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Europe's relaxed RoO pushes Laos' garment exports
Aug '11
Drawing benefits from Europe easing the restrictions on imports, garment exports from Laos have grown to US$ 100 million during the initial six months of the current year, registering a year-on-year rise of 29 percent.

This rise in exports is mainly attributable to hike in exports to Europe, pursuant to the European Union's decision permitting the least-developed countries (LDCs) like Laos to use imported raw materials for goods meant for export to the European market.

The European Commission came up with its new set of relaxed Rules of Origin (RoO) for LDCs on November 18, 2010. Under the rules, it permitted the LDCs to export even those goods to the EU at preferential tariff rates that were not produced from domestic raw materials. The new RoO became effective from January 1 this year.

While the garment exports from Laos has earned a competitive edge in Europe following the relaxed RoO, the country's garment industry still greatly relies on textiles imported from nearby Thailand.

During the January-June period of the current year, Laos mainly exported garments to the US, Japan and Europe with US accounting for around 17 percent of the total exports, Japan accounting for 3.3 percent and Europe accounting for the rest.

Swiftly rising orders from European importers has put the Laos garment industry, which is facing severe labour scarcity, in a predicament.

After the Thai Government's recent assurance of raising the minimum wage to 300 baht which is equivalent to US$ 10 per day, several Lao workers look for employment there as the proposed wage is much higher than 500,000 kip or US$ 62.50 that Lao garment units offer per month.

Garment exports brought in US$ 182 million to Laos during last year, 14 percent higher than revenues generated in 2009.

Fibre2fashion News Desk - India

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