Sustainable Rattan Production

2011

Sustainable Rattan Production Manual for Small and Medium Enterprises in Lao PDR Th i s publication f u n d e d b y : The European Union through WWF’s rattan project “Establishing a Sustainable Production System for Rattan Products in Cambodia, Laos and Vietnam”

Au t h o r : Vilasack Xayaphet

Co n s u l t a n t : Ms. Vilayvanh Saysanavongphet

Ed i t o r f o r En g l i s h l a n g u a g e : Frazer Henderson

Ed i t o r : Thibault Ledecq

Gr a p h i c d e s i g n a n d l a y o u t : Noy Promsouvanh

Ph o t o g r a p h e r : Noy Promsouvanh

Printing h o u s e : Naxay Services Sign and Printing

Co p y r i g h t : 2011- WWF/LNCCI

This publication has been produced with the financial assistance of the European Union. The contents of this publication are the sole responsibility of WWF and can in no way be taken to reflect the views of the European Union. 2011

Sustainable Rattan Production Manual for Small and Medium Enterprises in Lao PDR Note

Vientiane, 11 November 2011

Dear readers,

With the support of WWF Laos, the Lao National Chamber of Commerce has produced a manual on “ Sustainable Rattan Production for the Lao rattan SMEs” reflecting the experiences gained during the different projects on building a sustainable value chain for Lao rattan sector aiming at linking local producers with global value chains which will create new local income opportunities and employment, while simultaneously alleviating poverty and protecting natural resources.

This manual is an important reference on how Lao rattan businesses could move on to a sustainable production. All the essential elements are ex- plained from where to get sustainable rattan to export. As the world mar- ketplace changes every year, we encourage them to move forward and be part of these changes and get the benefits from that. The contact section included in this manual will help them to reach the different stakeholders to assist them. We hope that this manual will serve its readers.

For this edition, we would like to express sincere thanks to all participants for their greater contribution in supporting and editing the contents.

Sincerely yours,

Dr. Sananh Chounlamany Vice president The Lao National Chamber of Commerce and Industry

I Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR II PREFACE

This manual is based on the three years‟ experience gained by the Lao Na- tional Chamber of Commerce and Industry (LNCCI) through the implementation of the SWITCH-Asia “Establishing a Sustainable Production System for Rattan Products in Cambodia, Lao PDR, and Vietnam” project, which seeks to address the “Sustainable Rattan Industries” and aims to boost the export of sustainable rattan products from Lao PDR to the international market. The whole rattan supply chain has been studied and action taken by all key participants to add value along the chain.

The project envisions that by 2015, at least 50% of rattan processing in the region will be sustainable, leading to environmental improvements, strengthened competitiveness, poverty alleviation and national economic benefits. The LNCCI, in partnership with the World Wide Fund for Nature (WWF) and the National Agriculture and Forestry Research Institute (NA- FRI), trained villagers in the sustainable harvesting of rattan for furniture manufacture. Linking local producers with global value chains creates new local income opportunities and employment, while simultaneously alleviating poverty and protecting natural resources.

This manual marks another achievement in the second phase of the WWF project in the region. It aims to be a practical guide for small and medium enterprises (SMEs) working in the Lao rattan sector to gain a better understanding of the steps involved in engaging in sustainable production and supply, and to develop their business and strengthen their sector, while reaping financial benefit through growth and protecting the environment they work in.

I Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR II FOREWORD

Lao PDR is rich in natural resources, with a high level of animal and plant biodiversity on which rural people depend for their leaving. Rattan is a source of revenue for the Village Communities working with the rattan industry to produce rattan products as part of the value chain. SMEs engaged in moving the rattan sector towards sustainability receive support from stakeholders including the Government, LNCCI, WWF and project partners.

In this manual, LNCCI has collected information from the different stakeholders to help the Lao rattan industry move towards sustainability. The manual is divided into several parts outlining information and tools on:

1. Where and when can rattan from managed forests be accessed in PDR you be supplied with rattan from managed forests in Lao? 2. Who are the market actors in the Lao PDR rattan supply chain 3. How rattan is processed in Lao PDR 4. How to produce in a sustainable way 5. How to reach the niche market 6. Where to get funding to operate and support for production for an export market 7. How to ensure protection from competition 8. How to export

The information provided in each chapter is not exhaustive. Therefore, “contact sections” have been added to serve as a link between SMEs wishing to progress towards becoming sustainable businesses and the corresponding professional bodies.

We would like to express our sincere thanks to all participants from the private sector, governance and NGOs for their great contributions in supporting and editing the contents of this manual, and hope that it will serve its readers effectively.

III Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR IV ABBREVIATIONS AND ACRONYMS

CoC Chain of Custody CP Cleaner Production DAFO District Agriculture and Forestry Office DoC Department of Customs DoF Department of Forestry DoT Department of Taxation DPTP Department of Promotion and Trade FSC Forest Stewardship Council IPR Intellectual Property Rights LNCCI Lao National Chamber of Commerce and Industry MAF Ministry of Agriculture and Forestry MOIC Ministry of Industry and Commerce MOF Ministry of Finance VAT Value Added Tax NAFRI National Agriculture and Forestry Research Institute NTFP Non-Timber Forest Product PAFO Provincial Agriculture and Forestry Office PCCI Provincial Chamber of Commerce and Industry PMO Prime Minister’s Office SME Small and Medium Enterprise SNV Netherlands Development Organization SWOT Strengths, Weaknesses, Opportunities, Threats UNIDO United Nations Industrial Development Organization VNCPC Vietnam Cleaner Production Center WFTO World Fair Trade Organization WWF World Wide Fund for Nature

III Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR IV Contents

PART I: Where and when can rattan from managed forests be accessed in Lao PDR? ...... 2 1. Rattan supply ...... 3 1.1. Commercial species ...... 3 1.2 Location of commercial species ...... 6 1.3 Rattan supply capacity up to 2014 ...... 8 1.4 Harvesting schedule ...... 9 2. Quotas ...... 10 2.1 The proposal step ...... 11 2.2 The approval step ...... 11 3. Contact point ...... 13

PART II: Who are the market actors of the supply chain?.. 16 1. Physical flow chart ...... 17 2. Market actors ...... 18 2.1 Primary actors ...... 18 2.2 Threats and opportunities linked to primary actors ...... 19 2.3 Secondary actors ...... 20 2.4 Opportunities linked to the secondary actors ...... 22 3. Contact point ...... 23

PART III: How is rattan processed in Lao PDR? ...... 26 1. Processing steps from raw material to finished product ...... 27 2. Contact point ...... 29

PART IV: How to produce in a sustainable way ...... 32 1. What is CP? ...... 33 2. How is CP assessed? ...... 34 3. Assessment of Lao companies ...... 36 4. How will companies benefit from applying CP? ...... 40 5. Costs of establishing CP ...... 41 6. Contact point ...... 41

PART V: How to reach the niche market ...... 44 1. Design ...... 45 1.1. Values of sustainable design ...... 45 1.2. How can design benefit SMEs? ...... 46 1.3. Improving design ...... 46 1.4. Models of sustainable product design made in Lao PDR ...... 46 1.5. Contact point ...... 49 2. Pricing ...... 49 V Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR VI 2.1. Raw material pricing ...... 49 2.2. Production cost calculation ...... 49 2.3. Contact point ...... 57 3. The ability to develop ...... 58 4. Trade fairs ...... 58 4.1. What is trade fair? ...... 58 4.2. Why a trade fair? ...... 58 4.3. What are the benefits to trade fair participants? ...... 58 4.4. Conditions of attending a trade fair ...... 59 4.5. Formal costs of trade fair participation ...... 59 4.6. Documents needed to apply for participation in a trade fair at LNCCI... 59 4.7. Exhibitions in 2012 ...... 60 4.8. Contact point ...... 62 5. Certification ...... 62 5.1. Logo ...... 63 5.2. Why FSC? ...... 63 5.3. The 10 principles of the FSC standard ...... 64 5.4. Lao Forest Certification ...... 67 5.5. How will SMEs applying for FSC Certification benefit? ...... 68 5.6. Contact point ...... 68 6. Chain of Custody ...... 68 6.1. What is CoC? ...... 69 6.2. What are the CoC requirements? ...... 69 6.3. The six steps of the CoC system ...... 70 6.4. Certification and cost ...... 72 6.5. Contact point ...... 72 7. Fair Trade ...... 72 7.1. What is Fair Trade? ...... 72 7.2. Fair Trade logo ...... 73 7.3. Fair Trade and Rattan Industry ...... 73 7.4. Fair Trade certification benefits ...... 73 7.5. Contact point ...... 73 8. Analysis of Strengths, Weaknesses, Opportunities, Threats 74 8.1. What are the objectives of the Lao rattan industry? ...... 74 8.2. What are the goals of the Lao rattan industry? ...... 75 8.3. What will the Lao rattan strategy be over the coming years? ...... 75 8.4. What will the Lao rattan action plan be? ...... 76 8.5. What controls will there be? ...... 76 8.6. Contact point ...... 76

PART VI: Where to get funding to operate and support for producing for an export market ...... 78 1. Services at different banks ...... 79

V Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR VI 2. Microfinance ...... 80

PART VII: How to ensure protection from competition ..... 82 1. What are Intellectual Property Rights? ...... 83 2. IPR law in Lao PDR ...... 83 3. Copyright ...... 84 4. Petty patent and design ...... 85 5. Requirements for obtaining a registration certificate, and fees ...... 86 6. Contact point ...... 88

PARTVIII: How to export ...... 90 1. Information Center ...... 92 2. Taxation ...... 92 3. Value Added Tax ...... 96 4. Customs Duties ...... 97 4.1 Contact Point ...... 99 5. Administrative steps for export ...... 100 5.1. Leaving Lao PDR ...... 100 5.2. On arrival ...... 112 5.3. The process of obtaining a permit certificate and Form A ...... 112 5.4. Customs Declaration ...... 113 6. Container pricing ...... 114 7. Contact point ...... 115

VII Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR VIII INTRODUCTION

Indochina (Lao PDR, Vietnam and Cambodia), together with neighboring China and Thailand, is one of the fastest growing economic regions in the world. This rapid expansion is driving demand for natural resources at a level that far outstrips efforts to ensure sustainability. The rural poor are often most heavily affected by consequent pollution and the continued degradation of the natural resource base on which they rely. There is an urgent need to develop models of sustainable production that can support continued growth while benefiting rural communities. This is particularly the case in Lao PDR, which is a characteristic „Least Developed Country‟ with an economy and industrial sector that are underdeveloped and largely dependent on the extensive use of natural resources.

Rattan comes from the Palmae family that represents one of the main Non- Timber Forest Products (NTFP). In the forest rattan can grow up to 100 metres in height.

In all three countries, SMEs such as rattan producers and processors are engines of economic growth. They play a crucial role in poverty alleviation as they are scattered throughout rural areas and provide considerable employment in the area of rattan production.

There is a niche market for the Lao rattan industry outside the country, but its potential has not yet been reached. Working on sustainability will have a great impact on the industry and give it an opportunity to break through to the export market.

In Lao PDR, the rattan industry has great potential, as the resource is still available, unlike in neighboring countries, and this can support its development. Not only is rattan available, but there is also a rich diversity of commercial species. More than 32 rattan species have been identified, 13 of which are rated as the highest quality species for commercial use. Rattan is harvested across the country, providing employment and reducing poverty in rural areas.

The Lao rattan industry has also received support from the Government to promote rattan certification in order to build a name for Lao rattan and to assist the industry to sell its products, which have been made from local sustainable raw materials using local labor. The project was piloted by WWF in order to establish activities to achieve Forestry Stewardship Council-Chain of Custody (FSC-CoC) certification for rattan by 2010/2011. This is the key to gaining access to bigger and higher value markets, in VII Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR VIII which there is always demand for products made by companies sourcing rattan from certified forests.

Along with this project, initiatives to inter-crop rattan with tree plantation started in 2009. Since 2010, the rattan industry has been working on forest management. The aims are to make harvesting and the supply chain sustainable, to create clean production and to access the international market by reaching standards of production that achieve internationally recognized certification. In 2011, the first worldwide FSC-CoC rattan production export was achieved by a Lao manufacturer, supplying COOP in Switzerland. This is the start of future commercial links with international markets that will benefit the Lao rattan industry.

However, despite this favorable environment, the rattan industry faces con- straints, including a lack of infrastructure to link with rural rattan harvesting areas. Infrastructure development policies essentially cover cities and the main North-South axes. Since Lao PDR has no access to the sea, rattan exporters have to use Vietnamese and Thai sea ports, and faces high transportation costs. This is a major concern as it adversely affects product pricing, which can reduce competitiveness.

In addition, access to financial services is limited. Private banks are emerg- ing that offer SMEs access to loans, but rates of interest are high.

Because it has not yet developed links with the international market, the current market for the Lao rattan industry is local and there is very little export. Adaptation to the international market would stimulate processing, manufacturing standards, capacity and customer service.

IX Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR IX Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR

PAR T I

Part I:

Wh e r e a n d w h e n c a n r a t t a n f r o m m a n a g e d f o r e s t s b e a c c e s s e d in La o PDR?

With the support of WWF and NAFRI, the Ministry of Agriculture and Forest of Lao PDR has put in place a control on rattan availability. Those parts of the Lao rattan industry that want to be supplied with rattan from sustainable sources can now have it. This section details the different commercial species available from sustainable sources in Lao PDR, the location of the rattan gatherers and supply capacity, including the harvesting schedule and the process of obtaining a request for harvesting (a “quota”). 1. RATTAN SUPPLY CHAIN 1.1. Commercial Species:

In Lao PDR, 32 rattan species have been recorded, of which approximately nine (Calamus poilanei, C.viminalis, C.rudentum, C.gracilis, C.solitarius, C.tetradactylus, C.palustris, C.laoensis and Daemonorops jenkinsiana) are commonly processed by local rattan factories. Rattan is a climber from the palm family and a valuable Non-Timber Forest Product (NTFP) that is available in forests throughout the Greater Mekong region. Its stems are used for a variety of purposes, including food, shelter and furniture making. Village communities in Lao PDR rely heavily on the rattan trade, with sales accounting for up to 50% of cash income in some rural areas. More than 90% of rattan processed in Lao PDR originates from natural forests and it is being depleted at an unsustainable rate. This overexploitation reduces an important source of income from NTFP for local people, and decreases incentives to protect forests from conversion to other unsustainable land use.

Eleven of the known or suspected commercially important species are listed in Figures 1 to 3. These species are available in three managed areas located in central, northern and southern Lao PDR. They have been selected for their quality and usefulness, and they are the most used in the manufacturing process.

Figure 1: Rattan species of known or suspected commercial importance in central Lao PDR No Scientific Local names Uses names Handicrafts Trade Shoot

1 Calamus Wai thoon, blong thoon, Very high The most Edible poilanei gaparl, probably also quality valuable wai khom, blong chang cane being traded in Lao PDR

2 Calamus Wai boun, boun, High quality Suitable Edible. Fruit rudentum probably also wai sometimes sold tabong, boun dam, for food boun khao

3 Calamus Wai hom, wai soum, High quality One of the Edible gracilis wai tairtair preferred species in Lao PDR

4 Calamus Wai thork, wai yong, High quality One of the Edible but very Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 3 solitarius wai hakyong, wai preferred small 4 savang species in Lao PDR

5 Calamus Wai hangnou, wai Suitable, One of the Unknown tetradactylus hangnou nyai, wai high quality preferred savang, kaceck species in doikanair, revpeu Vietnam

6 Calamus Wai hangnou, wai Good quality One of Edible palustris namleuang, wai khairt, preferred wai kiyow, wai hom, species in wai namhang, wai Lao PDR tiukeng, wai savang, wai sard, wai kanebouang, re tair

7 Calamus Wai khom, wai nam, Suitable Suitable Edible siamensis wai deng, yo, re dark

8 Calamus Wai leum, wai katok, Suitable Not Edible (some laoensis wai wa, wai keyomee preferred, say it is too but can be bitter to eat sold and

9 Calamus Wai ngair Suitable Suitable Edible, large tenuis and delicious.

Pretty seeds

10 Calamus Wai nokor, Wai lai, Wai High quality Suitable Edible wailong namhang, Wai namleuang, Kloung, Kateangkordai No Scientific Local names Uses names Handicrafts Trade Shoot

1 Calamus Wai thoon, blong thoon, Very high The most Edible poilanei gaparl, probably also quality valuable wai khom, blong chang cane being traded in Lao PDR

2 Calamus Wai boun, boun, High quality Suitable Edible. Fruit rudentum probably also wai sometimes sold tabong, boun dam, for food boun khao

3 Calamus Wai hom, wai soum, High quality One of the Edible gracilis wai tairtair preferred species in PAR T I Lao PDR

4 Calamus Wai thork, wai yong, High quality One of the Edible but very solitarius wai hakyong, wai preferred small savang species in Lao PDR

5 Calamus Wai hangnou, wai Suitable, One of the Unknown tetradactylus hangnou nyai, wai high quality preferred savang, kaceck species in doikanair, revpeu Vietnam

7 Calamus Wai khom, wai nam, Suitable Suitable Edible siamensis wai deng, yo, re dark

8 Calamus Wai leum, wai katok, Suitable Not Edible (some laoensis wai wa, wai keyomee preferred, say it is too but can be bitter to eat sold and

9 Calamus Wai ngair Suitable Suitable Edible, large tenuis and delicious.

Pretty seeds

10 Calamus Wai nokor, Wai lai, Wai High quality Suitable Edible wailong namhang, Wai namleuang, Kloung, Kateangkordai 11 Daemonorops Boun, boun faat, wai Suitable Suitable Edible, large jenkinsiana boun, wai boun faat, and delicious. wai faat, wai keedeng, Pretty seeds wai kwa, wai seui, exported, blong chik. Re ya, leaves used as kateng parua, khamay thatch ! Figure 2: Rattan species of known or suspected commercial importance in southern No Scientific Local names Uses names Handicrafts Trade Shoot

1 Korthalsia Wai taluck High quality One of the Edible laciniosa preferred species in Lao PDR

2 Plectocomiopsis Wai dang, Wai kamlao High quality One of the Edible geniniflora preferred species in Lao PDR 3 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable3 Calamus Rattan Production - ManualWai fortabong Small and Medium Enterprises in LaoHigh PDR quality One of the Edible4 rudentum preferred species in Lao PDR

4 Calamus Wai savang High quality One of the Edible tetradactylus preferred species in Lao PDR

5 Calamus palustris Wai hangnou, wai Good quality One of preferred Edible namleuang, wai khairt, wai species in Lao kiyow, wai hom, wai namhang, wai tiukeng, wai savang, wai sard, wai kanebouang, re tair ! No Scientific Local names Uses names Handicrafts Trade Shoot

1 Korthalsia Wai taluck High quality One of the Edible laciniosa preferred species in Lao PDR

2 Plectocomiopsis Wai dang, Wai kamlao High quality One of the Edible geniniflora preferred species in Lao PDR

3 Calamus Wai tabong High quality One of the Edible rudentum preferred species in Lao PDR

4 Calamus Wai savang High quality One of the Edible tetradactylus preferred species in Lao PDR

5 Calamus palustris Wai hangnou, wai Good quality One of preferred Edible namleuang, wai khairt, wai species in Lao kiyow, wai hom, wai namhang, wai tiukeng, wai savang, wai sard, wai kanebouang, re tair ! Figure 3: Rattan species known or suspected commercially importance in northern Lao PDR

No Scientific Local names Uses names Handicrafts Trade Shoot

1 Calamus Wai hom , blong eure High quality Suitable Edible acanthospathus

2 Calamus Wai lao, Wai mon, Suitable Suitable Edible flagellum Wai namleuang, Wai toon, Blong pool

3 Calamus gracilis Wai hom, wai soum, High quality One of the Edible wai tairtair preferred species in Lao

4 Calamus Wai waan, Boun Suitable Suitable Edible but rhabdocladus waan, Blong slai, Wai sweet boun yong

5 Calamus Wai nouane, Wai High quality One of Edible nambariensis niew, Wai nokor, Wai preferred namleuang, Ka teang species in blor Lao

6 Calamus Wai namleuang, Wai High quality Suitable Edible platyacanthus leuang

7 Calamus wailong Wai nokor, Wai lai, High quality Suitable Edible Wai namhang, Wai namleuang, Kloung, Kateangkordai

8 Daemonorops Boun, boun faat, wai Suitable Suitable Edible, large jenkinsiana boun, wai boun faat, and delicious. wai faat, wai Pretty seeds keedeng, wai kwa, exported, wai seui, blong chik. leaves used as Re ya, kateng parua, thatch khamay 5! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 6 PAR T I 1.2. Location of the Commercial Species

Figures 4 to 6 below show where these species can be found as part of wild rattan management in Lao PDR, the 40 villages working with the sustainable project (utilizing a skilled, rural handicraft production and weaving labor force that can work with the rattan manufacturers), and the wild rattan harvesting figures from 2010 to 2014 from managed forests. The figures give a general idea of the potential to respond to future requirements for rattan.

Figure 4: Map of the sustainable wild rattan management

Bolikhan District Bolikhamxay Province

Viengthong District Bolikhamxay Province

Pakkading District Bolikhamxay Province

Khamkeut District Bolikhamxay Province

Feung District Vientiane Province

Thateng District Xekong Province

Lamam District Xekong Province

Project site (Phase II) National Boundary Provincial Boundary

5 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 6 Figure 5. List of villages working with Rattan Group of Handicraft Membership and weaving skill labor force potential

Rattan Group Member Weaving Skill Labor No Name of Village of Handicraft force Potential

I. Vientiane Province

Feung District

1 Nakang 9 3

2 Namai 14 5

3 Phonxay 11 5

II. Borlikhamxay Province

Pakading District

4 Heuyluk 19 6

5 Paksoun 20 11

6 Napong 16 7

Borlikhan District

7 Phonemixay 24 8

8 Khanyong 15 7

9 Phonesoung 5 5

10 Wa 6 6

11 Kokpho 28 12

12 Nakoun 17 10

13 Xiengleu 57 17

14 Xiengxien 26 9

Vienthong District

15 Thapouvieng 6 2

16 Namtong 9 3

17 Natho 12 3

18 Konetao 8 2

Khamkert District 7 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 8 19 Phonetong 29 5 PAR T I

Khamkert District 19 Phonetong 29 5 20 Sobpouan 29 5 21 Donesard 26 7 22 Boungpatao 21 15 23 Thaveng 42 19 24 Namthee 10 2 25 Phonexay 18 5 26 Kuanchan 31 19 27 Thongviengkham 15 7 28 Nachalay 16 2 29 Xamteuy 15 2 30 Nahard 0 0 31 Hangna 11 2 III. Sekong Province

Lamam District 32 TaNeum 29 11 33 TaPourk 17 5 34 Lavinoy 13 9 35 Xenoy 12 6 Thateang District

36 Nongkan 16 5 37 Thongwai 10 4 38 Paleang Neua 12 6 39 PaleangTai 10 3 40 Korhouaphou 11 5 ! 1.3. Rattan supply capacity up to 2014

The table below summarizes sustainable rattan harvesting capacity. The calculations are based on inventory. Sustainable management becomes possible when the quantity of rattan growing has been surveyed, making harvest- In the middle of 2011, rattan ing plans more accurate, and ensuring that the forest in four villages of Kham- villagers can still harvest rattan cane for the keut District, Bolikhamxay Province received the world’s next five years. This approach been developed first FSC certified rattan. The by NAFRI, DoF and WWF. The table has been certified area is 1142 ha based on an existing survey, but NAFRI/ DoF and WWF will continue to work on expanding the managed area to secure a bigger volume of sustainable raw rattan materials for Forest Stewardship Council (FSC) certification. 7 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 8

ton) ( 36.63 27.00 517.17 Weight

April,

2014 Cane 7,595.00 16,903.00 133,837.39

(ton) 59.03 45.00 354.63

Weight

2013 Cane 93,888.71 22,106.60 13,194.00

3 (ton) 350.53 103.3 149.00 Weight

2012 ! Cane ! 88,884.42 39,637.00 37,316.00

7&2 ! !

! (ton) 55.39 55.39 514.60 ! Weight 456 ! !

20% rattan harvesting Plan for 5 years

! 2011 ! Cane 123 ! ! ! 20,292.00 20,292.00 165,615.15

! 0&+ ! ! ! (ton) 42.09 42.09 383.67 Weight

*-/ ! ! ! 2010 Cane ! "-. ! ! ! 14,835.80 14,835.80 110,222.48

! "-$ ! ! ! Area (ha) 97,537.59 14,077.00 14,077.00 ! (#, ! ! Total forest ! ! !

*+) ! !

! Forest ! ! Rattan (#) ! ! 8,300.00 8,300.00 41,621.00 ! Sustainable Management ! ! %&' ! ! !

! "#$ ! ! (ha) + 603.40 603.40 Rattan 3,629.00 + management area

No Xekong Province Province Province Vientiane ! ! !"#$%&'()*+,%#(-.+ /0-'"+,#-1%&& while the cutting permit (quota) allocation process runs from February to October (for a maximum of nine months and a minimum of three months). igure 6. Wild rattan harvesting, 2010 to 2014 from forest management in three provinces management in three forest rattan harvesting, 2010 to 2014 from Wild 6. F igure schedule 1.4. Harvesting The sustainable forest areas are opened to harvesting once a year for six months from November the end of 7: H arvesting and quota period F igure Bolikhamxay ! 9 ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 10 PAR T I 2. The Quota

Since the Government started to implement control policies on rattan forest management in 1999, harvesting has required a quota document (rattan cutting permit) from the Ministry of Agriculture and Forestry (MAF). Village communities in charge of sustainable rattan areas cannot harvest to supply the rattan industry if they do not have the prior approval of the Ministry and provincial authority. The quota document is essential for rattan harvesters.

The quota document is processed through a hierarchy of five principal authorities from the Village Communities to the District Agriculture and For- estry Office (DAFO), the Provincial Agriculture and Forestry Office (PAFO), DoF and MAF. This process (the “proposal step”, see Figures 8 and 9) involves obtaining approval for the quota from the relevant authorities, and is followed by a second process (the “approval step”, see Figures 10 and 11) to obtain approval for harvesting at the provincial level, PAFO, DoF and Village Communities.

When submitting a proposal, it is important that all relevant documents are completely ready and accurate to avoid possible delay.

During the process, each authority issues a letter of approval, enabling the next step to betaken.

To ensure the acceptance of the quota and to minimize risk, it is highly recommended that businesses and Village Communities applying for a quota strictly follow every step in the correct order.

2.1. The proposal step Figure 8: Request steps to the ministerial level

As shown in the over- view flow chart below, MAF there are five steps in the process of obtaining DoF authorization. Fees will not be collected during PAFO this process but at the provincial level during the approval process. DAFO They are also important as they legalize the Village Communities harvest. 9 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 10 FigureProce 9: Ddetailsures: of the request processDetailed Approximate Fee Procedures: Detailed AppTimingroximate Fee (Example)Timing (Example) Step 1: Village The business entrepreneur 25 February Nil StepCommunities 1: Village The(Manufacturer, business entrepreneur village trader, or 25 February Nil middlemen) cooperates with Village Communities (Manufacturer, village trader, or middlemen)Communities cooperates to prepare witha propos Villageed

Communitiesharvesting plan to toprepare submit a to propos DAFO.ed harvestingThe necessary plan documentsto submit to at DAFO. this Thelevel necessary are: documents at this 1. Rattanlevel are harvesting: plan 2.1. RequirementRattan harvesting letter plan 2. Requirement letter

Step 2: District Level After DAFO receives the rattan 25 March Nil Step(DAFO) 2: District Level Afterharvesting DAFO plan receives from the Villagerattan 25 March Nil Communities, it has the right to (DAFO) harvesting plan from the Village Communities,summarize all itsubmitted has the right to

summarizedocumentation all submitted and passe s the documentationproposal to PAFO and. passes the proposal to PAFO. Step 3: Provincial level PAFO revises all summarized 25 June Nil Step(PAFO) 3: Provincial level PAFOdocument revisess and all then summarize deliversd the 25 June Nil proposal to DoF. (PAFO) documents and then delivers the proposal to DoF.

Step 4: Departmental DOF has a duty to summarize all 25 Sept Nil Steplevel 4:(DoF) Department al DOFrevised has documentat a duty to summarizeion and then all 25 Sept Nil level (DoF) revisedsubmits documentatthe proposalion to andMAF then. submits the proposal to MAF. Step 5: Ministerial After MAF has checked all revised 25 Oct Nil Steplevel 5:(MAF) Ministerial Afterdocumentation MAF has ,check the proposed all alrevised goes 25 Oct Nil to the Government for final level (MAF) documentation, the proposal goes toapproval. the Government The final quotafor final approval

approval.for the whole The country final quota will beapproval forapproved the whole by agreecountryment will by be the apNationalproved Ass by eagreembly.m ent by the ! National Assembly. ! 2.2. The approval step

Once MAF has approved the quota, harvesting approval can be processed at provincial level through PAFO and DAFO.

Once a Village Community has been informed of the approval of the quota at ministerial level, it can make a contract of purchase-sales with the busi- 11 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 12 PAR T I

ness entrepreneur. With the quota, contract and rattan harvesting plan documents processed, the business entrepreneur goes to the provincial authority to ask permission to harvest: this is the ‘approval step’.

When it has received harvesting certification, the Village Community can begin harvesting for the business entrepreneur, the holder of the quota.

Figure 10: Approval step at the provincial level

PAFO

DAFO Village Communities

Figure 11: Details of the approval process

Procedures Detailed Approximate Fee Timing

Step 1: Village The business entrepreneur makes a 2 days Nil Communities contract with Village Communities. The necessary documents at this

level are: 1. Rattan harvesting plan 2. Quota

Step 2: Provincial The business entrepreneur submits 2 days 1. Forest plantation fees (in level (PAFO) the contract made with the Village 2011): 1,000,000 LAK for Communities to PAFO, which will 10,000 canes. Price will vary issue a contract (“Bai San Gna according to the quantity. It is Phourk Phanh”) stipulating the estimated at 100 kip/cane. necessity to respect the harvesting 2. 200,000 LAK for the approval regulations and quantity submitted. 3. Fees for using Public Forest Resource to the provincial department of Industry and Commerce: 42,000 LAK for the application form and 400,000 LAK for the fees

Step 3: District The business entrepreneur goes to 1 day 4. Certification administration Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 11 level (DAFO) DAFO for a certificate for harvesting. fees: 200,000 LAK 12 5. Fees for using the Natural Resource: 300 KIP/cane. Every year price is revised.

Step 4: Village The business entrepreneur goes to 1 day Nil Communities the Village Communities with all the level documents approved and harvesting begins.

! Step 3: District The business entrepreneur goes to 1 day 1. Certification administration level (DAFO) DAFO for a certificate for harvesting. fees: 200,000 LAK 2. Fees for using the Natural Resource: 300 KIP/cane. Every year price is revised.

Step 4: Village The business entrepreneur goes to 1 day Nil Communities the Village Communities with all the level documents approved and harvesting begins.

! 3. Contact point

For more information please contact:

Ministry of Agriculture and Forest Department of Forestry

Mr. Phomma Pathoummavong Email: [email protected]

PO Box 6238, Vientiane, Phone: +856 21 215002 /+865 21 219561 Fax : +856 21 215723

Forest Research Center, National Agriculture and Forestry Research Institute

Mr. Bansa Thammavong Mobile: +856 20 22208283 Email: [email protected]

Mobile: +856 20 54333347 Mr. Bounchanh Mekaloun Email: [email protected]

13 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR PAR T I

13 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR

PART II

t h e

o f

k e y

t h e

a c t o r s c h a i n

a r e

II: II: ART h o ppl s u W m a r k e t P In Lao PDR, there are several ‘primary’ and ‘secondary’ actors involved and ‘secondary’ In Lao PDR, there are several ‘primary’ in the rattan supply chain. 1. Physical flow chart

The physical flow chart (see Figure 12) shows the links between the different actors involved in the rattan supply chain of the managed forest and other areas of Lao PDR.

The market actors in the legal supply of rattan from managed forests are villagers, Village Communities, middlemen, rattan furniture and handicraft manufacturers and product designers.

The rattan is gathered by the villagers under the direction and supervision of the Village Communities for middlemen (provincial traders) or manufacturers, or product designers holding a quota. Middlemen will resell the rattan to the manufacturers who will process the raw rattan and stock it for their own production purposes, and resell some to neighboring countries or to product designers.

In other areas, the actors are the local villagers, middlemen and furniture and handicraft manufacturers and product designers. They villagers may provide a door-to-door service, sometimes delivering the rattan directly to the manufacturers and designers, bypassing the need for a quota, and price is often cheaper.

Figure 12: Physical flow chart for rattan supply chain in Lao PDR

International final Domestic final Regional final consumer market consumer market consumer market

International rattan wholesalers (buyers of finished products) Retailers (showroom)

Rattan furniture and handicrafts Neighbouring manufacturer manufacturers/product designers (buyers of raw rattan)

Middlemen

Village communities Directly Villagers who Indirectly are not involved in the FM Forest managers (villagers)

17 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 18 2. Market sector

The ‘primary’ and ‘secondary’ actors involved in the rattan supply chain are described broadly in section 2.1, which draws on the results of an assessment of the threats and opportunities linked to each group and the way they PAR T II are linked along the chain 2.1. Primary actors

Villagers: Villagers look after the managed forest, plant and harvest the rattan where plantation projects have been set up, and gather the rattan for potential buyers through the Village Communities in the sustainable forest areas.

Village Communities: Each village has a Village Community; the rattan harvesting monitoring and control body. Harvesting follows the rules of the Village Communities composed by: the chief of the group; the vice chief; the control committee; and finance control (which collects the fees paid by the members participating in the harvest for the group). The number of harvesters will depend of the size of the villages, and could be from 4 to 20 people.

Middlemen: There are three types of “middleman”: a villager acting as a trader (illegally); a staff member of a manufacturer; or a manufacturer. The middlemen buy the harvested rattan from managed and non-managed areas. They must have quota certification before harvesting (see quota section).

Furniture and handicraft manufacturers and product designers: These are rattan furniture and handicraft manufacturer/exporters, and product designers running small shops. They transform raw rattan into a finished product for local sales and/or export.

Retailers: These are buyers of finished products to sell in their shops or showrooms. Manufacturers as retailers have their own showrooms. Of all actors in the value chain, they are the main exporters.

Final consumers: these are local people, tourists and international company buyers catering to the foreign market.

17 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 18 2.2. Threats and opportunities linked to primary actors

Figure 13 shows the threats and opportunities linked to the interactive relationship between primary actors along the chain from the most to less enumerate.

Figure 13: Threats and opportunities for primary actors along the chain International final Domestic final Regional final consumer market consumer market consumer market

International rattan wholesalers (buyers of finished products) Retailers (showroom) O5+O6 O3 T2, O2 Rattan furniture and handicrafts Neighbouring manufacturer manufacturers/product designers (buyers of raw rattan) O1 Middlemen O4 O7 T3 Village communities Directly Villagers who T1 Indirectly are not involved in the FM Forest managers (villagers)

Threats: • T1. Villagers with limited skills and experience in business and the sustainable use of natural resources • T2. Limited knowledge/skills of business owners • T3. Limited skills/knowledge related to product design in private sector

Opportunities: • O1. Increase the number of rattan SMEs in Lao PDR for more local added value • O2. Increase the quantity and quality of rattan merchandise to be produced by the private sector • O3. Create a domestic market for the private sector • O4. Strengthen direct market links between SMEs and villagers • O5. Increase participation of existing rattan SMEs to enable more inter- action to increase production and satisfy client demand • O6. Create a long-term market link between the SME and the interna- 19 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 20 tional market • O7. Create awareness among business owners of sustainable production

2.3. Secondary actors PAR T II

The rattan sector involves a group of secondary actors who support and supervise the commodity chain. In Lao PDR, these are: • Donor: EU • WWF • Consultants • Government • DoF, MAF • Department of Promotion and Trade (DPTP) of Ministry of Industry and Commerce (MoIC) in Vientiane • Import-export Department of MoIC in Vientiane • Customs Department of Ministry of Finance (MoF) • Rattan Business Association • Provincial Chambers of Commerce and industry • Agriculture Department (PAFO – Provincial level) • Agriculture Service (DAFO – District level) • District authorities

Figure 14 details the relationship between financial and service exchange. These are: • EU supports WWF and WWF supports LNCCI. LNCCI supports all activities financially. • LNCCI, together with PCCI, PAFO, DPTP and District authorities, provides service to Village Communities. • LNCCI and Government provide legislation, market information and technical skills to manufacturers (service to domestic and foreign market). • Department concerned provides the quota to manufacturers and Vil- lage Communities, or sometimes manufacturer directly to Village communities.

19 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 20 Figure 14: Financial and service support exchange within the institutional framework

Legend: The weight of the line reflects the intensity of the relationship. Financial relationship Provision of service

Domestic and International Govt. WWF Market

LNCCI Manufacturers

District Provincial Authorities + CCI Govt. Office

Village Middlemen Community

Figure 15 shows below the relationship between hierarchy and cooperation in the chain, including the: • Specific responsibility of each organisation. • Clear structure of line ministries and departments. • Clear hierarchy and cooperation within each department. • Numerous steps regarding the cooperative link between governmental departments and other stakeholders

21 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 22 Figure 15: Relationship between hierarchy and cooperation

Legend: The weight of the line reflects the strength of the cooperation. Hierarchy

Cooperation PAR T II

Import Dept. MoIC

DAFO MAF

EU PMO WWF LNCCI Dept.

Business PCCI PAO Association

Village Group Community

2.4. Opportunities linked to the secondary actors

Opportunities have been identified for LNCCI to act as the center of coordination between the secondary and secondary actors. These are: • LNCCI can provide skills to manufacturers through donors • LNCCI can support manufacturers’ skills by coordination with other donors • Improve coordination and processes at provincial level to save time taken to process paperwork, to make the process easier (as it currently requires many steps), and clearer through communication and services

21 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 22 3. Contact point

For more information please contact:

Lao National Chamber of Commerce and Industry Kaisone phomvihanh Avn, Saysettha District, Vientiane capital, Lao PDR

Tel: 85621 453312 Fax: 85621 452580

Mr. Vilasack Xayaphet Email: [email protected] Website: www.laocci.com

23 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR PAR T II

23 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR

PART III

PDR? a o L

r a t t a n

t h e

III: ART o r o c e s s e d

H p P The Lao Rattan industry in Lao PDR is small and new compared to The Lao Rattan industry in Lao PDR of Lao Rattan Companies” those in neighboring countries. The “Group manufacturers. Not all manufac- consists of six furniture and handicraft process, and their operations differ turers carry out a complete production process through five in size. This section details the entire manufacturing finished product (see Figures 16 important steps, from raw material to and 17). 1. Processing steps from raw material to finished product details

In general, the raw natural rattan canes are transported to the company storage facility for further processing. Then they are boiled in diesel oil to extract gum and other material. This protects the rattan from fungi and insects, makes it flexible for the production process and extends product shelf life. The boiled rattan is dried under the sun. After drying, it can be stored or taken for further processing, including peeling, splitting and node cutting. The rattan can be bent by heating it in a firewood-fueled steam generator. All of these processes are suited to large rattan canes (Calamus poilanei). Smaller canes, which are used for seating, for example, are split and woven by hand. For products requiring smooth surfaces, the rattan is sanded. Finally, surface treatment with chemicals or varnish is carried out to make the final products more beautiful and hard wearing. A rough production chart is shown below:

Figure 16: Steps of rattan processing Raw rattan

Boiling

Drying

Peeling/splitting

Framing/weaving

Painting

Finished product

27 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 28 PART III

. to a 28 in

t sier s

a . hand

skills. impart is soft and as

ling i it and week such as it for each with arms s,

after : boiled in a boiled in a s 2 es or split. pared for pared to splitting e ed , and to 1 or furniture according to each a mixture of rattan

peel for s required hand aving, but this is done ed , armchair e ifferent size

a smooth surface, is s After boiling After boiling sun d using traditional

peeled rattan

to tan make the required length and ben obtain , chair ion. to t

and to reduce material loss s , he cane stems the shape smoothness of stems to split for w ed cut and siz

to the ed

table the from large

and bundled up before bo and bundled from t

to be from insects, the rattan is from insects,

soak and as ing cut y

are not straight, so after drying are not straight, so after for 45 minutes.

in a machine

dirt,

furniture making. dirt dried under canes are selected and pre are selected canes is rattan such weaving is split normally soaked in water to make ( nly done by workers improve is still hot , an is bent into diesel canes is from fungal infec processes. Assembl it is : e the Bending Weaving Straighten Peeling Rattan Rattan Oil boiling Sun drying with also needs : : : : : Sanding : Splitting : hand The rattan is It attan required in effect to remove to remove The rattan is while it so . for , these ) , the ratt ed type of furniture is assembled from ing preserv form attan ach Weaving is mai R product, and flexible for easy weaving. Process 10 E Small diameter, rounded rattan is needed f Small diameter, rounded rattan is needed making needed. by hand. Process 8 For furniture production drying kind of product or legs its Process 9 Process 4 Natural r to make other process straightening is required peeling and splitting possible during Process 5 After drying and straightening, rat Process 6 The peeled rattan is s which is Process 7 Process 1: Process wash Process 2: To tank filled cleaned to remove polish protect them Process 3 The boiled rattan

Drying Boiling Raw rattan Raw Peeling/Splitting Framing/Weaving

Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan igure 17: Processing steps steps 17: Processing Figure Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 27 Framing/Weaving Process 8: Bending For furniture production from large peeled rattan: after drying, the rattan is bent into the shapes required for each kind of product (such as tables, chairs, armchairs with arms or legs). The rattan is cut to the required length and bent into its form while it is still hot. Process 9: Weaving Weaving is mainly done by workers using traditional skills. Rattan for hand weaving is cut and sized according to each product, and is normally soaked in water to make it soft and flexible for easy weaving. Process 10: Assembly Each type of furniture is assembled from a mixture of rattan materials, such as large bent canes for arms and legs, and split small canes for woven seats.

Painting Process 11: Bleaching Some finished products are bleached according to taste and customer demand. Process 12: Painting or finishing Paint, such as thinner, is usually used to make products smooth to the touch.

Final products The final product is ready to be sold

2. Contact point

Cleaner Production Center of Laos, Department of Industry, Ministry of Industry and Commerce

Ban Thongphanthong, Sisattanak District, Vientiane Capital, Lao PDR

Tel: 85621 454100-1 Fax: 85621 454101

Contact persons: Dr. P. K. Gupta, Chief of Technical Advisor. Email: [email protected]

Mr. Virasack Chundara National Project Coordinator Email: [email protected]; [email protected]

Mr. Thongphet Phonsavath, Deputy Project Coordinator Email: [email protected]

29 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR PART III Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 29 Turn the rattan wastes into valued products PART IV “

? in

a y w

e l r o d u c e

much more! p

t o

IV: ART More profit, less waste, and More profit, less waste, o s u s t a i n a b CLEANER PRODUCTION... CLEANER PRODUCTION...

H a P (Sourced by: UNEP-DTIE)

SLOGAN: “ The unsustainable harvesting of rattan is a significant issue, and its deple- tion leads to forest degradation. Up to 55% of the harvest is wasted along the supply chain, and highly toxic substances causing air, water and soil pollution and health issues for workers are used in the production process. Non-registered rattan traders can undercut legitimate traders, and over 90% of finished rattan products currently produced in Lao PDR do not meet required product quality standards and lack proper licenses.

Supply chain management has to be optimized and Cleaner Production (CP) techniques and technologies must be introduced at the pre-processing level and at rattan processing SMEs, thereby reducing pollution and mitigating the negative impact on workers and the population living around processing facilities.

CP activities in Lao PDR were launched in 2005 with the support of the United Nations Industrial Development Organization (UNIDO). CP assists companies to meet both environmental and trade-related challenges by reducing resource consumption, waste and pollution, and by switching to less hazardous materials and increasing worker productivity. It allows enterprises to be more efficient, cost-effective and competitive while simultaneously reducing their environmental impact and benefiting society.

SLOGAN: “CLEANER PRODUCTION... More profit, less waste, and much more!”

(Sourced by: UNEP-DTIE)

CP project activities started in 2010 in two phases, supported by WWF and the LNCCI with the technical expertise of the Vietnam Cleaner Production Centre (VNCPC). Upon the completion of the project, the manufacturers are skilled and able to apply a CP approach. 1. What is CP?

CP is the continuous application of an integrated, preventive environmental strategy to process products and services in order to increase eco-efficiency and reduce risks to people and the environment.

During production: CP involves conserving raw materials and energy; eliminating the use of toxic raw materials; reducing the quantity and toxicity of all emissions and waste; and reducing negative impacts along the life cycle of a product, from the extraction of raw materials to their ultimate

33 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 34 PART IV -

34 - - - ? w is CP assessed Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan By analysing the flow of materials and energy used, a manufacturing CP By analysing the flow of materials is If the application of CP assessments will be conducted every year. CP certification is maintained CP maintained and meets quality requirements, ness planning with processing to reduce the cost of production. It is suit cost of production. to reduce the with processing ness planning activities. of all scales, from household to industrial able for enterprises main actor in this area. merce, which is the team (themselves by a Lao CP team, with technical support and training [VNCPC]) tries to iden Cleaner Production Centre trained by the Vietnam to minimize waste and emissions from tify the sources of waste and options reduction strategies. Improvements in industrial processes, through source reduce or bring to light better choices organization and technology help to waste water which reduce waste and in the use of materials and energy, There are six steps heat and noise. generation, gaseous emissions, waste 19): assessment (see Figures 18 and in implementing a CP CP assessment focuses on identifying manufacturing waste, why it is identifying manufacturing waste, assessment focuses on CP assess- CP pollution and ways it can be reduced. on air produced, its affect PDR Center in Lao experts, since there is no CP by CP ment is carried out and Com of Industry in the Ministry of Industry under the Department CP is a profit-oriented and business-focused approach, combining busi approach, and business-focused is a profit-oriented CP 2. Ho CP incorporates environmental concerns into the environmental concerns incorporates to service: CP In relation uses different a method that is also CP delivery of services. design and efficiency and profit. tools to improve analysing disposal through proper product design. product proper through disposal Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 33 Figure 18: Six steps to CP assessment

Getting Start Analyzing Maintaining Process CP Steps

Implementing Generating CP Solutions CP Options

Selection of CP Options

Figure 19: Details of six steps to CP assessment

No Step Tasks

1 Getting started 1. Designate CP team

2. List process steps and identify benchmarks

3. Identify and select wasteful unit operation

2 Analyzing process steps 4. Process flow chart for focus unit operation

5. Make material and/or energy balance

6. Assign cost to waste streams

7. Cause analysis

3 Generating CP options 8. Generating CP options

9. Select workable opportunities

354 Selection of CP optionsSustainable 10.Rattan ProductionAssess - Manual technical for Small and feasibility Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 36

11. Assess financial viability

12. Evaluate environmental aspects

13. Select solutions for implementation

5 Implementing CP solutions 14. Prepare for implementation

15. Implement CP options

16. Monitor and evaluate results

6 Maintaining CP 17. Sustain CP

18. Select new focus area for next CP assessment (to task 3)

! PART IV

cts s

itie

) r energy balance

sk 3 s a

Calamus Poilanei s

Task (to t lysi a

assessment Assess financial viability Evaluate environmental aspe for implementation Select solutions implementation Prepare for Implement CP options Monitor and evaluate results Sustain CP for next CP Select new focus area Process flow chart for focus unit chart for focus unit Process flow operation material and/o Make Assign streams to waste cost an Cause options CP Generating opportu workable Select Assess feasibility technical Designate CP team identifyList process steps and benchmarks Identify unit and select wasteful operation

11. 12. 13. 14. 15. 16. 17. 18. 4. 5. 6. 7. 8. 9. 10. 1. 2. 3.

o companies

P ed ). In figure 20, industrial inputs are shown on the left ). In figure 20, industrial inputs are

Step Getting start Maintaining C Generating CP options CP Generating Selection of CP options of CP Selection Analyzing process steps Analyzing process Implementing CP solutions Implementing

6 5 4 3 2 1 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan

No 3. Assessment of La Figures 20 and 21 illustrate how CP assessment can operate at a rattan assessment can operate at a Figures 20 and 21 illustrate how CP to identify potential showing how each step is assessed manufacturer, involved in processing stages The figures show the different improvements. rattan species ( manufacturing using the two most used Three companies have been assessed for CP practices and are applying practices and are applying for CP Three companies have been assessed be- contract under CP Lao from support technical full-time receive They CP. has completed the requirements tween LNCCI and VNCPC. One company The difficulties faced by these companies mainly relate to: a lack of CP. to the guidelines; a lack of operating of skilled personnel that can commit in seeing clearly a long- requirements; and difficulty funding to meet the CP tends to focus on the nearest term return on investment (since manufacture financial objectives). In the Lao PDR rattan industry, processes like peeling, splitting, sanding processes like In the Lao PDR rattan industry, of waste and cutting generate a large amount and Calamus palustris and waste products on the right. ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 35 Figure 20: CP assessment applied to two species to identify waste generated during production Natural rattan (Calamus poilanei)

Selection/Preparation Poor quality rattan

DO, firewood Oil boiling Waste oil, ash

Waste cloths Cleaning

Sun drying

Straightening Poor quality rattan

Electricity Peeling Solid waste

Electricity Sanding Solid waste Sandpaper Sandpaper waste

Storage/semi finished product

Semi finished product

Splitting Solid waste 1.5-2%

37 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 38 PART IV 38 sh ir pollution A Poor quality rattan Poor water Waste dust Solid waste, Dust, sandpaper Dust, Gas emission A Sun dry Soaking Bending Splitting Weaving ssembling A components Natural rattan rattan Natural ) palustris (Calamus Finished product Finished ssembly with other ssembly with Painting/ finishing Painting/ A Selection/Preparation Water hinner T Varnish, Paint, Paint, Varnish, Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Seam, firewood Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 37 Figure 21: Example of CP assessment to two species details

Process Type Details

1 Rattan After harvesting, the natural rattan is transported, mostly by truck, Preparation to the plant site by the farmer or rattan seller, which normally takes 10 to 15 days. After arrival at the plant site, around 5% to /selection 10% is classed as waste because it has been attacked by fungi or because it is immature. The remaining rattan is then washed to remove dirt and bundled up (10-15 canes per bundle) before boiling.

2 Oil boiling In order to preserve the rattan against insects, it is boiled in a tank measuring approximately 4m3. The tank is filled with about 3,000

liters of diesel and heated with firewood for approximately 3 hours. About 300 pieces of bundled rattan cane are put into the hot tank and boiled for 45 minutes. The boiling method practiced at plants is primitive; there is no sorting or temperature control in different zones of the boiling chamber with uncontrolled natural draft for combustion. The firing takes place at two sides and there is no chimney, so firing involves the use of a lot of fuel wood.

Cleaning After boiling, the rattan is cleaned by hand using waste cloths in order to remove dirty matter from the cane stems, to impart a 3 polished effect, and to smooth the stems

4 Sun drying The boiled rattan is dried by the sun for one to two weeks. While drying the rattan is positioned to allow any remaining oil to flow off, thus speeding up the drying process and preventing parts of the rattan from remaining damp, which would affect product quality.

5 Straightening Natural rattan is not straight, so straightening is required to facilitate further processing and to reduce material loss during

these processes.

6 Peeling After drying and straightening, rattan can be stored or taken for further processing, such as peeling or splitting. Unsuitable or blunt

tools are used, resulting in high wastage, higher consumption of electricity, improper peeling and splitting, and uneven surfaces. The machinery used is old and inefficient.

7 Sanding Sanding with fine sandpaper is done to smooth the surface of the peeled rattan and make it suitable for furniture making.

88 Splitting Small,Small, roundedrounded lengths lengths of of rattan rattan are are needed needed in infurniture furniture making making, , andand aa splittingsplitting machine machine is is used used to to give give the the required required size sizes. sThe. The rattanrattan alsoalso needs needs to to be be split split for for w weaving,eaving, but but this this is isdone done by by hand. hand. TheThe rattanrattan is is soak soakeded to to make make splitting splitting by by hand hand easier easier, and, and to to prevent material loss.

9 Bending Long lengthsSustainable of Rattan peeled Production rattan - Manual are ben for Smallt into and the Medium shape Enterprisess needed in Lao PDR to Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 39 make up different kinds of furniture. The rattan is cut to the 40 required length and bent in a form while still hot, using steam prepared by a small boiler fired by wood. The canes are longer than required because of shrinkage during the bending process. After bending, they are trimmed and waste is generated.

10 Weaving Weaving is the major labor-oriented job and is mainly done by workers using traditional skills. The rattan split by hand for

weaving is cut randomly without reference to a proper plan and sized according to the particular product being made. It is normally soaked in water to make it soft and flexible for easy weaving.

11 Assembly Each type of furniture is assembled from a mixture of rattan materials, such as large bent canes for arms and legs, and small

split canes for woven seats.

12 Bleaching Some finished products are bleached according to taste and customer demand. Bleaching agents such as hydrogen peroxide,

sodium hydroxide and silicium oxide are used. The bleaching method is primitive. A large amount of chemicals are lost and workers receive little safety instruction.

13 Painting or Paint, dissolved in a solvent such as thinner, is usually used in finishing order to make the surface of products smooth. The consumption of varnish and lacquer is high because the painting process is

very inefficient and involves a lot of wastage. The consistency of varnish or lacquer applied needs to be optimized based on required application. ! PART IV - - - , to 40

is to

The during

and . . s peroxide, s

and small steam needed needed and waste and and o the

s , t leaching size consumption rinkage using s cut proper plan and sh i The b The easier furniture making furniture hydrogen . trimmed in as the shape a mixture of rattan

being made. It i still hot, in the required the

by hand by t he rattan he rattan are used such T soft and flexible for easy soft and flexible for easy needed because of wastage. The consistency of s for arms and legs,

wood. while aving, but this is done by hand. hand. by done is this but aving, it ben e to be optimized based on are reference to a product by s oxide

because the painting process are canes or w or

f t

bleached according to taste and bleached according to oriented job and is mainly done by oriented job and is mainly required bending, they are bending, they - rattan rattan in a form ben skills. The rattan split by hand for skills. The rattan split are t ilicium

fter is used to give to used is split s s

leaching agent solvent such as thinner, is usually used in to make splitting splitting make to safety instruction.

. involves a lot of B a . A large amount of chemicals are lost large

to be to ed and ittle peeled rattan peeled as l lengths of lengths longer than longer than lacquer is high woven seats. traditional product

ive soak oxide a small boiler fired a small boiler process. A ed r cut randomly without lacquer applied need demand. primitive and such by s are different kinds of furniture. kinds of different yd , is

h material loss. material or efficient and rounded type of furniture is assembled from type of furniture is assembled a splitting machine splitting a bending ed according to the particular ach odium materials split canes for Some finish customer s method is workers rece Paint, dissolved in order to make the surface of products smooth. of varnish very in varnish required application make up make and ben required length prepared The cane the is generated. Weaving is the major labor workers using weaving siz to make normally soaked in water weaving. E Small, and needs also rattan is rattan The prevent lengths of Long

Splitting Bending g CP? benefit from applyin w will companies Bleaching Painting or finishing Assembl Weaving

ting, peeling and sanding the wastewater sources come Exhaust gas from painting or thinner; and soaking tanks from rattan washing, oil boiling tanks quality rattan (discarded because Solid waste from: the discarded, low during storage, from peeling and it has fungi or because it is immature); processing end-cutting and from weaving and other Pollution of air and environment by the dust generated from node cut Pollution of air and environment by

9 8 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 13 12 11 10 • • • Companies did not see the benefits of CP when it was first implemented. Companies did not see the benefits of CP a few months, the advantages for could be quan after trials over However, 4. Ho From the assessment of the Lao manufacturers, the waste generated dur From the assessment of the Lao manufacturers, ing production is identified as: ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 39 tified: • Reduced emissions • Monetary savings • Reduced environmental pollution • Increased access to more modern, cleaner technologies • Conservation of raw material • Ability to access international market more competitively 5. Costs of establishing CP

Since the CP Center was launched, CP activities have been supported by the UNIDO programme, so SMEs have so far not been charged for CP assessment. However, a decision is pending on charging a fee for CP assessment in the future.

CP began in 2005 in Lao PDR. CP assessment is just beginning, and it does not yet cover the entire industrial sector. Currently, CP activities are carried out by a CP Center operating with project cooperation supported by UNIDO. 6. Contact point

For more information please contact:

Cleaner Production Center of Laos Department of Industry, Ministry of Industry and Commerce

Ban Thongphanthong, Sisattanak District, Vientiane Capital, Lao PDR

Tel: 85621 454100-1 Fax: 85621 454101

Contact persons: Dr. P. K. Gupta, Chief of Technical Advisor. Email: [email protected]

Mr. Virasack Chundara National Project Coordinator Email: [email protected]; [email protected]

Mr. Thongphet Phonsavath, Deputy Project Coordinator Email: [email protected]

41 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR PART IV Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 41 © Therese Broberg PART V - -

n i c h e

t h e

r e a c h

t o

V: ART o

H m a r k e t P Several projects have been put in place in Lao PDR to support Lao rattan Several projects have been put in place to reach international niche companies to build sustainable businesses is possible if key changes are Acquiring and retaining customers markets. and evaluating production capac made in areas including design, pricing er several factors. Companies often fail to recognize that the market place er several factors. Companies often fail adapt dominate the market Those who change and changes every year. As the world market place and those who do not change are left behind. on their former business practices changes, companies can no longer rely to sustain prosperity. Companies must develop the ability to build relationships with foreign ity. customers and take advantage of these relationships by understanding how to achieve appropriate product certification. If Lao rattan companies are to reach markets abroad, they need to consid If Lao rattan companies are to reach markets 1. Design

Design is a realization of a concept or idea into a model for commercial production. Therese Broberg (School of Industrial Design, Lund University, Sweden) was called in as a consultant in relation to rattan manufacturing in Lao PDR, and defined ‘design’ as relating to beauty, emotions and functionality.

In 2011, a design guide book – “Sustainable Rattan Design” – was pub- lished with co-funding from WWF and the European Union. It aims to show how design can contribute to sustaining rattan resources and how, by investing in design, the rattan sector can attract the interest of international buyers and, therefore, access the international market. It demonstrates why it is important to think about design when addressing sustainability. Sustainable rattan design is key to reaching the international market, where customers are increasingly looking for attractive, environmentally friendly products. Environment 1.1. Values of sustainable design

There are three foundations for sustainable design: • People: it must be socially sound • Planet: it must be environmentally friendly • Profit: it must be financially viable © Therese Broberg © Working with a sustainable design can help Economy Society to save the environment, increase economic advantages and bring people together. Today, many customers around the world demand that the products they buy come from sustainable sources.

Sustainable design can be made in many ways: • Finding new uses for waste material • Minimizing material use • Securing a superior product with a long lifespan

Designs made from natural cane with the peel left on automatically result in sustainable products. The Therese Broberg © peel is very protective and by leaving it on the cane producers avoid having to undertake unhealthy diesel boiling and toxic surface treatments. 45 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 46 PART V - - - - 46 Make unique pieces Recycle materials constructing a piece of furniture Use square elements or arcs when complicated joints and additional materials Avoid using nails, glue and screws Avoid Simplify logistics and simplify Pay attention to the plugging technique: transportation Invest in a professional design section Use all parts of the rattan, generating more income and minimizing rattan, generating more income and Use all parts of the waste cost Use less rattan, reducing on the international market Meet customer demand industry and recognition of the Lao rattan Increase the visibility Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan signers for Lao manufacturers. They embody the idea of design expressing signers for Lao manufacturers. and demonstrate the numerous possibili emotion, beauty and functionality, 1.4. Models of sustainable product design made in Lao PDR made design 1.4. Models of sustainable product de The pictures below show models created by Swedish, French and Lao Lao rattan manufacturers tend to make the same kind of products to the Lao rattan manufacturers tend to make to come to them with their own same designs or to wait for customers market This approach does not maximize manufacturers’ design ideas. toxic substances used during produc potential and, due to the waste and 1.3. Improving design 1.3. Improving design health. Designers and workers’ tion, impacts negatively on the environment think about the following ideas recommended that manufacturers should before production: • • • • • • • When design allows manufacturers to use all parts of the rattan and to manufacturers to use all parts of When design allows Designers from nails, production costs are reduced. avoid using glue and have recommend assisting Lao rattan manufacturers Sweden and France 1.2. How can design benefit SMEs? benefit design How can 1.2. the parts they products use only rattan SMEs manufacturing Currently, warehouse pile up in the small parts that remains are mostly need. What pass- time As them. reuse to how know not does manufacturer the because burned. Most manufacturers are thrown out or eat them and they es, mites from clients respond to orders design; they time to think about do not have with a model. who come to them ed that products should be designed to: ed that products should • • • • Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 45 ties for Lao designers and manufacturers to create inspiring products.

Minimize space use Flat Pack Basket Size: 29 x 29 cm top 24 x 24 cm bottom 30 cm high Material: Rattan Species: Calamus solitarius Weight: 0,3 kg Designed by: Therese Broberg

Minimize raw material use

String Basket

Size: Ø 33 cm top 36 cm high Material: Rattan Species: Calamus solitarius Weight: 0,35 kg Designed by: Therese Broberg

47 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 48 PART V 48

Basket

Ø 26 cm 17 cm high Ø 30 cm top 34 cm high aste Material lowerpot Woven F Size: Material: Rattan solitarius Species: Calamus 0,3 kg Weight: Therese Broberg Designed by: Size: Material: Rattan and its waste Species: Calamus solitarius 1 kg Weight: Therese Broberg Designed by: W

No chemical and toxic use toxic and chemical No Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan

into valued products Turn the rattan wastes Turn the rattan Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 47 1.5. Contact point

For more information, please contact:

Michel Saada Tchop Lai Galery

Vat Inpeng street, P.O.Box.7776 Vientiane, Lao PDR E-mail: [email protected] 2. Pricing

An important component of exportation is pricing. A proper calculation of the cost of production allows manufacturers to develop the right price strategy, to positioning themselves effectively in relation to competitors and to satisfy customers. 2.1. Raw material pricing

In 2011, MAF set the price for raw rattan, from the harvesting of the managed areas, per stick. Price varies between 1,500 kip (small diameter canes) to 6,000 kip (large diameter canes) for a stick measuring five me- ters. The price is broken down as follows:

!"#$ %&'()$*)&$ 2),$'3(45)$,4$,6)$ 9'::78)$ 9'::78)$=73>'(&7?,$ +,'(-$./"01$ &7,,73$87,6)&)&$ ,&)7+;&<$ 8&4;*$ /7@4&$ 27,;&7:$&)+4;&()$

!"##$ !###$ !##$ !##$ !##$ %##$

!##&$ '(&$ (&$ (&$ (&$ !)&$ ! In the illegal market, where gatherers do not work according to the quota system, raw rattan is sold at a lower price per roll or per kilo to manufacturers. 2.2. Production cost calculation

The production cost can be calculated to evaluate profitability and production feasibility. It may be calculated by an external consultant to assist a company’ production plans. The information given below information is applicable to all rattan industries working with villages. 49 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 50 PART V

- 50 - Set Set Total Total Total (USD) (USD) (USD) Rattan Rattan Cost/Set Cost per Cost per

As a ferent

Total Total Total (USD) Rattan Rattan Product Product Cost per Cost per Cost/Unit

Unit (USD) Unit (USD)

Total (LAK) Cost/Set Total Total

(LAK) (LAK) per Set per Set Rattan Cost Rattan Cost

Total (LAK) Cost/Unit

(LAK) (LAK) cost per cost per Total rattan Total rattan product unit product unit

Shipping

# 1 # 1 cost cost Total Total (LAK) (LAK) rattan rattan

Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Other per per inputs Cost Cost cane cane (LAK) (LAK)

Rattan # 2 Rattan # 2

of cane of cane

Number Number

Packaging

# 1 # 1 cost cost Total Total (LAK) (LAK) rattan rattan

Expense 2 detail (explain) = Expense 3 detail (explain) = Expense 3 detail (explain) = Expense 4 detail (explain) = Expense 4 detail (explain) = Cost per one rattan cane # 2 = (Amount LAK) Cost per one rattan cane # 2 = (Amount LAK) List of concerned costs per 1 rattan cane List of concerned costs per 1 rattan cane Expense 1 detail (explain) = Expense 1 detail (explain) = Expense 2 detail (explain) = Labor st st

per per

Co Co cane cane (LAK) (LAK)

Composition of Total Variable Costs (LAK)Composition of Total Variable Rattan # 1 Rattan # 1 Rattan

(LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount

of cane of cane Number Number

Size 0

Size Size

tail tail Photo

cerned costs per 1 rattan cerned costs per 1 rattan Photo Photo

Product Product Product

# # Product # Product Product Expense 3 de (explain) = Expense 4 detail (explain) = Expense 4 detail (explain) = (explain) = Expense 2 detail (explain) = Expense 2 detail (explain) = Expense 3 de (explain) = (Amount LAK) List of con cane List of con cane Expense 1 detail (explain) = Expense 1 detail Cost per one rattan cane # 1 = (Amount LAK) Cost per one rattan cane # 1 =

Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Table 2: Detail calculation of rattan cost Table 2.2.1. Production cost calculation to evaluate profitability to evaluate calculation cost Production 2.2.1. feasibility and cost. calculation of production a template for was used to create MS Excel element of to calculate each developed in order of tables were series A from The figures are linked and fix costs). cost (variable costs production when fig each table, so that are set in to another and formulas one table costs 1: Cost structure of total variable Table igure 22: Production cost calculation 22: Production Figure ures are input, the calculation is made automatically. The figures in table 1 The figures in table is made automatically. input, the calculation ures are in tables 2 to 6. when inputs were added will be automatic calculated will be calcu cost per set of rattan handicraft products result, the variable companies in tables 7 and 8 allow exporting The figures lated for table 1. to evaluate dif break-even point of production, and to be aware of the selling prices. production costs and ! ! ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 49 Table 3: Detail calculation of labor cost

Product Labor cost per activity (LAK) Total labor Product Photo Size Making Basic Packing Loading Quality Other cost # product Salary control (LAK) per set

0 ! Table 4: Detail calculation of packaging cost

Product No. of Carton Scotch Tape Cost of Wrapping paper Total Total cost product hanging cost of of Product # Photo Size units per Size No. of Cost Total No. of Cost Total tag No. of Cost Total packag packaging container cartons per cost of scotch per 1 cost of (LAK) paper per kg cost of ing per product carton carton tape scotch scotch (Kg) (LAK) paper (LAK) unit (LAK) (LAK) (LAK) (unit) tape tape (LAK) (LAK)/ (LAK) m

0 !

Table 5: Detail calculation of other inputs cost

Product Input # 1 Input # 2 Total other Total other Total Total inputs per inputs per other other Product # Photo Size Number Cost per Total Number Cost per Total Product Set (LAK) inputs inputs of input input unit input # of input input input # Unit (LAK) per per Set #1 (LAK) 1 cost #1 unit 1 cost Product (USD) (LAK) (LAK) (LAK) Unit (USD)

! Table 6: Detail calculation of shipping cost

Product Number of products in set Number of product units Total cost of shipping per product per size unit (LAK) Product # Photo Size

51 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 52 PART V 52

) (LAK

Amount (LAK) Amount (LAK) Amount Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK)

======Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Amount (LAK) Number of set

= = = =

person per day

etail (explain) = etail (explain)

cost = (Amount cost LAK) detail (explain) = cost ed

ed even quantity - Expense 7 Expense 5 detail (explain) = Expense 5 detail (explain) = Expense 6 detail (explain) Expense 3 detail (explain) = Expense 3 = Expense 4 detail (explain) Expense 1 d Expense 1 detail (explain) = Expense 2 Total fix Total ! Selling price per set Break Total fix cost Total variable cost per set Total fix Selling price ! Variable cost per set Total variable cost Worker capacity per Target workers for production Maximum of production Production target Amount of rattan canes need for 1 set Amount of rattan canes from forest (small diameter) Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 2. Production cost and selling price evaluation 2. Production cost and selling price 1. Break-even calculation Table 8: Production feasibility evaluation 8: Production feasibility Table Table 7: Total fixed costs fixed Total 7: Table ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 51 2.2.2. Production plan and quality control system to ensure good management

Companies can take advantage of producing with villages in addition to in their own factories, increasing their production capacity with regards to important orders from clients.

This production plan contains detailed information about the exporting company, production capacity, production target, and how production flow should be created together with the quality control system that should be set up.

Production Plan

General Information

Company Name:

Product: Rattan Basket, size:

Big Ø 28 cm x H 21 cm

Medium Ø 22 cm x H 18 cm

Small Ø 17 cm x H 14 cm

The target number of produced 9,072 units (3,024 sets) products:

Production Period: Late February to end May 2011

Production Location: Khamkerd district, Bolikhamxay province

The number of village producers: 100 people

Capacity of village producers: 0.5 – 1 set/people/day

The number of casual workers: 33 people

The number of splitting machines 10 units

53 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 54 ! PART V 8*,$'.#$'! 54 ! ! # # # -*'.#$/! 8"24& 0*,'(+$1$* ! ! .#$%//)0,"-23&,4# .#5)'')(#3)('",)0& .#6,"-23'#7),& )*++#*,$'! 0#*'&1#*'(! ! ! "#*'(%&'(6#$7! ! -23142.1!5&'1&4 # "#$%&'(! !"#$%&'()*#+",-&, Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Location and map and Location ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 53 Agree and accept criteria for rattan basket production Deliver rattan strips to weaving villagers (also produce rattan basket) follow up and quality check for rattan basket produc - Monitor, tion Quality check for final products Store finished products and wait for company to collect Agree and accept criteria for rattan basket production Produce rattan basket Deliver finished products to weaving villagers representatives Agree and accept criteria for rattan cane harvesting Harvest rattan cane from forest Carry rattan cane from forest to “village rattan cane storage” First stage: Rattan cane quality check Purchase harvested rattan cane from harvesting villagers Store rattan cane in “village rattan cane storage” Split rattan cane into strips Deliver rattan strips to weaving villagers representatives Second stage: Rattan basket quality check Collect and purchase finished products Prepare for products shipment 12 13 14 15 16 1 2 3 4 5 6 7 8 9 10 11 17 18 19 1 5 2 4 3 3 2 (7 villages) (4 villages) (7 villages) 4 1 representatives, Weaving villagers, Weaving Weaving villagers, Weaving Harvesting Villagers 5 Company 6 Shipment Production flow and functions 55 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 56 PART V 56 Rattan basket is checked before packaging Spliting procedure is introduced to village workers Spliting procedure Sorting rattan strips Rattan basket is checked at the time of collecting Rattan basket is checked at the time List of criteria for rattan cane is introduced to is introduced to for rattan cane List of criteria villagers harveting at the rattan rattan cane is checked Harvested at delivery time cane storage List of criteria for rattan basket is introduced to weaving List of criteria for rattan basket is introduced villagers villagemonitored by is Rattan basket in production process weaving representatives at village weaving Rattan basket is checked and store representatives place Rattan basket packaging • Rattan cane spliting • • • Rattan basket collecting Rattan cane harvesting Rattan cane • • • • • Rattan basket weaving Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Production Quality Control Control Quality Production Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 55 2.2.3. Production scheduling to monitor and follow up production

In this example, a production schedule allows the exporting company to add data, updating the progress of production at each step from the number of rattan canes harvested to the number of rattan baskets woven.

Figure 23: Production Schedule

& ,-)& !"#$%& '()*&"+&!"#$%& '()*&"+&!"#$%& & ,-)& !"#$%& '()*&"+&!"#$%& '()*&"+&!"#$%& .($*& /**0&1& /**0&2& /**0&3& /**0&4& /**0&1& /**0&2& /**0&3& /**0&4& .($*& /**0&1& /**0&2& /**0&3& /**0&4& /**0&1& /**0&2& /**0&3& /**0&4& !"#$% % *#((#$%'#$+%,#-.+/(0$1%2'#$+3% % % % % % % % % !"#$% % *#((#$%'#$+%,#-.+/(0$1%2'#$+3% % % % % % % % % &'()#"% % % % % % % % % % &'()#"% % % % % % % % % % !"#$% % *#((#$%'#$+%0$%/(4-#1+%2'#$+3% % % % % % % % % !"#$% % *#((#$%'#$+%0$%/(4-#1+%2'#$+3% % % % % % % % % &'()#"% % % % % % % % % % &'()#"% % % % % % % % % % !"#$% % *#((#$%'#$+%/5"0((0$1%2'#$+3% % % % % % % % % !"#$% % *#((#$%'#$+%/5"0((0$1%2'#$+3% % % % % % % % % &'()#"% % % % % % % % % % &'()#"% % % % % % % % % % !"#$% % *#((#$%/(-05%0$%/(4-#1+%2/(-05/3% % % % % % % % % !"#$% % *#((#$%/(-05%0$%/(4-#1+%2/(-05/3% % % % % % % % % &'()#"% % % % % % % % % % &'()#"% % % % % % % % % % !"#$% % 6+"0.+-%-#((#$%/(-05/%(4%7+#.0$1% % % % % % % % % !"#$% % 6+"0.+-%-#((#$%/(-05/%(4%7+#.0$1% % % % % % % % % .0""#1+-/%2%/(-053% &'()#"% % .0""#1+-/%2%/(-053% % % % % % % % % &'()#"% % % % % % % % % % !"#$% % *#((#$%5-48)'(%7+#.0$1%2/(-053% % % % % % % % % !"#$% % *#((#$%5-48)'(%7+#.0$1%2/(-053% % % % % % % % % &'()#"% % % % % % % % % % &'()#"% % % % % % % % % % !"#$% % *#((#$%9#/:+(%5-48)'(%2/+(3% % % % % % % % % !"#$% % *#((#$%9#/:+(%5-48)'(%2/+(3% % % % % % % % % &'()#"% % % % % % % % % % &'()#"% % % % % % % % % % % %

2.3. Contact point

Enterprises Development Consultant (EDC) CO,.LTD Managing Partner, Consultant

Ban Nakham, Sikhottabong District, Vientiane Capital, Lao PDR

Tel: +856 21 251050 Fax: +856 21 251061 MB: +856 20 55777570

Mr. Thone Boungvattana Email: [email protected] Website: www.edclao.com

57 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 58 PART V - 58 - -

Easy to present your products to the many customers attending the fair Easy for customers to see your products Can result in new market opportunities and new customers image An opportunity to present the company’s Managing English language communication (written and spoken) so (written and spoken) communication English language Managing made to emails and orders that replies can be How to supply quotations and successful website Establishing an accessible

Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan • • • • 4.3. What are the benefits to trade fair participants? 4.3. What are the benefits to trade 4.2. Why a trade fair? 4.2. Why a trade or- are exhibitions or ‘expos’ fairs, in the form of trade shows, trade Trade demon and showcase can industry specific a in companies that so ganized 4.1. What is trade fair? 4.1. What is trade kind of product trade fair is a place where most suppliers of a particular A event where goods and services gather to present their output. It is an and demonstrated. related to a specific industry are exhibited play their products to potential customers. Many companies wanting to gain to potential customers. Many companies play their products fairs and supplement customers participate in trade access to international a website, hand- marketing support including brochures, their displays with principal details provided by This section includes outs and a sales team. fairs. the LNCCI about participation in trade fairs, companies are also At trade strate their latest products and services. examine recent market trends and able to study what their rivals are doing, discover new opportunities. 4. Trade fairs to dis at which they are able trade fair is a tool used by entrepreneurs, A

The ability to change has now become a competitive advantage for com advantage become a competitive to change has now The ability op devel ty to abili 3. The panies. The ability to change is an ability to learn. Companies wanting wanting ability to learn. Companies to change is an The ability panies. the abroad should consider clients or partners relationship with to build a important issues: following • • • Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 57 • Offers access to competitors’ markets • Opportunity to obtain new orders and generate income 4.4. Conditions of attending a trade fair

Business entrepreneurs wishing to attend a trade fair/exhibition have to be members of LNCCI or a provincial branch.

The standard requirements of attendance are: • The products have to be suited to the event and the objective of the event • The products must be made by the company • Production must involve a skilled labour force in a suitably located factory • Raw materials must be of good quality and meet market standards • There must be direct access to a contact person from the company • The company must provide product information • The company must have a good understanding of production export procedure • Market information and financial information about the company must be available • The company must provide printed material in support of the product 4.5. Formal costs of trade fair participation

• Exhibition booth fee • Cost of transporting products to exhibition booth (internal/external) • Flight tickets • Local transportation and hotel accommodation with daily allowance • Promotional material printing • Decoration • Translation • VISA fees • Construction work force 4.6. Documents needed to apply for participation in a trade fair at LNCCI

• Request letter • Exhibition form • Copy of current LNCCI business membership • Supporting current basic documentation: 1. Business Registration License; 2. Export Business License; 3. Tax Registration License; 4. 59 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 60 PART V # " " 60 " " " " " " " " %C" +%-;B37E ?$%-+@7$A3BC" D/=/,7EC" +%3/7+<7" -/B+0 F+3@*/%"=$7/C" A<<-"$%-" G/H/7$0/" 4$7X/%3" +%-;B37E 8<<-"$%-" G/H/7$0/" -+"2)/&#&,3' ?$%-+@7$A3BC D/=/,7EC" +%3/7+<7" -/B+0%C" F+3@*/%"=$7/C" A<<-"$%-" G/H/7$0/" ?$%-+@7$A3BC" D/=/,7EC" +%3/7+<7" -/B+0%C" F+3@*/%"=$7/C" A<<-"$%-" G/H/7$0/" 8<<-"$%-" G/H/7$0/" #/=/,7E 8;7%+3;7/" Y7<-;@3+<% 4$7X/%3" " " " " R " 4#8 O P " " " %0F!! )*$+,$%-"I%3/7%$3+<%$,"8;7%+3;7/" 8$+7"P)I88R O$%0F!!"POI88"9"OIQ" (>!!R )*/"!3*".+B*;$%0G$%%$"O<7-/7" )7$-/"9")<;7+BX"8$+7 I%-+$"M6NMK"O;B+%/BB"8$+7" PQMO8R"9"O;B+%/BB":SK:QMTN" Q$<"8<<-"8/B3+H$, 01&.' )*/"!23*")*$+,$%-"456")7$-/" 8$+7"9":;,3;7$,"6*<="(>!! " " " " " " " " # " 3;7$," I5JM:) I5JM:) I5JM:) I5JM:) I5JM:) .+B*;$%0G$ %%$"O<7-/7 J7$0$3+" 5$+-$%C" K/="L/,*+ :;, ?$,," -.%/'# .+/%0"1$+ " " " " " " # " " " )*$+,$%- )*$+,$%- :*+%$ )*$+,$%- )*$+,$%- Q$<"JL1 )*$+,$%- I%-+$ )*$+,$%- (")*&+, " " " " " " "!2 " " "!W "!Z "((" ' ' ' ' "W "V "2" ' " ' ' ' "5$E"[" " # ' 5$E"!(" MY7" (>!( MY7"!(" MY7"!" 5$7"(" 5$7"!>" 8/G"&" 8/G"(2"" 8/G"(" $%&' #$%"!&" Invoice and Packing List; 5. Request Letter 5. Request List; and Packing Invoice # " " " " " " " " " \ Z V 2 & U W ( !" ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan xhibition Activities in the Asian Region Activities in the 24: 2012 Exhibition Figure 4.7. Exhibitions in 2012 4.7. Exhibitions to both the relating trade fair and exhibitions involved in several LNCCI is in 2012: external market internal and Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 59 !" #$%"&"'()"*" ./(01(23" 4'5#6." 7(289:9"42;<%2(;0:2(1"=(>/0:2" A(%B<2;" +,-+" =(0%"?"7(289:9"42;<%2(;0:2(1" 023C>;%)" @<(;/<%"=(0%""

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!E# $%#'#!F## G-0#H$I# G-0J64K11# 42%#!<+#3-9%#*,#G-0# /-,9*&7-;+<=# >%?%87@=# *,+%7*07# 9%<*A,=# B*+&2%,#?-7%=# ;009#-,9# C%D%7-A%## # PART V - - - 62 # # # -A% , the way B*+&2%,#?-7%=# ;009#-,9# C%D%7 /-,9*&7-;+<=# >%?%87@=# *,+%7*07# 9%<*A,=# B*+&2%,#?-7%=# ;009#-,9# C%D%7-A%# /-,9*&7-;+<=# >%?%87@=# *,+%7*07# 9%<*A,=# # # 42%#!<+#3-9%#*,#G-0 42%#5+2#)*%+,-.#6,+%7,-+*0,-8# 47-9%#:-*7# # # 2*# 64K11 J G-0 /0#1 3*,2 # # G-0#H$I )*%+,-. tion # # #!F# #(# ' ' $%# $%&#!# # # !E !" # Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Unsustainable rattan harvesting leads to forest degradation, affecting to forest degradation, affecting Unsustainable rattan harvesting leads but also a source of income for rural not only tropical forest ecosystems will ensure its future Achieving more sustainable rattan production people. on nature, communities and compa supply and prevent negative impacts The importance of rattan for multiple applications including as a building The importance of rattan for multiple is widely recognized. However material and in furniture production in the processing of rattan takes a toll The use of toxic chemicals and petrol air pollution and harms health. Manu on soil and water resources, causes obtain of benefits the note manufacturers that important is it context, this In Mr. Vilasack Xayaphet Vilasack Mr. Email: [email protected] www.laocci.com 5. Certifica nies. to be improved in order to secure rattan is harvested and processed needs supply in the long term. facturers have to pay attention to pollution, wastage, unreliable and illegal supply practices and low product quality. Tel: +856 21 453312 Tel: Fax: +856 21 452580 Lao National Chamber of Commerce and Industry Lao National Chamber Exhibition Division 4.8. Contact point Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 61 ing certification. This section contains some essential information about certification. 5.1. Logo

The Forest Stewardship Council (FSC) is an NGO that promotes sustainable forestry all over the world, and grants certification to let buyers know that forest products have been harvested sustainably. If a product is FSC certified, it means that it has been harvested sustainably and not mixed with other products during processing. Today, in the USA and Europe, buyers are paying more attention to products that have been FSC certified.

The Rainforest Alliance SmartWood Pro- gram is a certification body accredited by the FSC that has established a set of standards (see Figure 25) to provide forest managers, landowners, forest industries, scientists, environmentalists and the general public with information on the forest management operations that SmartWood evalu- ates when deciding on the granting of FSC certification. These standards have been developed for Lao PDR based upon the Rainforest Alliance SmartWood Generic standards, which have been approved by the FSC (through Accreditation Services International). 5.2. Why FSC?

FSC, which is represented in more than 50 countries, is an internationally recognized certification body. It is acknowledged as having the strongest and most credible certification system, which provides a link between the responsible production and consumption of forest products. FSC certification enables consumers and businesses to make purchasing decisions that benefit people and the environment, and provides ongoing business value. FSC certification represents a marketing opportunity for the Lao rattan industry that would enable their products to be sold at a higher price and bring sustainable production closer.

The long-term objective of the WWF Sustainable Rattan Project in Lao PDR is credible forest certification and establishing a more sustainable rattan production supply chain. 63 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 64 PART V 64

shall be be shall resolve disputes disputes resolve

l normally disqualify disqualify normally l ized and protected protected and ized the involved or affected affected or involved the ary tenure or use rights rights use or tenure ary

Conventions, ITTA, and the the and ITTA, Conventions,

on with their free and informed informed and free their with on Details

term forest use rights to the land (e.g. (e.g. land the to rights use forest term -

ces. case basis, by the certifiers and and certifiers the by basis, case -

by - operation with such peoples, and recogn and peoples, such with operation - Management planning and operations shall incorporate the the incorporate shall operations and planning Management Consultations impact. social of evaluations of results by affected directly groups and people with maintained operations. management significance to indigenous peoples shall be clearly identified in in identified clearly be shall peoples indigenous to significance co managers. forest by of application the for compensated be shall peoples Indigenous or species forest of use the regarding knowledge traditional their compensation This operations. forest in systems management up agreed formally be shall commence. operations forest before consent management forest the to, adjacent or within, communities The and training, employment, for opportunities given be should area servi other laws applicable all exceed or meet should management Forest and employees of safety and health covering regulations and/or families. their parties. long of evidence Clear be shall agreements) lease or rights, customary title, land demonstrated. custom or legal with communities Local their protect to necessary extent the to control, maintain shall delegate they unless operations forest over resources, or rights agencies. other to consent informed and free with control to employed be shall mechanisms Appropriate and circumstances The rights. use and claims tenure over in considered explicitly be will disputes outstanding any of status magnitude substantial of Disputes evaluation. certification the wil interests of number significant a involving certified. being from operation an religious or economic ecological, cultural, special of Sites All applicable and legally prescribed fees, royalties, taxes and and taxes royalties, fees, prescribed legally and applicable All paid. be shall charges other international binding all of provisions the countries, signatory In ILO CITES, as such agreements respected. be shall Diversity, Biological on Convention and Principles FSC the and regulations laws, between a Conflicts on certification, of purposes the for evaluated be shall Criteria case

• • • • • • • • • • •

LAWS

RIGHTS

WITH

USE PEOPLES'

RELATIONS

PRINCIPLES

AND

Principle WORKER'S RESPONSIBILITIES FSC

AND COMMUNITY INDIGENOUS RIGHTS AND TENURE COMPLIANCE AND

4 3 2 1 No Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan igure 25: FSC standard Figure he 10 principles of the FSC standard FSC of the principles The 10 5.3. to the FSC certification. applicable details the 10 principles Figure 25 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 63 5 BENEFITS FROM THE • Forest management should strive toward economic viability, FOREST while taking into account the full environmental, social, and operational costs of production, and ensuring the investments necessary to maintain the ecological productivity of the forest. • Forest management and marketing operations should encourage the optimal use and local processing of the forest's diversity of products. • Forest management should minimize waste associated with harvesting and on-site processing operations and avoid damage to other forest resources. • The rate of harvest of forest products shall not exceed levels which can be permanently sustained.

6 ENVIRONMENTAL IMPACT • Assessment of environmental impacts shall be completed -- appropriate to the scale, intensity of forest management and the uniqueness of the affected resources -- and adequately integrated into management systems. Assessments shall include landscape level considerations as well as the impacts of on-site processing facilities. Environmental impacts shall be assessed prior to commencement of site-disturbing operations. • Safeguards shall exist which protect rare, threatened and endangered species and their habitats (e.g., nesting and feeding areas). Conservation zones and protection areas shall be established, appropriate to the scale and intensity of forest management and the uniqueness of the affected resources. Inappropriate hunting, fishing, trapping and collecting shall be controlled. • Ecological functions and values shall be maintained intact, enhanced, or restored, including: • Forest regeneration and succession. • Genetic, species, and ecosystem diversity. • Natural cycles that affect the productivity of the forest ecosystem. • Written guidelines shall be prepared and implemented to: control erosion; minimize forest damage during harvesting, road construction, and all other mechanical disturbances; and protect water resources.

7 MANAGEMENT PLAN • The management plan and supporting documents shall provide: a. Management objectives. b. Description of the forest resources to be managed, environmental limitations, land use and ownership status, socio-economic conditions, and a profile of adjacent lands. c. Description of silvicultural and/or other management system, based on the ecology of the forest in question and information gathered through resource inventories. d. Rationale for rate of annual harvest and species selection. 65 Sustainablee. Provisions Rattan Production for monitoring - Manual forof Smallforest and growth Medium andEnterprises dynam in Laoics. PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 66 f. Environmental safeguards based on environmental assessments. g. Plans for the identification and protection of rare, threatened and endangered species. h. Maps describing the forest resource base including protected areas, planned management activities and land ownership. i. Description and justification of harvesting techniques and equipment to be used. • Forest workers shall receive adequate training and supervision to ensure proper implementation of the management plan. 8 MONITORING AND • Forest management should include the research and data ASSESSMENT collection needed to monitor, at a minimum, the following indicators: a. Yield of all forest products harvested. b. Growth rates, regeneration and condition of the forest. c. Composition and observed changes in the flora and fauna. d. Environmental and social impacts of harvesting and other operations. e. Costs, productivity, and efficiency of forest management. • Documentation shall be provided by the forest manager to enable monitoring and certifying organizations to trace each forest product from its origin, a process known as the "chain of custody."

9 MAINTENANCE OF HIGH 1. Assessment to determine the presence of the attributes consistent CONSERVATION VALUE with High Conservation Value Forests will be completed, FORESTS appropriate to scale and intensity of forest management. 10 PLANTATIONS • The design and layout of plantations should promote the protection, restoration and conservation of natural forests, and not increase pressures on natural forests. Wildlife corridors, streamside zones and a mosaic of stands of different ages and rotation periods, shall be used in the layout of the plantation, consistent with the scale of the operation. The scale and layout of plantation blocs shall be consistent with the patterns of forest stands found within the natural landscape. PART V

- land land ics. 66

and and

Special Special

ssessment of of ssessment

being), in addition addition in being),

8, 6 and 4. No No 4. and 6 8, term soil degradation or or degradation soil term - icultural and/or other management management other and/or icultural site ecological and social impacts, (e.g. (e.g. impacts, social and ecological site - not result in long in result not

gement should include the research and data data and research the include should gement site and off and site ! -

ide zones and a mosaic of stands of different ages and and ages different of stands of mosaic a and zones ide Yield of all forest products harvested. products forest all of Yield forest. the of condition and regeneration rates, Growth flora the in changes observed and Composition fauna. other and harvesting of impacts social and Environmental operations. management. forest of efficiency and productivity, Costs, Environmental safeguards based on environmental environmental on based safeguards Environmental assessments. rare, of protection and identification the for Plans species. endangered and threatened including base resource forest the describing Maps and activities management planned areas, protected ownership. and techniques harvesting of justification and Description used. be to equipment Description of silv of Description question in forest the of ecology the on based system, inventories. resource through gathered information and species and harvest annual of rate for Rationale selection. dynam and growth forest of monitoring for Provisions te to scale and intensity of forest management. forest of intensity and scale to te

a. b. c. d. e. f. g. h. i. c. d. e. ands found within the natural landscape. natural the within found ands monitoring of plantations shall include regular a regular include shall plantations of monitoring on potential fertility, soil and resources water on effects regeneration, natural well social and welfare local on impacts and principles in addressed elements those to trials local until scale large a on planted be should species well ecologically are they that shown have experience and/or significant have not do and invasive, not are site, the to adapted ecosystems. other on impacts ecological negative for acquisition land of issues social to paid be will attention ownership, of rights local of protection the especially plantations, access. or use Measures shall be taken to maintain or improve soil structure, structure, soil improve or maintain to taken be shall Measures of rate and techniques The activity. biological and fertility, the and maintenance, and construction trail and road harvesting, shall species of choice substantial or quantity quality, water on impacts adverse patterns. drainage course stream from deviation operation, the of diversity and scale the to Appropriate The design and layout of plantations should promote the the promote should plantations of layout and design The and forests, natural of conservation and restoration protection, corridors, Wildlife forests. natural on pressures increase not streams plantation, the of layout the in used be shall periods, rotation layout and scale The operation. the of scale the with consistent forest of patterns the with consistent be shall blocs plantation of st Documentation shall be provided by the forest manager to to manager forest the by provided be shall Documentation each trace to organizations certifying and monitoring enable of "chain the as known process a origin, its from product forest custody." Forest workers shall receive adequate training and supervision supervision and training adequate receive shall workers Forest plan. management the of implementation proper ensure to mana Forest following the minimum, a at monitor, to needed collection indicators:

Assessment to determine the presence of the attributes consistent consistent attributes the of presence the determine to Assessment completed, be will Forests Value Conservation High with appropria • •

• • • • 1.

HIGH

VALUE

FORESTS MAINTENANCE CONSERVATION ASSESSMENT MONITORING AND AND MONITORING PLANTATIONS

9 8 10 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 65 • Measures shall be taken to maintain or improve soil structure, fertility, and biological activity. The techniques and rate of harvesting, road and trail construction and maintenance, and the choice of species shall not result in long-term soil degradation or adverse impacts on water quality, quantity or substantial deviation from stream course drainage patterns. • Appropriate to the scale and diversity of the operation, monitoring of plantations shall include regular assessment of potential on-site and off-site ecological and social impacts, (e.g. natural regeneration, effects on water resources and soil fertility, and impacts on local welfare and social well-being), in addition to those elements addressed in principles 8, 6 and 4. No species should be planted on a large scale until local trials and/or experience have shown that they are ecologically well- adapted to the site, are not invasive, and do not have significant negative ecological impacts on other ecosystems. Special attention will be paid to social issues of land acquisition for plantations, especially the protection of local rights of ownership, use or access. ! 5.4. Lao Forest Certification

The DoF under MAF controls the forest and certification under the Rainfor- est Alliance SmartWood Program for FSC certification. It recruits villages to be certified and can withdraw them from the certified list when they no longer qualify according to the certification schemes standards (see Figure 26).

In 2005, an area of 50,000 hectares of the forest management area in Khammouane and Savannakhet provinces was approved for FSC certification by SmartWood and is expected to increase in the future.

Figure 26: Lao Forest Certification authority chart

Department of Forestry (forest control and certification)

Provincial of Agriculture and Forestry (Member)

District of Agriculture and Forestry

Village Community

67 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 68 PART V 68 -

Increase prices Increase income Produce more specific types of product Produce more specific supply Draw on sustainable Increase relations with International Organizations Increase relations reputation that follows product certification Gain from the good Improve market access Improve a sustainable market Draw on their market share Increase Promote new products

5.5. How will SMEs applying for FSC Certification benefit? FSC for SMEs applying How will 5.5. Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan tody (CoC) certification, which allows them to export FSC-certified rattan tody (CoC) certification, which allows them to export FSC-certified rattan In order to strengthen the chain from forest to international market, the In order to strengthen the chain from forest to international market, the project has worked with rattan processors to attain FSC Chain of Cus The project has worked to build a network of harvesters, processors, The project has worked to build a network buyers that promote FSC-certified, government officials and international for the protection of village forest sustainable rattan harvesting, allowing among village participants. resources and an increase in livelihoods 6. Chain of Custody Tel: +856 21 215002 / 219561 / 21956 Tel: Fax: +856 21 215723 Mr. Phomma Pathoummavong Mr. PO Box 6238, Vientiane 5.6. Contact point Agriculture and Forestry Ministry of Department of Forestry • • - Finance: • • - Productivity: • • - Networking: in many ways. will benefit receive FSC certification SMEs that - Marketing: • • • • Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 67 products. There are key CoC elements in relation to rattan, which allow a step-by-step approach to certification, so that rattan companies can seek certification independently in the future. 6.1. What is CoC?

CoC is a system that traces rattan from the forest to the buyer. Its goal is to make sure that no sustainable rattan is lost or mixed with unsustainable rattan and that production takes place in a sustainable manner. It helps to control processing and the use of supplies more efficiently.

According to the FSC website, “FSC chain of custody certification veri- fies FSC certified forest products through the production chain. FSC-CoC certification is for companies that manufacture, process or trade in timber or NTFP and want to demonstrate to their customers that they use respon- sibly produced raw materials.”

In markets across Europe and the USA, demand is increasing for products that have been sourced and produced in a sustainable manner. Consumers are now looking for products labeled “organic”, “fair-trade” and “sustainable”, and are willing to pay more for a product when they know that its manufacture did not contribute to global warming or environmental degradation.

In order to provide the public with reliable information on sustainable forest products, the FSC has created several certifications that can be used by manufacturers to show that their products were harvested and produced in an environmentally responsible manner. Those who take material directly from the forest are eligible to apply for FSC Forest Management certification, which, if attained, would show that they have created and applied a sustainable forest management plan to their harvesting operations. This certification then feeds into an FSC-CoC certificate, which is attained by the product manufacturer to show buyers that the product is composed of sustainably harvested material and was produced in an environmentally friendly manner. 6.2. What are the CoC requirements?

CoC certification requires operations to identify the origin of raw materials used in FSC-certified products and to keep FSC-certified products separate from other products throughout the production process. This procedure allows operations to label products with the FSC trademark, which provides 69 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 70 PART V

, 70 the

log

at m

systems

list

yste -

s l

clude:

n step instructions for etai - in and support tio ion. - t c D by -

.accreditation inin

a CoC processing ndbook for CoC processing within the Creating a marking system Gaining staff buy Creating a training system an Physical Separation of Canes Marking Production Planning Staff Tr Identifying key leaders Finding a space for CoC production Assessing current documentation systems Modifying documentation Establishing a system of order numbering services.com/accreditation_of_cbs.html). In order to apply through SmartWood, the company should first notify the correct regional representative of their intent to apply for certifica After the handbook and DCS have been finalized, the company can apply for an FSC CoC audit through SmartWood (http://www.rainforest alliance.org/forestry/certification) or another FSC licensed auditor (full http://www production Excel file of computer database forms List of FSC material suppliers Contracts with all relevant outsourcing groups and sample government forms for use during produ The easiest way to formalize a CoC system and train staff is to create a comprehensive ha specific factory. This handbook should include full step entire The Document Control System (or DCS) for each factory should in Handbook of procedures Book of forms used in the factory for CoC

6. 7. 8. 1. 2. 3. 4. 1. 2. 3. 4. 5. 11. 12. 13. 9. 10.

ents)

Key Element

Applying for an Audit Creating a Document Control System Creating Handbook Apply key element as Factory Model (8 Steps) Processing (4 Key elem Set up key element for Rattan

Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan igure 27: Details of the COC system Figure This lack of prescribed NTFP CoC certification standards has allowed CoC certification standards has NTFP This lack of prescribed Although certified. rattan companies who wish to be some flexibility for remain and core elements of FSC-CoC certification the basic principles to use specific forms or marking the same, companies are not required principles based on their own factory systems. Instead, they can adapt the capacity and production plan. 6.3. The six steps of the CoC system be usefully applied to the standard can Several steps of the CoC NTFP system must follow these Companies that want to apply this rattan industry. below: The CoC system is outlined standards. SmartWood they have since been widened to accommodate the certification of NTFPs widened to accommodate the certification they have since been Generic NTFP was laid out in the SmartWood This change such as rattan. by a was based on certification attempts Addendum, which Certification stan but does not specifically address processors, NTFP range of different of rattan products. dards for CoC certification Until 2005, these standards were only applied to wood products. However standards were only applied to wood Until 2005, these FSC-STD 40-004 (http://www.fsc.org/standards.html) FSC-STD The standards for CoC certification of forest products are defined by: products are defined of forest for CoC certification The standards the link between responsible production and consumption that enables the that enables and consumption production responsible between the link purchasing responsible environmentally and socially to make consumer decisions. Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 69 Key Element Detail Set up key element for Rattan 1. Physical Separation of Canes Processing (4 Key elements) 2. Marking 3. Production Planning 4. Staff Training Apply key element as Factory Model1. Identifying key leaders (8 Steps) 2. Finding a space for CoC production 3. Assessing current documentation systems 4. Modifying documentation systems 5. Establishing a system of order numbering 6. Creating a marking system 7. Gaining staff buy-in and support 8. Creating a training system and log Creating Handbook The easiest way to formalize a CoC system and train staff is to create a comprehensive handbook for CoC processing within the specific factory. This handbook should include full step-by-step instructions for the entire CoC processing system Creating a Document Control System The Document Control System (or DCS) for each factory should include: 9. Handbook of procedures 10. Book of forms used in the factory for CoC production 11. Excel file of computer database forms 12. List of FSC material suppliers 13. Contracts with all relevant outsourcing groups and sample government forms for use during production Applying for an Audit After the handbook and DCS have been finalized, the company can apply for an FSC CoC audit through SmartWood (http://www.rainforest- alliance.org/forestry/certification) or another FSC licensed auditor (full list at http://www.accreditation- services.com/accreditation_of_cbs.html). In order to apply through SmartWood, the company should first notify the correct regional representative of their intent to apply for certification.

Audit Preparation 1. After completing the above steps and scheduling a CoC audit, the factory team should prepare for the audit, both mentally and logistically. Factory management must now work independently from project partners (who cannot be present during the audit) to make sure that staff are trained and fully understand the CoC processing system.

2. The auditors can direct questions to any staff members, so it is important that everyone is able to explain how CoC processing works in the factory. Management should also inspect the factory to make sure that it is in top shape for the auditors: CoC material should be neatly stored and labeled, handbooks should be accessible, CoC guidelines should be posted, and the factory should look tidy and well-organized. Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR ! 71 72 PART V - 72 ood - -

rade? rade logo rade

air Trade

Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan For a product to display the FAIRTRADE Mark it For a product to display the FAIRTRADE which must meet international Fairtrade standards, are set by the international certification body Fair The FAIRTRADE Mark is a registered certification The FAIRTRADE in devel label for products sourced from producers oping countries. trade Labelling Organisations International (FLO). These standards are agreed through a process of research and consultation with key participants in the 7.2. Fair T

7.1. What is Fair T transparency and is a trading partnership, based on dialogue, Trade Fair international trade. It contributes to respect, that seeks greater equity in secur better trading conditions to, and sustainable development by offering 7. F and workers – especially in the ing the rights of, marginalized producers South. Tel: +856 21 215002 /+865 21 219561 /+865 21 21956 +856 21 215002 /+865 21 219561 Tel: Fax: +856 21 215723 PO Box 6238, Vientiane, Lao PDR Lao PO Box 6238, Vientiane, 6.5. Contact point Agriculture and Forestry Ministry of Department of Forestry 6.4. Certification6.4. cost and SmartW through the regulation follows international CoC certification approbation process. One Lao rattan company has achieved certification; has achieved certification; Lao rattan company process. One approbation were process related to the certification The costs Company. the Leudnilan fees for CoC that the service project. It is noted by the WWF Lao supported it and whether location of the company depending on the differ certification area. is in an urban or rural Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 71 Fairtrade scheme, including producers themselves, traders, NGOs, aca- demic institutions and labelling organisations such as the Fairtrade Foun- dation.

The Fair Trade system flows from FLO to FLO-CERT to the World Fair Trade Organization (WFTO). 7.3. Fair Trade and Rattan Industry

The Lao rattan industry is not at this stage certified ‘Fair Trade’, although some food products are. In the region, only the Cambodian rattan association has WFTO certification.

Rattan certification is new compared to other certification. 7.4. Fair Trade certification benefits

• The benefits of achieving Fair Trade certification include: • Access to information about market development, supply and demand. • A growing network for product promotion. • Establishing contacts with buyers in the global market (for example, by linking up with other WFTO members and trade partners through the WFTO network website, events and meetings). 7.5. Contact point

For more information, please contact: The Fairtrade Foundation 3rd Floor Ibex House 42-47 Minories London EC3N 1DY (UK)

Tel: + 44 20 7405 5942 (general enquiries) Fax: + 44 20 7977 0101 Email the Fairtrade Foundation: Contacting staff:

If you know the name of the individual staff member you wish to e-mail directly, use the formula [email protected], www.fairtrade. org.uk.

73 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 74 PART V - 74 . TS THREA - ortuni , Opp WEAKNESSES Lack of supply chain Narrow market Unclear quota and quota supply High manufacturing value Difficult to access international market Quota Transportation Recognize between buyer and seller • • • • • • • • knesses , Wea Where does the Goals? Strategy? stand? Objectives? Lao Rattan Industry

STRENGTHS Supporting from LNCCI/WWF FSC forest certify Niche market Rattan factory Skills 40 Raw materials in villages , Threa

Increase production/change production from low to high productivity

• • • OPPORTUNITIES • • • Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan • 8.1. What are the objectives of the Lao rattan industry? of the Lao rattan 8.1. What are the objectives to set its objectives and goals into a The Lao PDR rattan Industry needs forecast action plan. What are the possible broad objectives to be achieved by the Lao Rattan Industry in the coming period? ties These factors provide a base on which the rattan industry can build its These factors provide a base on which objectives, goals and strategies.

A project activity has been organized to mobilize the rattan industry with the industry with the the rattan organized to mobilize activity has been project A 115/ based on Decree Association Trader Rattan of establishing a objective rattan SME of Lao potential competitiveness that session the PM. During op of the strengths, weaknesses, This section details some was identified. gths Stren of nalysis 8. A portunities and threats (SWOT) that apply to the Lao rattan industry (SWOT) that apply to the Lao portunities and threats Group on the Lao PDR Rattan Analysis 28: SWOT Figure Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 73 • Build the market share for Lao Rattan abroad • Increase customer satisfaction • Increase promotion • Increase awareness • Increase sales • Become an association to get more recognition and support • Change mindset: become more entrepreneur-oriented (better able to plan in the long term, create business plans etc.) • Skills management, vision/strategy

The objectives chosen must be feasible and internally compatible, or they will fail to provide much help in shaping strategy. 8.2. What are the goals of the Lao rattan industry?

The objectives must be recast in terms of measurable goals if they are to provide guidance and control (what and when to achieve). For example, an objective related to measurable market share and goal might be worded: ‘Move from 20% to 30% market share within this current fiscal year’. 8.3. What will the Lao rattan strategy be over the coming years?

Possible strategies include: • The business target market. Be extremely specific about your target market (the industries, size of companies, product applications, and locations the company aims to reach with its products). Define in terms of business purchase motivations (for example, price, quality, service) • The core position. What kind of products do you to offer (for example, the best quality; environmentally friendly products; the best design and style; the most durable; the safest; the best value for money; the easiest to use)? • Price position. The company should choose one of the following: ‘More for More’; ‘More for the Same’; ‘The Same for Less’; ‘Less for Much Less’; or ‘More for Less’. Each of these positions will draw a particular target market. • The total value proposition. Why should I buy from you? Outline the benefits and features of your product in relation to its price. A business should perceive superior profitability. • The distribution strategy. How does the Lao rattan Industry want to reach its target market? Through websites and/or trade fairs? • The communication strategy. This may involve advertising, sales promotion, public relations, a trained sales force and direct marketing. The 75 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR PART V - business should make sure there is consistency in its chosen target target in its chosen is consistency sure there make should business proposition, its value price positioning, its positioning, its core market, strategy. its communication strategy and its distribution Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Kaisone phomvihan Avn, Saysettha district, Vientiane Capital, Lao PDR Saysettha district, Vientiane Avn, Kaisone phomvihan Lao National Chamber of Commerce and Industry Lao National Chamber of Commerce +856 21 453312 Tel: Fax: +856 21 452580 Email: [email protected] WWW.laocci.com Website: ing planned goals and action. Monthly and quarterly benchmarks against and action. Monthly and quarterly benchmarks ing planned goals be measured. performance are to 8.6. Contact point For more and business advocacy. LNCCI is providing training services information, please contact: 8.5. What controls will there be? 8.5. What controls in accomplish to review the progress made There must be a mechanism The business must translate its goals and strategies into concrete actions into concrete its goals and strategies must translate The business result in work. All plans must according to a calendar. that will take place so that they know and tasks assigned to key players Dates must be set contribute to when. Performance monitoring should what to expect and stay on target. ensuring that tasks 8.4. What will the Lao rattan action plan be? action will the Lao rattan 8.4. What Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 75

PART VI

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VI: ART e r a t e h e r e p r o d u c i n g m a r k e t W o p P Getting a loan is a problem for businesses in Lao PDR. The Lao rattan Getting a loan is a problem for businesses sectors, and faces big challenges industry is not as well developed as other establish sustainable business in trying to build a good reputation and is required if rattan companies practices. Therefore, an element of trust banking institutions. The key are to access loans from private and public order has been placed is how and factor for the rattan industry once an are some possible ways for the where to get funding for production. Here rattan industry to find funding. 1. Services at different banks

Name of Bank Business Loan (amount and Loan Letter of Account conditions) Interest Credit rate (conditions)

Agricultural Yes Yes Yes Yes Bank “Thanakhane For application: khasikham” 1. Business license 2. Tax registration 3. Business accounting report 4. List of shareholders and others suitable documents 5. Guaranty: bank accounts, Land titling and a letter of guaranty of a third party. !BCEL Yes Yes Yes Yes

Phongsavanh Yes Yes 2011: Yes Bank Business < 1 year old: 5-30 12% million LAK Business> 1 year old: 31- 800 million LAK 1. For application: 2. Business license 3. Tax registration 4. Business accounting report 5. List of shareholders and others suitable documents 6. Guaranty: bank accounts, Land titling and a letter of guaranty of a third party.

Public Bank Yes Yes Yes Yes ! 79 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 80 PART VI

EMI office: 021 244 395 Contact

Land titling Guaranty

ther suitable documents Tax registration Business accounting report O ID card Business license Conditions For application:

5. 1. 2. 3. 4.

Interest 4%

! 100,000,000 LAK businesses Loan amount for Loan amount Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan

Ekphatana Microfinance Institution (EMI) is a private organization providing a private organization (EMI) is Microfinance Institution Ekphatana in Vientiane. operating and companies loans to individuals icrofinance 2. M Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 79 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR © Therese Broberg © PART VII -

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VII: ART o r o t e c t i o n

H p c o m P erage is also valuable in the country where products are registered. For erage is also valuable in the country where or the country of exportation. Lao rattan, this could be in Lao PDR Lao rattan companies manufacturing products that run a high risk of Lao rattan companies manufacturing registering intellectual property being copied can protect themselves by are the most recognized rights rights. Copyright, petty patent and design PDR and abroad. This rights cov in relation to rattan production in Lao Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 1. What are Intellectual Property Rights?

Intellectual property is a term referring to a number of distinct types of cre- ations of the mind for which a set of exclusive rights are recognized – and the corresponding fields of law. Under intellectual property law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary and artistic works; discoveries and inventions; and words, phrases, symbols, and designs. Common types of intellectual property rights (IPR) in most European, American and Asian jurisdictions include copyright, trademarks, patents, industrial design rights and trade secrets .

The ASEAN Project on the Protection of Intellectual Property Rights (ECAP III), phase three, began on 1 January 2010, based on a Financing Agree- ment signed on 21 October 2009 by the European Commission and the ASEAN Secretariat, and a Contribution Agreement signed on 18 December 2009 by the European Commission and the European Patent Office.

In Lao PDR, the National Authority for Science and Technology, based at the Prime Minister’s Office since 2009 (and previously known as the STEA- Science, Technology and Environment Agency) deals with IPR. 2. IPR law in Lao PDR

The IPR law has been applicable since 2007, and regulated by decrees and regulations from the Prime Minister’s Office (PMO). There is no specific IPR regulation regarding the Rattan Industry, which is governed by regulations on Petty Patent, Design and Copyright. The IPR authority in Lao PDR notes that when applying for Petty Patent, Design and Copyright, it is essential that business entrepreneurs understand that only new technology, design and products can be covered.

There are 11 sections in the Lao IPR law (see Figure 29). The law is applicable to domestic and foreign individuals and entities involved in intellectual property activities under this law and international conventions to which Lao PDR is a party.

83 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 84 PART VII ! ! ! ! ! ! 84 - ! ! ! ! ! ! 107 107 111 111 118 118 126 126 135 135 137 137

------59 73 73 99 99 59 ------7 7 11 11 12 12 - - - -

60 74 100 108 1 12 12 60 74 100 108 1 Article Article Article Article Article Article Article Article Article Article Article Article 119 Article 119 Article 127 Article 127 Article 136 Article 136 Details Details Article 1 Article 1 Article 8 Article 8 Article

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Against Vio Policies for Good Performers and Measures Against Vio Final Prov Final Prov Compe and Violation Remedies Dispute Resolution Dispute Resolution and Violation Remedies Management and Inspe Management and Inspe Policies for Good Performers and Measures Copyright and Related Copyright and Related Prohibitions Intellectual Property Prohibitions Intellectual Property Property and Unfair Violation of Intellectual Compe Property and Unfair Violation of Intellectual Intellectual Property Intellectual Property Intellectual Industry Property Industry Property Plant Varietie Plant Varietie Copyright and Related Title Title General Provision General Provision

! XI ! XI IX X X VIII IX VII VIII VI VI VII IV V V II III III IV I II Section Section Section I Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan

Copyright regulation No. 1028/PMO-NAST was disseminated on June 17, was disseminated on June Copyright regulation No. 1028/PMO-NAST regulation on the notification of copy 2009. Copyright is governed by the ght 3. Copyri right and related rights information. Once a prototype of a new product right and related rights information. copyright. Registration is not required arises, it is immediately covered by the database of copyrights and related but may be voluntarily recorded for related to This will provide information about and evidence rights center. of violation or dispute, and en copyright and related rights in the event copyright and related rights owner able a channel of public access to the for for business purposes. For products intended for export, an application The protection is for protection must be made in the country of destination. the lifetime of the creator of the work plus 50 years. igure 29: IPR law in Lao PDR law in Lao 29: IPR Figure Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 83 Figure 30: Copyright regulation

Section Title Details

I General Provisions Article 1-7

II Patent Article 8-14

III Petty Patent Article 15-18

IV Industrial Designs Article 19-32

V Amendment of filing patent application for Article 33-34 invention, device and registration of industrial design

VI Official fees and resources derived from Article 35-40 registration

VII Settlement of dispute arising from Patent, Article 41-43 Petty Patent and Industrial Designs

VIII Final Provisions Article 44-45 ! 4. Petty patent and design

Petty Patent and Design regulation No. 332/STEA-PMO was disseminated on February 18, 2003. Petty Patent and Design fall under the regulation on the implementation of the decree on Patent, Petty Patent and Indus- trial Designs. There are eight sections, detailed in Figure 30 (note that the regulation is under review). Registration for Petty Patent and Industrial Design is not an obligation but recommended if a business wants to protect its technically-new product from being copied. The protection lasts for five years, renewable for a total of 15 years. This regulation protects new products in the territory of Lao PDR. The business will keep master plans to prove that the product is genuine and owned by the business.

It is recommended that manufacturers do not exhibit a new product without

85 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 86 PART VII

45 18 32 34 40 43 ------7 14 - - Details tion cer- Article 44 Article 1 Article 8 Article 15 Article 19 Article 33 Article 35 Article 41

trial Designs aining a registra

Title

, and fees Settlement of dispute arising from Patent, Settlement of dispute arising from Petty Patent and Indus Final Provisions invention, device and registration of invention, device and registration industrial design from Official fees and resources derived registration Petty Patent Industrial Designs for Amendment of filing patent application General Provisions Patent

I II V III VI IV VII VIII

Section Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan

tifica 5. Requirements for obt In the case of products intended for export, the business must apply for business must for export, the of products intended In the case assis be done with the This can destination. in the country of protection proper protection, as this increases the risk of it being copied. Even though though Even copied. risk of it being the increases as this protection, proper will by registration given the protection last long, do not products rattan be further the design can time, during which company for some protect the that it is protected. in the knowledge developed Design regulation 31: Petty Patent and Figure tance of a professional legal institution (law firms) or independently via the firms) or independently institution (law professional legal tance of a point). can be provided by the contact internet (more details ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 85 Registration of works (here meaning newly created designs) can be conducted at the Ministry of Science and Technology. Copyright may be registered at the Division of Copyright and Petty Patent and Industrial Design at the Department of Intellectual Property Standardization and Metrology. The fees for the issuance of notification of rights and related rights information are shown in Figure 31.

Figure 32: Copyright, petty patent and design registration information, 2011

Headings Copyrights Petty patent and design Location Copyright: Copyright Division, Petty Patent and Industrial building annex to the Ministry of Design, fourth floor Science and Technology Application Form code number: IP-C.01 Application (called a ‘request’) can (see forms sample in 5,000 LAK/set/work be withdrawn at the registry unit. appendix) Submit the registration application 10,000 LAK with required attachments, these Submit the registration application are: with required attachments, these 1. Business license are: 2. Tax registration 4. Request 3. Information on related works5. Power of attorney if process such as master plan of the through an agent product with specifications 6. Precise description of the invention to be registered or protected 7. The scope of protection 8. The creator explanation with technical drawings and the scope of protection 9. Full payment of fees Issuance of 20,000 LAK/one work 300,000 LAK/item for 4 first years Notification fees Data search 10,000 LAK/one work Not applicable for petty patent Technical service Form code number: IP-C.02 for Request for opposition: 300,000 fees for changes, changes LAK/item cancellation Form code number: IP-C.03 for Duplication: 100,000 LAK revocation or cancellation duplication of Application form: 5,000 LAK/set certificate

Service fees: 20,000 LAK/one work Maintaining fees are Nil 34% increment for each year official and services fees 87! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 88 PART VII 88 III) int t po ac Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan In Europe: European Patent Office http://www.epo.org In Asia: In Intellectual Property Rights (ECAP ASEAN Project on the Protection of c/o Department of Intellectual Property Ministry of Commerce Office 10708, 7th Floor District 44/100 Sanam Bin Nam Road, Muang Thailand Nonthaburi 11000, +662 547-4678, 547-5193 Tel: Fax: +662 547-4677 [email protected] For general enquiries, please contact Contact person: Mrs. Khamgnong SICHANTHAVONG Director of Copyright Division E-mail: [email protected] For Copyright: Division of Copyright Lao PDR Box: 2279, Vientiane, P.O. +856 21 263 613 Tel: Fax:+856 21 213 472 Contact person: Ms Chansida KEOPASEUTH Industrial Property Division Deputy Director of E-mail: [email protected] For Petty Patent and Industrial Design: For Petty Patent and Metrology Property Standardization and Department of Intellectual Lao PDR 2279, Vientiane, Box: P.O. +856 21 240 784 Tel: 472 Fax: +856 21 213 In Lao PDR: Technology Science and Ministry of Note: the current exchange rate for LAK / US$ is 8,000 LAK/1$. is 8,000 / US$ for LAK rate exchange the current Note: 6. Cont Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 87

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H P Exporting is essential for the Lao ecomony and its contribution to the Exporting is essential for the Lao ecomony The Government has developed policies to support alleviation of poverty. The line min of the country. and promote export to build competitiveness istries concerned with decision making are MOIC and MOF. The relevant The are MOIC and MOF. istries concerned with decision making ministry for the rattan industry is MAF. The rattan industry must comply with the regulations that have been put in place to process export paperwork. The sections below provide the details of the different documents required.

When exporting, Lao rattan manufacturers deal with export authorities, which involves MoIC and MoF for the payment of export duties.

Forest strategy and related government policies encourage local people to manage forest resources and gain benefit from protecting forest resources by collecting Non-Timber Forest Products (NTFPs) including rattan for processing and trade to improve income and reduce poverty. The National Forest Strategy 2020 (MAF 2004) and the Forest Law (2007) provide a legal basis for the development and management of forest resources including NTFPs and Rattan. The National Forest Strategy 2020 addresses the development of NTFPs (section 5.2.3) including:

No Description

1 Linking harvesting plans and quotas with local forest management plans developed by villages through the Village Land Use Planning process

2 Enhancing the transparency and consistency of the harvesting plan quota system and procedures and annual sustainability

3 Establishing NTFP harvesting plans based on resource inventories and science rather than only on market demand that may threaten the resource base

4 Setting appropriate royalties and fees for companies who buy, process and export rattan products (in relation to species that are susceptible to over- harvesting or species whose populations are threatened)

5 Promoting NTFP processing and export through appropriate trade regulation and technical and financial support

91 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 92 PART VIII - - - 92 - er Cent tion tion

Roles of the FTPD in terms of Lao foreign trade policies of Lao foreign trade the FTPD in terms Roles of cooperation Economic laws and international documents-domestic Legislative to international trade Procedures related Lao trade agreements On-going trade negotiations from trading partners under various preferences received Trade ASEAN, multilateral/WTO and sub-regional, scopes-bilateral, regional and commerce assistance for the Lao industry Official development sector trade projects the process of the agreements and Implementation of under the FTPD.

Taxation refers to the financial obligation of individuals, legal entities and refers to the financial obligation of individuals, Taxation who carry out business or make organizations, including foreign persons, basis in Lao PDR, as well as those a living on a permanent or temporary located in Lao PDR but who carry residing or having a place of business generate income. out activities in a foreign country that in the amended tax must be paid according to the rates specified Taxes on the Prom The Implementing Decree of the President of Lao PDR law. tax liabil Law No. 46/PO, dated 25 May 2005, details Tax ulgation of the to all organizations and This tax regime is applicable ity (see Figure 32). The tax regime of in Lao PDR. persons conducting business or working indirect taxes are The indirect taxes. Lao PDR is comprised of direct and profit taxes, income The direct taxes are business turnover tax and use tax. are applicable to rattan manufac taxes, de minimus taxes and fees. Some turers (see Figure 33). xa 2. Ta

The purpose of the Information Center is to provide and disseminate infor provide and disseminate Center is to of the Information The purpose orma 1. Inf mation for the public. This information relates to: This information the public. mation for • • • • • • • • • Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 91 Figure 33: Tax law in Lao PDR

Part Title Details

I General Provisions Articles 1-6

II Tax System Articles 7-9!

III Business Turnover Tax Articles 10-22!

IV Excise Tax Articles 23-29!

V Profit Tax Articles 30-53!

VI Income Tax Articles 54-67!

VII Fees and Service Charges Articles 68-71

VIII Obligations and Rights of Taxpayers, Articles 72-85

Responsibilities of Persons and Relevant Organizations and Rules on the administration of Taxes, Fees and Service Charges

IX Structure and Activities Relating to Taxation Articles 86-94

X Administration and Inspection of Taxation Activities Articles 95-102

XI Policies towards Persons with Outstanding Performance Articles 103-106

and Measures Against Offenders

XII Final Provisions Articles 107-108!

93 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 94 PART VIII

40 40 aw 94 L f the the f o Article Tax Tax Article Article 51 Article Article 17 Article

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. Rat For trading and and trading For services general of 1% businesses: of revenue total year whole whole year whole For domestic domestic For producer of revenue total 35% on net profits profits net on 35% from derived services professional net on 35% and from derived profits operations. business rates tax profit The foreign to applicable companies invested the to subject vary, granted as incentives 2004 the under Investment Foreign t 0% from Law, 20% As an example, the the example, an As rate tax profit Lao to applicable is companies owned for 0% Kip than higher 2,400,000

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5% and 10%, plus a 0% 0% a plus 10%, and 5% goods exempted for rate the in listed are they as Law. Tax • • • he he

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exports are are exports

transactions transactions - . . Importers of of Importers . . by the Lao Lao the by

Details

letion of the work. work. the of letion end financial financial end tax tax - r s DR. P

oods/services, it is is it oods/services, ayable in advance on a a on advance in ayable external auditors auditors external recognized Government. exempt from annual profit profit annual from exempt exempt be also may tax tax. minimum the from minimum the of Exemption when applicable also is tax the in shown as losses financial company's by certified are statements company had losses in its its in losses had company the in operations business the year, previous de its pay must company minimu foreign Certain are who investors domestic would create a lower profit profit lower a create would the to payment tax t than Government tax. minimum of application payable is Tax Minimum if Even basis. annual an on year the the that states statement A minimum tax (also called called (also tax minimum A is tax") minimus "de the gross to applicable previous the of turnover enterprise those of year profit, a make not do who that profit a make who or between the total income income total the between deductible total the and is It year. the of expenses p basis. quarterly from business o business from or Law Tax the unless with agreements specific Government Lao the provide specifically annual The exemptions. on calculated is profit net difference the of basis the turnover tax turnover assessment re for goods business the from exempt turnove on levied is tax Profit derived profits net annual All purchases and sales sales and purchases All by substantiated be must of Importers invoices. tax are resale for goods the deduct to allowed paid tax turnover business importation of point the at business monthly the from to the tax authority, the the authority, tax the to the following month of basis The collection. goods imported for taxation plus value, customs the is plus duties, customs services on Tax tax. excise after calculated be shall comp the Lao business the imports, For the at paid is tax turnover while, importation, of point transactions domestic for g of monthly paid and declared The turnover tax shall be be shall tax turnover The upon collected imported of sale time first domestically or goods and goods produced there Initially, services. in BTT of rates four were

Type of Tax of Type

Minimum Tax Minimum Profit Tax Profit Turnover Tax Tax Turnover ("BTT") Business Business Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Figure 34: Tax liability for businesses carrying trade activities in Lao PDR in Lao activities trade carrying businesses liability for Tax 34: Figure Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 93 specifically provide 35% on net profits company. exemptions. The annual derived from net profit is calculated on professional services; and 35% on net the basis of the difference profits derived from between the total income business operations. and the total deductible • The profit tax rates expenses of the year. It is applicable to foreign payable in advance on a invested companies quarterly basis. vary, subject to the incentives as granted under the 2004 Foreign Investment Law, from 0% to 20%. Minimum Tax A minimum tax (also called • For domestic Applicable Article 51 the "de minimus tax") is producers: 0.25% of depending on applicable to gross total revenue of the financial whole year turnover of the previous results of the • For trading and year of those enterprise general services company who do not make a profit, businesses: 1% of or who make a profit that total revenue of would create a lower profit whole year tax payment to the Government than the application of minimum tax. Minimum Tax is payable on an annual basis. Even if the year-end financial statement states that the company had losses in its business operations in the previous year, the company must pay its de minimus tax.

Certain foreign and domestic investors who are exempt from annual profit tax may also be exempt from the minimum tax. Exemption of the minimum tax is also applicable when losses as shown in the company's financial statements are certified by external auditors recognized by the Lao Government. Income Taxes Taxes on incomes are comprised of the following:

Personal Income Tax • From 0% to 25% for Applicable Article 60 levied monthly on wages, Lao employees salaries, bonuses and • A flat rate of 10% for foreign employees other emoluments derived employed by entities from employment in Lao licensed under the PDR Foreign Investment Law, which the employers are responsible to collect and to declare to the tax authority Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 95 96

! PART VIII

96 - - -

31 31 48 48 53 53 55 55 39 39 - - Details Details ------7 7 24 24 - - - - Articles 40 Articles 40 Articles 49 Articles 49 Articles 54 Articles 54 Articles 1 Articles 1 Articles 8 Articles 8 Articles 25 Articles 25 Articles 32 Articles 32

Added Added Added - -

Added Tax Added Tax Added Title Title - -

Added Tax Licenses Tax Added Licenses Tax Added - -

icies towards Persons with High Achievement Achievement High with Persons towards icies Achievement High with Persons towards icies Pol Pol and Measures Against Violators Against Measures and Violators Against Measures and Provisions Final Provisions Final Value Value Implementation Implementation Value of Inspection and Management Value of Inspection and Management Tax Tax General Provisions General Provisions General Value on Regulations Value on Regulations

x Ta Added alue

Value-added tax (VAT) is a tax on consumption, ultimately paid by final paid by final ultimately is a tax on consumption, tax (VAT) Value-added and added to goods on the value indirect tax is collected This consumers. and ser distribution from production, in all processes, ranging services 3. V The Government determines the policy on VAT and other taxes. It aims to and other taxes. determines the policy on VAT The Government and domestic promote manufacturing, services, exports, set tax levels that growth of socio- and contribute to the constant and foreign investment, the President of Lao PDR On the The Decree of economic development. Law No. 03/PO, has been promul Tax Value-Added Promulgation of the DR Law in Lao P VAT 35: Figure vice supply to consumption. It is also collected on the value of goods and on the value of It is also collected to consumption. vice supply not bear businesses should PDR. In principle, imported into Lao services in place that tax themselves since there are mechanisms the burden of the transactions payments levied on intermediate of VAT allow for a refund between firms. started implement 2007 (see Figure 35). Lao PDR gated on 16 January countries in the late 2010. Limited to fewer than 10 in January ing VAT Among is now implemented by about 140 countries worldwide. 1960s, VAT range from 5 % in Japan to 25 % in industrialized nations, standard rates Figure “36” details its implementation Hungary and in parts of Scandinavia. in Lao PDR. Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 95 Figure 36: VAT liability in Lao PDR

Taxpayers Registered VAT taxpayers

VAT liability Applies to most goods and services when these are supplied in Lao PDR by registered VAT taxpayers and also to most imports of goods (some goods and services are exempt, covered by Article 10 of this law).

General VAT rate 10%

VAT rate on export 0% No VAT is applied on goods and services for exporting to the international market to reduce the capital investment required and strengthen income for Lao businesses

Calculation System The VAT system is based on tax collection in a staged process, with successive taxpayers entitled to deduct input tax on purchases and account for output tax on sales. Each business in the supply chain takes part in the process of controlling and collecting the tax, remitting the proportion of tax corresponding to its margin, i.e. on the difference between the VAT paid out to suppliers and the VAT charged to customers

Refund procedures VAT refunds are part and parcel of the VAT system because they result from the typical VAT deduction mechanism (input VAT offset against output VAT), combined with the application of a zero rate on exports

Returned VAT Monthly

Risks Delays in refund could result in businesses needing cash flow for operate, and fairness issues

Recommendations VAT taxpayers have effective financial reporting systems in place and are reporting correct sales and VAT payment amounts

Benefits Substantial cash flow ! 4. Customs Duties

Customs duties refer to the financial obligations of individuals, legal entities and organizations carrying out import and export, transit and circulation of goods through border customs checkpoints according to the rates deter- mined in the Book of Tariff Rates according to the rules and regulations specified in the Custom Law No.05/NA, dated 20 May 2005 (see Figure 37) and specified in Figure “38” for the Lao rattan businesses.

97 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 98 PART VIII

! ! ! !

98 19 40 42 45 47 49 60 69 88 93 15 ------! - 9 - 16 10 Of the Article Tax law Article 7 Details

Articles Articles 30 Articles 41 Articles 43 Articles 46 Articles 48 Articles 50 Articles 61 Articles 70 Articles 81 Articles 89 Articles 94 Articles 1 Articles

Rattan

businesses om export Applicable to Such goods are exempt fr duty, exit and entry restriction rules. 0% on export according to the Book o Tariff Rates Locally produced goods and goods on which customs duties and obligations have been paid in accordance with rules and regulations may be moved from one place to another within the Lao PDR through foreign territory.

pecific

Rate (latest)

like export duties, range from 5% to 40% Import duties,

Title

by law or

tions and Activities

Details

certain goods to be used in the production. must be paid at the point of importation before the goods can be removed from the customs services. The import duties may be exempted for whereas import goods are declared at their actual value plus insurance, transportation and other costs. Import and export duties exemptions are provided for by specific agreement with the Lao Government. Export goods are declared at their actual value, Under the Customs Law, all goods, imported or exported, are subject to duties, unless contrary

moval of Goods for which Security has been Provided and moval of Goods for which Final Provisions Final Customs Organiza Work Administration and Inspection of Customs and Policies to Persons with Outstanding Performance Measures Against Violators The Use of Boats for Movement of Passengers or Goods The Use of Boats for Movement of Passengers along Border Rivers Customs Offences Prosecutions Relating to Customs Warehouse Regimes Control Goods under Specific Duties and other Obligations Exemptions from Customs Economic Zone, S Customs Duties for Special Free Zone Economic Zone or Duty Customs Declaration Procedures Customs Declaration payment of customs duties and other Customs declaration, obligations Re General Provisions General

I II X V III XI IX VI IV Type of Tax XII VII XIII VIII XIV Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan

Other Taxes: Import and Export Duties Part igure 38: Customs obligations in Lao PDR Figure DR P law in Lao 37: Custom Figure ! ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 97 Type of Tax Details Rate Applicable to Article Rattan (latest) Of the businesses Tax law

Other Taxes: Under the Customs Import duties, 0% on export Article 7 Import and Law, all goods, like export according to Export Duties imported or exported, duties, range the Book of are subject to duties, from 5% to Tariff Rates unless contrary 40%

exemptions are provided for by law or Locally by specific agreement produced with the Lao goods and Government. Export goods on which goods are declared at customs duties their actual value, and obligations whereas import goods have been paid are declared at their in accordance actual value plus with rules and insurance, regulations transportation and may be moved other costs. Import from one place and export duties to another must be paid at the within the Lao point of importation PDR through before the goods can foreign be removed from the territory. customs services. The import duties may Such goods be exempted for are exempt certain goods to be from export used in the duty, exit and production. entry restriction rules. ! 4.1 Contact Point

Ministry of Commerce and Industry Foreign Trade Policy Department Tel/fax: +856 21 450066 E-mail: [email protected]; [email protected] Website: www.laoftpd.com

Trade Promotion and Product Development

Department of Export and Import ERIT: the Economic Research Institute for trade Trade Development Facility

Ministry of Finance Tax Department Customs Department Cabinet Ministry of Finance 99 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 100 PART VIII

- 100

Shipping company Services provided by

! ! ! (see

MOIC

ter ter ter ter ter rovided r r r r r ultur the xporter xpo xpo xpo xpo xpo Exporter E Exporter E E details below) Document processed through (see details below) Remarks Specific to agric product This document is processed and p by exporter E E E Exporter

ginal xport Ori Copy Original Original Copy Copy Copy Copy Copy Copy Nature of the documents Copy

PAFO

xporter E SmartWood From exporter DOIC, MOIC MAFF Buyer and seller DOIC, MOIC MOIC MOF PAFO Issued by MAFF

r e tive steps fo

ontract

Sale C

FORM A to DOIC, MOIC CoC & FSC Certificate Request Letter for form A phourkphanh” Invoice and Packing List Goods to Export NTFP “bai sangna “Cutting permit” Contract of Sale of “Bai anougnad khoudkhone” Proof of Quota Allocation Proof of Resource Harvesting Business registration License Tax Registration License Export Business License Type of document

Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 11 9 10 8 7 6 5 4 2 3 1 No Figure 39: Listing of required documents for export documents for 39: Listing of required Figure Several documents are required to process an export from Lao PDR to Several documents are required to details the documentation required to the country of destination. Figure 39 in Lao PDR. Thanaleng point at process exports through the customs 5.1. Leaving Lao PDR

ing transportation tax, resource tax and VAT, in accordance with Custom and VAT, ing transportation tax, resource tax export duty. dated 20 May 2005 and exempt of Law No. 05/NA 5. Administra before a product can be cleared at Sixteen documents must be processed Of these, four are requested on arrival the customs border checking point. point in the country of destination. at the customs declaration checking are completed and all relevant taxes It is recommended that all documents at the border check point, includ paid before declaring goods to Customs Kaisone phomvihan Avn, Saysettha district, Vientiane Capital, Lao PDR Capital, Saysettha district, Vientiane Avn, Kaisone phomvihan Lao National Chamber of Commerce and Industry Commerce and Chamber of Lao National +856 21 453312 Tel: Fax: +856 21 452580 Email: [email protected] www.laocci.com Website: email: [email protected] email: [email protected] www.mof.gov.la website: Rue 23 Singha, Vientiane, Lao P.D.R. Vientiane, 23 Singha, Rue 21 900943 +856 Tel/Fax: Box: 46 P.O. Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 99 No Type of document Issued by Nature of Remarks Services the provided documents by

1 Export Business License MAFF Copy Specific to agricultural products This document is processed and provided by the exporter

2 Business registration MOIC Copy Exporter License

3 Tax Registration License MOF Copy Exporter

4 Proof of Resource PAFO Copy Exporter Harvesting “Bai anougnad khoudkhone”

5 Proof of Quota Allocation MAFF-PAFO Copy Exporter “Cutting permit”

6 Contract of Sale of Buyer and Copy Exporter! Goods to Export seller

7 NTFP Sale Contract DOIC, MOIC Copy “bai sangna Exporter! phourkphanh”

8 Invoice and Packing List Exporter Original Exporter!

9 CoC & FSC Certificate SmartWood Copy Exporter

10 Request Letter for form A From exporter Original Exporter (see to DOIC, MOIC details below)

11 FORM A DOIC, MOIC Original Document Shipping processed company through MOIC (see details below) 12 Permit certification “Bai MOIC – Dimex Original Document Shipping tid tham sinh Kha” processed company through MOIC (see details below)

13 Transportation tax, MOF Copy All fees must Forestry tax and VAT be fully paid ahead of 111 Sustainable Rattan Production - Manual forprocessin Small and Mediumg Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR 112 14 Plant Quarantine PAFO, MAF Original Checked at Shipping Declaration international company Check Point

15 Certificate of Fumigation LFF Shipping Original Processed for Shipping Company customs company

clearance at landing port

16 Customs Declaration MOF Original Declaration Shipping Form issued at the company checking point when all documents listed above are provided. ! PART VIII

- 112 hipping hipping hipping hipping hipping S company S company S company S company

authority

The same

issues Form A issues Form g at MOIC MOIC

ed hecking point clearance at landing port Declaration issued at the c when all documents listed above are provided Document Document processed through details (see below) must fees All fully paid be of ahead processin Check international Check Point for Processed customs

Issue

Certificate

Permission

Original Original Original Original Original Copy

Company DoC, MOF

DOIC, MOIC LFF Shipping Dimex From company – - DEPARTMENT

PAFO, MAF PAFO, LFF Shipping Company MOF MOIC MOIC MOF tion

of approba Issue report “Bai

aration

Lading of orm Customs Decl F

Declaration of Fumigation Certificate Plant Quarantine Quarantine Plant Transportation tax, tax, Transportation VAT tax and Forestry tid tham Kha” sinh Permit certification certification Permit Request Letter to Bill Certificate of Fumigation Invoice and Packing List DOCUMENT FORM A inspection

authority of

Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 16 15 14 13 12 4 2 3 No 1 he process of obtaining a permit certificate and Form A 5.3. The process Figure 40: Export documentation at destination Figure Figure 40 details the documents required to process exports at their desti Figure 40 details the documents required nation. n arrival 5.2. On arrival ! ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 111 Figure 41: The details of each step

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The final step in exporting a product is obtaining a customs declaration, which is one checking point at the border. Exporters/enterprises must present their all documentation to the customs authorities, who perform a product inspection and approve and issue the ASEAN Custom Declaration Documents. This completes the export procedure and the product may be transported to the destination country.

Approval and Submit all Product issue ASEAN Cus- documentation Inspection tom declaration documents

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TO VAT 7% T/T : CY CHARGES BKK LOADING AT VIENTIA CUSTOMS CLEAR AT BORDERS FOB CHARGES AT BKK PORT SUBJECT DETAILS OF COST PER CONTAINER IMPORT CLEAR FOR EMPTY CONTAINERS FOB CHARGES AT BKK PORT SUBJECT TO VAT 7% T/T CY CHARGES HAIPHONG HAIPHONG LOADING AT VIENTIANE CUSTOMS CL IMPORT CLEAR FOR EMPTY CONTAINERS % % % %

VIENTIANE VIA BANGKOK PORT VIENTIANE VIA HAIPHONG PORT. 2 3 4 5 1

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Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 6. Cont 42: Containerized Shipments Figure !"#$%D % !"#$%C !"#$%A !"#$% !"#$%& NO. OF ITMES EX EX ! ! Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 113 7. Contact point

Ministry of Industry and Commerce Department of Import and Export

Tel: +856 21 453452, 450066 www.moic.gov.la

Lao National Chamber of Commerce and Industry CO and standard division

Tel: +85621 453312 Fax: +85621 452580

Email: [email protected] Website: WWW.laocci.com Kaisone phomvihan Avn, Saysettha district, Vientiane Capital, Lao PDR

Lao Freight Forwarder CO,.LTD Km 3 Thadeua Rd, Vientiane, LaoPDR. P.O.Box 3145 Tel: +856 21 313321, 313351 Fax: +856 21 314831

Email: [email protected] [email protected] [email protected] [email protected] [email protected]

115 Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR PART VIII Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan Sustainable Rattan Production - Manual for Small and Medium Enterprises in Lao PDR Small and Medium Enterprises in Lao PDR - Manual for - Manual for Production Production Sustainable Rattan Sustainable Rattan 115