Transcript Document 7418636

Competition Scenario
in the Lao PDR
CUTS-NERI
Advocacy and Capacity Building on
Competition Policy and Law in Asia
(7Up2 Project)
Presented by Dr. Leeber Leebouapao
Workshop in Hanoi(16-17 Aaugust 2005)
Lao PDR
GENERAL BACKGROUND
Characteristics of the Country:
 Landlocked and mountainous country
Geographical Location:

South East Asia
Country Area:

236.800 km2
Population(2005):

5.6 million people
Economic System:
 Transition from the centrally planed economy to a
market oriented economy since 1986
Economic Integration:
 1997: Member of ASEAN
 Currently: Preparation for Joining WTO
MACROECONOMIC PERFORMANCE
GDP Growth Rate 1992-2003 in %
%
8
5.9
7.3
6.9
5.8
5.7
5.7
2002
6.9
2001
7
7.5
2000
7.7
6
4
6
6.5
4
Year
2004
2003
1999
1998
1997
1996
1995
1994
1993
0
1992
2
US$
450
GDP per capita 1996-2004 in US$
402
394.58
400
361.34
360.35
332.21 328.33
350
328.81
284.55
300
258.59
250
200
150
100
2004
2003
2002
2001
2000
1999
1998
1997
0
1996
50
Share in GDP by Sectors in 2004
26.2%
47.2%
26.6%
Agriculture
Industry
Services
Inflation Rate 1995-2004
%
160
140
120
100
80
60
40
20
0
134
61.38
12.2
2004
16
2003
2002
2001
2000
7.84 10.6
1999
1998
1997
1996
1995
14.3518.8 14.2
26.98
Exchange Rate Kip/US$ 1995-2004
12000
10,060 10,60010500
10000
8,871
8000
7,103
6000
4000
3,296
2004
2003
2002
2001
2000
1999
1,260
1998
926
1996
1995
819
1997
2000
0
7,864
Export and Import Value(million US$) between 1992-2004
800
700
500
Export
Import
400
300
200
100
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
1992
million USS$
600
1500
533
42
2001
2004
20.4
2000
500
116.8
1999
2003
122.3
1998
493.8
138.78
1997
2002
129.65
1996
804.9
2500
2,598.30
3000
1995
1994
347.8
0
1993
500
335.1
1000
1992
Registered FDI Capital 1992-2003 in million US$
2000
Competition Policy/Regulation Regime
 The NEM (1986)
IV th Party Congress: Moving from the Centrally Planned Economy to
A Market Oriented Economy since 1986
 Party Congresses(V 1991, VI 1996, VII 2001) stress the importance
of multi-economic sectors including private sector.
 The Constitution (1991)
The state protects and expands all forms of state, collective and
individual ownership, as well as private ownership of domestic
capitalists and foreigners who make investments in the Lao People’s
Democratic Republic. The state encourages all economic sectors to
compete and cooperate with one another in expanding their
production and business. All economic sectors are equal before the
law. (Article 14. )
 The Business Law (1994)
“All types of operations conducted by enterprises in all economic
sectors are inter-related and competing on an equal footing before the
law.” (Art.5).
Competition Policy/Regulation Regime (Cont.)
 The Decree No. 15/PO on Trade Competition (2004)
The objective of the Decree is to “define rules and measures to
regulate monopolisation and unfair competition in trade of all forms,
aiming to promote fair trade competition, protect the rights and legal
interests of consumers and to encourage business activities in the Lao
PDR to function efficiently in the market economy mechanism as
determined by the Government of the Lao PDR” (Art. 1 – Objectives).
“All types of operations conducted by enterprises in all economic
sectors are inter-related and competing on an equal footing before the
law” (Art.5). This principle is further reflected by the Decree in that
“Business activities of all sectors are equal under the law; they
cooperate and compete with each other in a fair manner in
compliance with this Decree and concerned laws and regulations”
(Art.3 – Fundamental principle in competition). .
Competition Policy/Regulation Regime (Cont.)
 Industrial Policy
Decree No. 19/PO(1988) on “Management and Administration of
SOEs”
- Autonomy of SOEs.
- Elimination of subsidy system
The Party Resolution(1988) , the Constitution(1991), the Business
Law(1994) encourage private sector development
Decree No.42/PO on Promotion and Development of Small and
Medium-sized Enterprises (SMEs) (2004) identifies as priority areas:





(i) Creating an enabling regulatory and administrative environment for SMEs;
(ii) Enhancing competitiveness of SMEs
(iii) Expanding domestic and international markets for SMEs;
(iv) Improving access to finance by SMEs;
(v) Encouraging and creating favourable conditions for the
establishment
of business organisations; and
 (vi) Encouraging entrepreneurial attitudes and characteristics within
the
society
Competition Policy/Regulation Regime (Cont.)
 Trade policy:
 Domestic Trade Liberalization:
Decree 12/PO(1987) on “Promotion of goods and money
circulation” “One market, one price” principle, e.i
elimination of the
dual price system
Decree No. 14 /PO( 1988) on goods price determination,
prices of most goods determined by market, except
for logs, basic utility and mineral prices
Competition Policy/Regulation Regime (Cont.)
 External Trade Policy:
Decree 18 on “State monopoly on strategic export and import
goods”:
- Reduction of restricted items, private sector participation in
export/import, abolition of quantitative restrictions of import
goods in substance
Order/PO No. 24,(2004) on the facilitation for exportation and
importation:
To establish one stop services at border points and to
abolish export-import licenses, except gold and copper
export and except vehicles, spare parts, petroleum, gas
and diamond and other prohibited goods
Lao PDRs’ integration into the regional and global
markets(AFTA, AFTA+1, +2, +3, preparation to Join WTO by
2008, …)
Competition Policy/Regulation Regime (Cont.)
 Privatization Policy:
Decree No.17/PO on Privatization of SOE (1990)
( Current situation: by 2003 there are only round 93 wholly
SOEs of which 32 are considered strategic)
 Investment Policy:
 Foreign Investment Law of 1988
(amended in 1994)
 Domestic Investment Law of 1994
 Government’s Yearly and Five Years Plans for SocioEconomic Development
 Promotion of Private Investment
Other Sectoral Laws/Regulations Related to Competition
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Enterprise Accounting Law
Labor Law
Business Law
Custom Law
National Budget Law
Law on Bankruptcy
Secured Transaction Law
Law on Government of the
Lao PDR
Law on the Military Service
Law on -Promotion of Domesti
Investment
Tax Law
Law on The Bank of the Lao
PDR
Forestry Law
Water and Water Resources
Law
Electricity Law
16. Road Transport Law
17. Mining Law
18. Law on Agriculture
19. Law on the ProcessingIndustry
20. Environmental Protection
Law
22. Urban Planning Law
23. National Road Law
24. Law on Drugs and Medical
Products
25. Road trafficking Law
26. Education Law
27. Law on Hygiene, Prevention
and Health Promotion
28. Telecommunications Law
29. State Assets Law
Policy/Law Related To Consumer Protection
No
Name of Law
Law No.
Date
Effective date
1
Constitution
01/NA
14 /08/ 1991
15 /081991
2
Property Law
01/90/NA
27/06/1990
27 /07/1990
3
Contract Law
02/90/ NA
27/06/ 1990
27 /07/ 1990
4
Law of Non-Contractual Obligations (Tort Law)
08/90/ NA
29/11/1990
24 /12 1990
5
Insurance Law
11/90/ NA
29 /11/ 1990
24 /12/ 1990
6
Labor Law
02/94/ NA
14 /02/ 1994
21/03/1994
7
Business Law
03/94/ NA
18 /07/ 1994
13 /08/ 1994
8
Water and Water Resources Law
02Œ96/ NA
11 /10/ 1996.
02 /05/1996
9
Road Transport Law
03/97/ NA
12/03/ 1997.
31/05/ 1997
10
Law on Agriculture
01/98/ NA
10 /10/ 1998
06/09/1998
11
The Law on the Processing Industry
01/99/ NA
03 /03/1999
26 1999
12
Environmental Protection Law
02/99/ NA
03 /03/ 1999
26 /03/1999
13
Law on Drugs and Medical Products
01/ NA
08 /03/2000
22/05/ 2000
14
Road trafficking Law
02/ NA
08 /03/2000
22/05/2000
15
Law on Hygiene, Prevention and Health Promotion
01/ NA
10 /03/2001
25 /03/2001
16
Telecommunications Law
02/ NA
10 /03/2001
25 /03/2001
17
Education Law
03/NA
08/03/2000
22 /05/ 2000
Market Structure and Competition
• Market structure and competition
- Manufacturing Sectors
- Services and Utilities
Market Structure and Competition(Cont.)
Business in
Manufacturing Sector
1. Textile and garment
Number of Companies
59 enterprises (with 43 subcontractors)
Domestic
Market shares
Import
13%, 34%, 51.9%
n.a.
Types of Market
Competition
2. Cement
3
44%
19.8%
Oligopoly
3. Beer
1
98%
2%
Monopoly
4. Tobacco
2
40%
40%
Competition
5. Motorcycle assembly
2
75%
n.a.
Competition
6. Steel
11
15-20%
n.a.
Competitive
7. Electricity generation
EdL, IPPs, Provincial authorities
n.a.
n.a.
Monopoly
8. Pharmaceuticals
15 enterprises, 05 of which are major
players
n.a.
n.a.
Competitive
9. Wood processing
- Logging : 3 Central SOE & pro.SOE,
FDI
- Primary wood industry : 182
- Secondary wood industry: 1269
100 %
100 %
99%
Oligopoly
-
Competitive
Market Structure and Competition(Cont.)
Business of Service
and Utility
Banking
Insurance
Market Shares
Types of Market
Number of Companies
-
04 State-owned banks
03 Joint-venture banks
07 foreign bank branches
01 foreign bank representative office
1 SOE
70.7%
20.9%
8.3%
0%
( 98 % )
Oligopoly
Monopoly
Transport
- Trucking
- Inter-provincial bus
transport
Many providers
Competition
Many providers
Competition
Competition
Domestic: 1 SOE
- Aviation
International:
Lao Aviation
Vietnam Airlines
Thai International Aviation
China Yunnan Aviation
100%
53%
23.5%
20.5%
3%
State monopoly
Oligopoly
Market Structure and Competition(Cont.)
Business of Service and
Utility (Cont. )
Number of Companies
Domestic
Market shares
Types of Market
Telecommunications
PSTN (Public switched
telephone network)
- Cellular
- Internet Access
- Cable television
LTC
ETL
LAT
86.5%
12%
1.5%
LTC
ETL
Millicom
LAT
66.6%
19.6%
10.2%
3.4%
LTC
PlaNet Online
GlobeNet
75%
n.a.
n.a.
-Electronic Yiang Jin Cheng Du
Company of China
-Thailand’s UBC pay Direct-toHome service
n.a.
n.a.
Oligopoly
Oligopoly
Oligopoly
Oligopoly
Market Structure and Competition(Cont.)
Barriers to competition:
- Barriers by Law/Policy/Regulation
- Barriers by private anticompetitive behaviours
- Barriers by Nature
Market Structure and Competition(Cont.)
Anti-competitive Practices:
 Transformation of public monopoly into
private monopoly
 Price fixing and other cartel arrangements
 Bid rigging
 Tied selling
 Predatory behaviours by dominant enterprises
Perspectives on Competition Policy
Field Survey Results
Findings of SME survey (72 manufacturing enterprises : 42
food processing enterprises and 30 non-food) in the Vientiane
Municipality :
– 12.7% of the surveyed enterprises thought that they don’t
have any competitor in the city;
– 28.2% said they have some competitor;
– 59.1% said they have many competitors.
– 66.2% of the surveyed enterprises thought that the number
of competitors is on the increase, i.e. the market structure
becomes more competitive;
– 5.6% though that there are now less competitors.
– 28.2% thought there have been no changes.
– A majority thought that competition from domestic rival
enterprises is strongest, rather than competition from Thai,
Chinese and Vietnamese products.
Types of anti-competitive practices prevalent in
Lao PDR
100%
80%
60%
40%
20%
0%
Yes
Collective price f ixing
Bid rigging
Exclusive dealing
Discriminatory dealing
Entry barriers
Any others
No
Market sharing
Tied selling
Resale price maintenance
Unreasonably high price
Predatory pricing
Are these regulations implemented
strongly?
Are these regulations implemented
strongly?
16%
2%
16%
Yes
2%
40%
No
40%
42%
42%
Yes
No
They are not
implemented at all
Don’t know
They are not
implemented at all
Don’t know
Should we have separate regulatory rules
for any specific sectors?
14%
2%
Yes
6%
No
Unnecessary
16%
62% Don't know
Others
What's the implementation procedure and mechanism of
and/or for the competition authority (CA) - the State authority
that oversees competition and competition-related issues would you like to have for our country?
Don't know
2
Ombudsman
2
23
CA under a relevant Ministry
22
Autonomous Competition Authority
0
5
10
15
20
25
What responsibilities/powers should
the Competition Authority have?
Investigative
12%
2%
31%
2%
53%
Adjudicative
Both investigative
and adjudicative
Don't know
Any other
Shall the competition authority be given broad
authorities to deal with both anti-competitive
practices and consumer protection issues?
12%
2%
Yes
No
24%
Don't know
62%
Others
Should many national stakeholders participate in the
implementation process of the competition law
besides the competition authority?
12%
6%
Yes
No
Don't know
82%
THE WAY FORWARD
 Establishing the Trade Competition Commission
 Building capacity of national stakeholders (Business
Sector, Consumer, Government, Academic Research
Institutes, NGO, Donors ) to understand the concept of
competition and effectively implement the Decree on
Trade Competition
 Discussing the possibility of transforming the Decree
on Trade Competition to a competition law( 5 year
plan(2006-2010), draft ).
Thank You
For
Your Attention