Supply Chain Analysis for Rural Sanitation Products and Services in Lao pdr



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Possible limitations of the data


The data presented in this report may be limited by a number of factors. These include the sample size. For example, 37 concrete producers were interviewed in total, so provincial- and district-level data for these actors must be treated with some caution. Similarly, in some districts only a few material suppliers were interviewed. However, data were verified against other sources. The reported selling prices of various construction materials were double-checked.

The data may also suffer from selection bias. Those companies that were prepared to be interviewed may not be representative of the population. However it is not clear in what direction this bias might affect the data. Some actors refused to be interviewed (some citing that are too often asked questions by sanitation programs) and some of these tended to be larger suppliers. But other large suppliers were interviewed.

Some interviewees may have believed that their answers could determine whether they would win future work from the project. That is, they may have believed they were being interviewed as a prospective supplier to a program (since many actors in the Lao PDR sanitation supply chain have knowledge of, or experience working with, Government and NGO programs). This became apparent in some interviews during the preliminary field visits. As a result, the research teams were trained to explain that this was not the case and that interviewee’s answers would be used anonymously. However, it may be that some interviewees still understated their business’s constraints and weaknesses, for example.

At many interviews and all focus groups, local Nam Saat and/or Health officials were present. This may have influenced some interviewees’ answers. Though in general officials were a useful source of local knowledge and assisted the research teams in finding actors to interview.

Some interviewees may have been hesitant to reveal a lack of knowledge and so provided guesses rather than stated that they didn’t know. Research teams were trained to probe and attempted to limit this.

The research team did not reach the most rural villages because in these villages supply chain actors are not present and interviewing poor households was not in the project scope. This implies that the research did not reach the most rural communities but only those rural communities with at least one supply chain stakeholder. However, actors were asked about the location of their customers and their ability to serve remote rural areas.

Finally, the research location did not include the whole supply chain. For example, manufacturers and suppliers in Thailand and Viet Nam were outside the geographic scope of the project, yet these businesses are an important part of the chain. Also, construction material suppliers in Pakse (and some other towns) play a role in the supply chains studied but these were not in the selected research districts. Similarly, some suppliers in Vientiane form part of the supply chain to rural areas. The team tried to obtain interviews with Vientiane construction material suppliers, but they all refused stating they had been questioned too many times previously by sanitation projects (with the exception of an informal meeting with one supplier).

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All data in the tables and figures in this report are from the study’s field research, unless stated otherwise.

  1. The Sanitation Supply Chain

    1. The actors

      1. Manufacturers


Most manufacturers of components for latrines are in Thailand, China and Vietnam. There are three Lao manufacturers of cement (two are state-owned). Sand and gravel are produced locally. We are not aware of any local manufacture of latrine pans.

As a result, there were no in-depth interviews with manufacturers. However, the team had an unstructured interview with Lao Cement.


Lao Cement


Lao Cement is owned by the Lao and Chinese governments. It produces the two types of cement (known universally throughout Lao as Red and Green brands) at its plant in Vientiane province under the brand name Kating Thong. The company supplies twelve provinces: Oudomxay, Luangnamtha, Huaphan, Xieng Khuang, Luang Prabang, Xayabuly, Xayxomboun, Vientiane, Vientiane Capital, Borikhamxay, Khammouan, and Savannakhet. However, more than 80% of output is for Vientiane and surrounding areas. A separate state-owned cement manufacturer is located in Savannakhet and a there is a private cement producer in Salavan.

The delivered price for nearby provinces is 780,000 LAK per ton for Red, and 710,000 LAK per ton for Green. Lao Cement stated that its price is a little higher than cement from other factories in Lao as well as from Thailand, Vietnam, and China. The plant gate price is about 10-15% lower if spot buyers come to the factory. For delivery to farther provinces, an additional cost of 270,000 LAK per ton is charged. A slightly lower price is offered in wet season, and other periods of excess supply. This discount is about 15,000 LAK per ton.

Lao Cement supplies to its regular wholesale shops who act as sales agents. In wet season, the company sells on credit to its agents and wholesalers - until cement is sold out. No credit is offered during the dry season. The company produces brochures explaining the company and its products. These brochures are supplied to sales agents, wholesalers and new clients. The company has no direct link to rural areas. Wholesalers in these areas buy on spot from Lao Cement.

      1. Construction materials importers and suppliers (wholesale and retail)


Importers/wholesalers are businesses that import construction materials (e.g. cement, ceramic pans, PVC tubing, tiles, etc.) from outside Lao PDR for wholesaling.

Retailers are shop-keepers in urban or rural markets who sell construction materials, including latrine components, usually directly to consumer households.

Importers/wholesalers are usually located in the provincial capital and sell to retailers in the province, construction projects, and may also sell small amounts directly to households. Latrine related products are generally a small part of their product range and income. Some importers are not in the provincial capital but are in towns close to the border.

The average number of construction material suppliers per research district is 6.96. However there is wide variation: Houay Xai, Sing, Khamkeut and Salavan districts have at least 15 material suppliers while Xaychamphone and Kaluem have only one (Table 2). Detailed maps and explanation of product flows are provided below.

Retailers are located in the provincial towns and villages and are typically family-owned small enterprises. Usually they supply themselves from importers and wholesalers located close to the border and their customers are almost 100% individual households. Some retailers also import directly themselves.

However, in Lao PDR a clear distinction between importers, wholesalers and retailers is often difficult to discern. Especially closer to the border the distinction between these activities is blurred and nearly all construction material shops do some importing. Sometimes the supply chain is totally bypassed by individual end customers, who travel to Thailand to purchase products (typically because the price is lower, at least partly due to avoiding import duty and custom fees).

The EMC research team interviewed a total of 68 construction materials suppliers. The interviewees were either the shop owner who employs staff (51%) or a self-employed sole trader (i.e. no staff) (49%). The majority of the owners and the sole traders were female, 57% and 67% respectively (Table 5). This level of female ownership is consistent with that for micro businesses (those having 1 or 2 staff) throughout the country: 63% of micro businesses in Lao PDR in 2011 were owned or managed by a woman (GIZ 2012).



Table 5: Owner and Self Employed Material Suppliers – Distribution by gender (n=68)




Owner (with staff)

Self-employed sole trader (no staff)

Total

Male

Female

Total

Male

Female

Northern

30%

83%

17%

70%

29%

71%

Bokeo

55%

83%

17%

45%

60%

40%

Luangnamtha

0%

0%

0%

100%

11%

89%

Central

53%

40%

60%

47%

11%

89%

Borikhamxay

67%

0%

100%

33%

0%

100%

Savannakhet

40%

100%

0%

60%

17%

83%

Southern

66%

32%

68%

34%

60%

40%

Attapeu

50%

0%

100%

50%

50%

50%

Salavan

70%

71%

29%

30%

67%

33%

Sekong

86%

17%

83%

14%

100%

0%

Total sample

51%

43%

57%

49%

33%

67%

In our sample, construction materials suppliers on average employ 4 staff, and have been in business for seven years. Those in district capitals typically employ more staff than the others (5.7 compared to 3.3, on average) and have been in businesses for longer (10 years compared to 6 years, on average).





Material suppliers in Sekong Province


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