Laos Inflation May Deter Investors

Rising inflation in Laos is undermining the country’s attraction as a low-cost manufacturing base, a report said on Thursday, although investment figures remain solid.

External investors, particularly Japanese, are put off by inflation and rising labour costs, the state-run Vientiane Times said.

“Many companies are facing difficulties recruiting workers due to the fact they are not willing to offer higher wages,” the government mouthpiece reported.

Minimum wage in Vientiane is about 600,000 kip (75 United States dollars) a month, but a worker now needs at least 1,000,000 kip to survive, the daily said, as annual inflation has been rising for the past two years, and reached 5.7% in February.

But investment figures indicated Laos was still an attractive production base in the region, amid surging labour costs in China and jitters left in the wake of Thailand’s devastating floods in 2011.

Japanese investment in the country reached 405.7 million dollars in 2013, up 15% year-on-year.

The Japan External Trade Organisation, which assists Japanese companies in their overseas operations, plans to open an office in the Vientiane this year.

Source: Bangkok Post

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