Executive Summary
It is a fact that the Government of Laos plans to join the ASEAN Free Trade Agreement (hereinafter referred as ‘AFTA’) in 2015. It would certainly bring to the nation not only the challenges but opportunities to various business sectors and society. However, there has no specific research been made to date to analyze the AFTA’s impacts to the Lao IT service industry. To fill the gap, this study was designed to investigate the positive and negative impacts and to work with the stakeholders for suggesting measures to maximize the positive impacts and mitigate the negative impacts.
The study briefly introduced Lao economy development and current status and characteristics of Lao ICT industry before moving into the AEC and its implication to the ICT industry in general with particular emphasized on the ASEAN ICT Master Plan.
Through key informant interviews and working group meetings where representatives from policy making agencies, private sector (IT service providers) and academia were presented, the study found that for Lao ICT sector, tariff rate for hardware as well as packaged software products has already reached 0%. Therefore, ICT goods could be considered as free flow recently. This implies that by 2015, there would be ‘no’ or ‘positive’ impacts in the sense that the consumer or enterprise access to cheaper ICT products.
In terms of skilled labor movement, according to AFAS Mode 4, there is no explicit limitation on the national treatment. The degree of impacts would depend on the demand for foreign workers of the industry and the existing of concerns over foreign competition for works in Laos.
Provided with the current situation of Lao labor market where ICT human resource are still not sufficient, it is considered “positive” in terms of impacts when we move toward a more liberalized labor market in ASEAN. However, in the long run the fear of competition between local and foreign labor for jobs is common for the host countries, including Laos. It is inevitable that Lao labor market need to address the professional IT skills standard in order to stay competitive for jobs.
Overall, most IT service providers are not overly concerned, as the Lao market has long been effectively relatively opened even without the FTA. However, there are a number of measures could be taken to optimize the challenges and opportunities brought about by the FTA.
a) Measure to maximize the positive impacts:
• In the short term, embrace and welcome foreign talent to develop the better product for the local and regional markets;
• Develop product with regional market in mind;
• Adopt latest technology quick;
b) Measures to minimize the negative impacts:
• In the mid to long term, human resource issues have to be addressed.
• Get ready to compete. Work more closely among the local IT service providers in order to
attain the reasonable level of economy of scale;
• Create new businesses that response to the local needs with new ideas but it doesn’t matter if the deployed technology is new or old one.