UNCTAD NATIONAL WORKSHOP ENHANCING NEW AND DYNAMIC

EXPORTS OF LAO PDR

Presented by Santisouk Phounsavath

Deputy Director,

Multilateral Trade Policy Division, MOIC

26 Oct 2010

Study on “dynamic” export (Green Tea) and “new” export

(organic cabbages) of Lao PDR

CONTENTS

Introduction/overviewDynamic exports: Green TeaNew exports: Organic Cabbages

Conclusion

INTRODUCTION

What is Dynamic exports?

What is New exports?

INTRODUCTION

Objective of the study:“To examine selected products aiming

to provide policy recommendations to unleash bottlenecks that inhibit their export potentials”

OVERVIEW

Status quo of agricultural Trade 2008 total export of US$ 1.4 million (26% of

GDP) Avg Export Growth of 12% from 2000 to 2008

Key markets for Ag Exports: ASEAN: Thailand, Vietnam Transition Economy: China Advanced Economy: EU, Japan and South Korea

OVERVIEW

Why Green Tea and Organic Cabbages? Development implications: Poverty reduction,

Opium eradication Minority development eg. Arkha ethnic Environmentally industries Rapid growth in demand:

Green tea (World growth rate 17% pa, China: 56% pa) Cabbages export growth rate to Thailand 55% pa

Methodology of the study Review of secondary data Interview relevant stakeholders Consultation Workshop

DYNAMIC EXPORTS: GREEN TEA

Production areas: Boliven Plateau of Champasack Province Phongsaly, Udomxay, Luang Prabang, Xieng

Khoung, Huaphan (Wild tea)

Processing Northern Provinces: Wild tea.

i.e. Phongsaly Southern Provinces: Plant tea

DYNAMIC EXPORTS: GREEN TEA

Transportation: Truck Export certifications: Phytosanitary, CO.

Challenges linked to green tea production: Technology Techniques Laboratory Export certification: Organic, Standard (ISO)

DYNAMIC EXPORTS: GREEN TEA

Investment Stats in 2010 Local investment: worth 1.8 billion Kip FDI: worth 768 million kip (China, Malaysia) Cover 2000 hectares for green tea cultivation

Main challenge linked to investment: Access to finance

DYNAMIC EXPORTS: GREEN TEA

Exports Stats: Green tea to China: worth $US 110, 000 (2009) EU and Japan around 28-30 tons annually from

2006-08 Potential Markets: ASEAN (esp Thailand) and US

Challenges linked to green tea exports Marketing Certifications: sustainably produced, standard,

and organic

DYNAMIC EXPORTS: TEA

Recommendations: Continue trials and trainings on

management and propagation techniques Make contact with researchers on Chinese

sideResearch on ODOP approach and market

opportunitiesProduct quality/technical standards and

certificationPublic-Private Partnership

NEW EXPORTS: CABBAGES

Production areas: Nationwide: 84.000 Hectares Champasak province (Pakxong District and

Boliven Plateaux) 24tons/hectares, total production of 53,328 tons and;

Vientiane Capital (self sufficient)

Processing: Organic Plantation Cultivation truck market

Export certifications: Quality, Phytosanitary, CO

NEW EXPORTS: CABBAGES

Challenges linked to cabbage production Lack of technical knowhow on organic farming Lack of storage facilities Lack of packaging techniques Lack of transportation facilities Lack of organized sales chains for fresh

vegetables Little value addition

NEW EXPORTS: CABBAGES

Investment FDI $US 100 million in Champasak from 2000-08

Success of PPP example: MoUs between Lao-Thai Provincial Governors (between Champasak, Sekong, Saravanh and Ubon Rachathani) Support producers and importers to:

reduce transaction costs Access to finance stimulate investment, production and trade

NEW EXPORTS: CABBAGES Contract farming with Thai businesses (Ubon

Ratchathani)

Pros

• Garantee Minimum price• Know how• Production techniques• Equipments • Seeds• Fertilizers• Cost reduction• Increase efficiency • Quality consistency • Facilitate Standard requirement

Cons

• Not fully understood the obligations

• Monopoly rights• Push down prices• Not responsible for losses• Natural disasters i.e. flood,

drought

NEW EXPORTS: CABBAGES

Sole export market: Thailand

NEW EXPORTS: CABBAGES

Challenges linked to export of organic cabbage Insufficient market information Complex export procedures Difficulties in meeting SPS/TBT and other quality

standards Lack of organic certification for export Implementation of Contract Farming Market access

NEW EXPORTS: CABBAGES

Recommendations Establishment of information centres improve transportation infrastructure Credit available to producers for value added

activities More research on vegetable value chains, off-

season production high quality seeds, organic fertilizer and pesticides

Advice on diversification of markets: i.e. China, Vietnam Cambodia , Middle East and Japan

Promote organic cabbages

NEW EXPORTS: CABBAGES

Recommendations (Cons) Model contract farming to reduce transaction

cost Quality standards/Organic Cerification Promote micro finance to target producers

CONCLUSIONS

Lack of finance is a major constraint Infrastructural constraint is the most serious

bottleneck to investment Regulations are still complicated and too

much paper works Cost of doing business remain high Absence of skilled manpower Needed for diversification of investment into

new range of activities and higher level of growth

THANK YOU FOR YOUR ATTENTION!

Further information: Mr. Santisouk Phounsavath,Multilateral Trade Policy DivisionForeign Trade Policy Department, MOICTel: 450065Fax: 450066Email: santisoukben@gmail.com