Lao authorities have reduced import tariffs on 8,536 items to zero as part of national efforts in establishing the Asean Free Trade Area, according to a government report.

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The report, which the Ministry of Planning and Investment distributed recently at a meeting of finance and planning officials, shows the Lao government no longer charges import tariffs on 8,536 goods from Asean member countries.

These goods represent 89 percent of total items on a designated list which Laos trades with regional member countries under the Asean Trade in Goods Agreement (ATIGA), according to the ‘National Socio-Economic Development for 2019’ report.

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The report also indicated that under the ATIGA, Laos is only able to maintain import tariffs on some goods which it sees as essential for economic stability. In this regard, the government has left the level of import tariffs unchanged on 325 items.

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Vientiane Times has been unable to access information on the list of goods that have been exempted and those still subject to tariffs.

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A customs official told Vientiane Times that under the Asean Free Trade Agreement, each member country has the right to list some goods on which the level of import tariffs can be maintained to prevent a dramatic drop in domestic revenue collections.

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He also said the Lao government has imposed 10 percent value added tax on goods imported into the country as part of efforts to shore up domestic revenue in recent years. In addition, excise or turnover taxes are also charged on imported goods.

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The Lao government began implementing the Asean Free Trade Agreement in 2015. As one of the least developed nations and a newer Asean member, Laos was able to prolong the implementation of the full obligations of the agreement until 2018.

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The main purpose of the Asean Free Trade Area and the elimination of import tariffs is to boost trade in the region of 600 million consumers.  The removal of tariffs aims to help producers and traders in the region to distribute their goods more freely and to reduce their business operating costs.

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The freer flow of goods will encourage foreign investors to establish businesses and production bases in Asean and create jobs for people in these countries. The abolishment of import tariffs and trade protectionist policies has transformed Laos into a new attractive market in the region. At present, the country is flooded with foreign products, which account for more than 50 percent of the goods sold in the country.

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The government has been trying to boost domestic production and consumption. However, some businesses such as cement and steel producers have complained about the stiff competition they face from foreign firms.

By Ekaphone Phouthonesy
(Latest Update January 23, 2019)