Lao Economy

Lao Garment Industry Fails To Attract New Investors

Source: Vientiane Times

The construction of garment factories in Laos has continued only gradually this year as the industry is still struggling to source workers to supply its factories, according to an official related to the sector.

Vice President of the Association of the Lao Garment Industry, Dr Xaybandith Rasphone explained that the construction of garment factories is expected to proceed slowly again this year as it did the previous year.

Last year, only two new clothing factories registered with the association, Dr Xaybandith said.

The Lao garment industry needs more than 35,000 -40,000 workers each year, he explained, but currently there are only 28,000-30,000 labourers working in the nation’s garment factories, which are mainly located in Vientiane and Savannakhet province.

Meanwhile, new garment factories are also on the drawing board to exploit growing exports to European Union (EU) nations but investors are still concerned about the short supply of local tailors.

Some labourers are known to drop out of work after only a short period of employment, which is also challenging for the industry.

That is why the garment industry has been facing challenges to attract new factories’ investment in recent years, Dr Xaybandith observed.

However, officials pointed out that the association is working with the relevant authorities in each province to promote the benefits of working in factories to local people.

According to an Association of the Lao Garment Industry report in 2015, the country had 98 garment factories operating, mainly in and around Vientiane with 12 of these solely owned by Lao business people.

The Japanese were also large investors in garments at 28 percent of factories, followed by Thai investors at 22 percent.

According to the 8th socio-economic development plan of the government from 2016-2020, the labour force in Laos is expected to increase to 610,000 people in the next five years to support the growth of the economy.

Meanwhile the labour force is expected to rise from 3.8 million people in 2015 to 4.41 million people in 2020.

The Ministry of Industry and Commerce reported recently that the export value of Lao clothes in 2016 had decreased from US$ 151 million to US$127 million.

This year, it is estimated that the value of Laos’ clothing industry will continue to decline slightly at 42.5 percent for an expected total export value of US$115 million.