Clothing manufacturers in Laos are encountering ongoing hurdles to survive and thrive. Shortage of skilled labor is a chronic problem. Customers want quality products and manufacturers hold little power to bargain as their costs rise while the prices received remain constant.

Laos is unable to compete due to a lack of raw materials within the country and the high transportation costs with no direct sea routes. In 2015, Laos had 92 garment factories with just 78 now remaining. Seven of these are owned by Lao businesses, seven are joint ventures and the remainder are owned by overseas interests.

The Japanese are large investors in the garment sector, followed by Thai nationals. Currently, a total of 50 factories are members of the association with 40 manufacturing exclusively for export and six catering to the domestic market as well as exports. These factories employed 26,000 people at the beginning of this year with women comprising 90 per cent of the workforce and 0.5 per cent foreigners.

Most foreign employees are in the administration and technical divisions, especially those from Thailand, Japan, China, the Philippines and Sri Lanka. Laos’ garment exports in 2016 were down by 7.25 per cent compared to 2014. The main export markets are the EU, Japan, the US and Canada.