Leveraging the Competitiveness of Transport SMEs in Lao PDR

Operational competitiveness of SME transport companies in Lao PDR needs improvement when compared to other ASEAN Member States. The cross-border freight market is dominated by Thai, Vietnamese and Chinese operators. As Laos is exposed to increased competition from established ASEAN operators, Lao SME transport companies find it difficult to compete unless they streamline their operations, reduce time and increase vehicle utilization. Low labour costs alone do not make a transport company competitive. Their assets must be properly utilized and staff working to their full potential without long idle periods.

Therefore, the Department of Transport under the Ministry of Public Works and Transport (MPWT), supported by the Regional Economic Integration of Laos into ASEAN, Trade and Entrepreneurship Development (RELATED) Project of the German Development Cooperation, organized a training on the efficiency in transport operations. The training for about 30 participants from both the public and private sector took place from October 29th to November 02nd 2018 at the Public Works and Transport Training Institute, Vientiane Capital. 

For the Lao economy, transport and logistics operations are of utmost importance for two reasons: First, an increase in the efficiency of transport and logistics operations reduces the transaction costs for the Lao economy. It improves the competitiveness of all goods produced in Lao PDR and traded with neighbouring countries. More efficient transport and logistics operations also improve the attractiveness of Lao PDR as location within regional value chains. Second, the Lao transport and logistics sector has potential to create additional employment opportunities and income for Lao people as well as to contribute to an increasing diversification of the Lao economy.

The training aimed at leveraging the capacity of SME transport operators and officials to better manage their operations, compete in both the domestic and cross border transport market and get well prepared for competitors in the context of the ASEAN Economic Community. Relevant topics included, amongst others, variable and fixed costs, vehicle types, depreciation, pricing methods, the optimal utilization of the vehicle fleet and preventative maintenance.

At the end of the training, the participants were guided to develop an individual action plan to apply the lessons learnt from the training in their day-to-day transport operations to enhance their efficiency and effectiveness.

After the training, the Department of Transport and the RELATED project will provide on-the-job advisory to each individual participant to implement the action plan in their companies. In addition, a seminar after the training course will allow participants to exchange their experiences in improving the efficiency in their transport operations. Those companies that will most successfully implement their action plans will be awarded.

Mr. Vilayphanh Sayavong, Acting Director General of Department of Transport stated at his opening remark that “Both public and private sectors required to leverage their capacity and in-depth knowledge about the efficiency and effectiveness management of their transport operations, business networks in the domestic and international markets, marketing in transport market, procedure of transport business operations, etc. These will enable them to increase their business competitiveness and get prepared to collabolate and enter into competition in the AEC context which will eventually contribute to the sustainable economic development of Laos”

A second training course will be organized in Savannakhet Province from November 12th to 15th 2018.