechanism of the region and the world, operating under enabling conditions and benefiting from an efficient support mechanism. ASEAN SME Regional Gateway-GMS SME BIZ Network  Vision ( )

33  Contributing to proportional and stable economic growth  Creating opportunities for increasing employment  Mobilizing assets and intellectual resources of the people for production, trading and services  Increase income and distribution in order to increase the living standard of the people and to poverty alleviation  Contributing to the erection of the basis for industrialization and modernization of the country ASEAN SME Regional Gateway-GMS SME BIZ Network

34  Growth of output of SMEs by 12% p.a  Increase of number of registered SMEs of 12% p.a.  Increase of employment of 10% p.a.  SMEs shall provide for approx. 50% of total employment ASEAN SME Regional Gateway-GMS SME BIZ Network

35 1. Creating an Enabling Regulatory and Administrative Environment 2. Enhancing Competitiveness 3. Expanding Domestic and International Markets 4. Improving Access to Finance 5. Encouraging and Creating Favorable Conditions for Establishment of Business Organizations 6. Enhancing Entrepreneurial Attitudes and Characteristics within the Society 1. Creating an Enabling Regulatory and Administrative Environment 2. Enhancing Competitiveness 3. Expanding Domestic and International Markets 4. Improving Access to Finance 5. Encouraging and Creating Favorable Conditions for Establishment of Business Organizations 6. Enhancing Entrepreneurial Attitudes and Characteristics within the Society ASEAN SME Regional Gateway-GMS SME BIZ Network

1. Positive impact  Market expansion  More competition-more joy for consumer  Increasing of Supply chain 2. Negative impact  Zero income tax  Growth of SME’s may faced competitiveness  Change of everything ASEAN SME Regional Gateway-GMS SME BIZ Network

37 THANK YOU ຂອບໃຈ