Evolving GMS Trade

in Lao PDR
Florian A. Alburo
Center for the Advancement of
Trade
T d Integration
I t ti andd Facilitation
F ilit ti
204 School of Economics University of the Philippines
Diliman, Quezon City Philippines

Outline
I. Background of Presentation
II
II. L PDR Selected
Lao S l t d Economic
E i Indicators
I di t
III. Lao PDR and GMS Trade Data
IV. Evolving Trade with the GMS
V. Prospects

1
 Background of Presentation

• L
Larger study
t d off GMS Agricultural
A i lt l Trade
T d and
d
Facilitation
• “New” agriculture – what is it?
• Some results of the study
• Focus on Lao PDR

Lao PDR
Selected Economic Indicators

• Aggregate Economic Performance since 2000 –

real GDP growth significant shift from the 90s.
• Aggregate investments have seen increasing
rates supported by impressive savings rates.
• Agriculture value added maintained respectable
growth rates despite some fluctuations.
fluctuations
• Trade has expanded rapidly in the last five years
• FDI has jumped dramatically in recent years

2
 Lao PDR

2000 2001 2002 2003 2004 2005 2006 2007 2008

real GDPgr 5.8 5.7 5.9 5.8 6.9 7.3 8.3 7.9 7.5

agr real va gr 4.9 3.8 4 2.2 3.5 2.5 2.9 na

FDI($M ) 33.9 23.9 4.5 19.5 16.9 27.7 187.3 323.5

savings rate 15.1 15.4 17.9 17 18.2 17.3 18.7 22.3 27

GDI rate 20.5 21 24 21.4 21.1 17.5 21.4 22 24

export gr 9.5 -3.3 -5.9 11.6 8.3 52.2 67.1 5.2 26.0p

import gr -3.4 -4.7 -12.4 3.4 54.2 23.7 25.1 33 25.8

Source: ADB KI (2009) UN Econ and Social Survey of Asia and Pacific 2009

Lao PDR Selected Data

80 350

Export Growth Rate

70
300

60
Import Growth Rate

250
50
Growth Rate or Share (Percent)

40
Million US Dollars

200
Gross Domestic
30 Investment

150
20

Real GDP
Savings Rate
10
Agr VA 100

0
2000 2001 2002 2003 2004 2005 2006 2007
50
-10
FDI (right axis)

-20 0
Year

3
 Lao PDR and GMS Trade Data
• The principal vehicle for empirical analysis of
GMS agricultural production and trade is trade
data using international sources – UN
COMTRADE, IMF Direction of Trade, FAOStat,
among others. Lao PDR and Myanmar data are
derived from partner sources.
• Lao PDR data used here come from reports of
partner countries or the summary of reports from
the world trade.

• Out of the 24 chapters in the HS classification

code belonging to agriculture, what is included in
the study are likely products in eco-production
and eco-trade i.e. fresh p
produce and field crops
p
with minimal value added processing.
• 6 chapters have been excluded mostly live
animals and animal products.
• Of the remaining 18 chapters, 9 have been
excluded among them live trees, gum, resins,
beverage, tobacco and substitutes, residues
from food industries, animal fodder.

4
 9

Evolving Trade with the GMS

• Lao PDR remains land-locked in the sense of its trade
tied closely to adjoining neighbors.
• But export-wise this has diminished though import-wise
this has increased between 2000 and 2006.

10

5
• While overall trade with the GMS countries
(excluding Myanmar) has shown consistent
deficits, Lao PDR exports have been increasing
at yyearlyy rate of 21.9 p
percent while its imports
p
growing at 18.1 percent.
• On a partner country basis much of Lao PDR
trade (in the products included in the study) have
expanded most with PRC, Thailand and Viet
Nam.
• On a product basis trade has expanded for
Thailand in HS 07 (fresh vegetables), 08 (fresh
fruits), 10 (cereals), 12 (oil seeds), and 20
(processed vegetables and fruits)
11

• Trade has expanded for PRC in HS 10 (cereals)

and 12 (oil seeds).
• Trade has expanded for Viet Nam in HS 09
(coffee tea and maté) and 10 (cereals).
(coffee, (cereals)
• For example, exports to Thailand of fresh
vegetables increased from USD 6,000 in 2000 to
USD 2.4M in 2005 and USD 929,000 in 2007.
Fresh fruits from USD 8,000 in 2000 to USD 1M
in 2007.
2007
• Exports to Viet Nam in coffee grew from USD
275,000 in 2000 to USD 3.6M in 2007.

12

6
 Lao PDR "Exports' to GMS HS 07, 08, 09, 20

4,500,000

4,000,000

HS-09
3,500,000

3,000,000

HS-07
2,500,000
US Dollars

2,000,000

1,500,000

HS-08

1,000,000
HS-20
HS 20

500,000

0
2000 2001 2002 2003 2004 2005 2006 2007
Year

13

Prospects
• The bulk of GMS-Lao PDR trade remains
outside of the agricultural sector.
sector
• In 2000 most of GMS imports from Lao PDR
were in wood products (wood and articles of
wood) but these have sharply declined in 2007
replaced by copper and articles, and minerals.
• This is particularly true for Thailand, PRC, and
Vi t Nam.
Viet N
• “New” agricultural products are less than 10
percent of Lao PDR trade though there is limited
evidence that they are growing fast.
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7
• Transforming Lao PDR from a “land-locked”
country to a “land-linked” country entails a
recognition of trade as the important artery and
stream for seamless economy. y
• One finding of the study is the increasing
amount of intra-industry trade even in the
agricultural sector.
• This means that even for countries with similar
factor endowments (as the GMS is) trade is
growth inducing.
• For agriculture, increasing exchange through
contract farming contributes to this kind of trade.
15

• Regional and national policies have to be geared

to promoting freer flow of goods and people and
the reduction of trade barriers.
• For GMS this means addressing residual
obstacles to completing the CBTA.
• For Lao PDR this means formulating and
implementing trade and related policies to
stimulate investments that encompass the value
chain designing and strengthening regulatory
chain,
agencies that safeguard trade transactions, and
enhancing systems that increase supply
capacities for wider market access beyond GMS.
16

8
Thank you…

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