UNCTAD NATIONAL WORKSHOP
ENHANCING NEW AND DYNAMIC EXPORTS
OF LAO PDR
Study on “dynamic” export (Green
Tea) and “new” export (organic
cabbages) of Lao PDR
Presented by Santisouk Phounsavath
Deputy Director,
Multilateral Trade Policy Division, MOIC
26 Oct 2010
CONTENTS
Introduction/overview
Dynamic
exports: Green Tea
New 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 side
 Research on ODOP approach and market
opportunities
 Product quality/technical standards and
certification
 Public-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 Division
Foreign Trade Policy Department, MOIC
Tel: 450065
Fax: 450066
Email: santisoukben@gmail.com