Kip weakens against Thai baht, hurts Lao importers
VIENTIANE (Vientiane Times/ANN) - The continuously weakening value of the Lao kip against the Thai baht has hurt businesses in Laos, especially those engaged in import operations, forcing them to accept a cut in profits.
As of September 2, the exchange rate at the Banque pour le Commerce Exterieur Lao Public (BCEL) showed that one Thai baht was being sold for 291.92 kip, and one Thai baht could be purchased for 289.73 kip.
This issue creates significant challenges for both the public and private sectors, with possible further rises of the Thai baht and weakening of the kip in the months or years to come.
The founder and owner of BNN Clean and Organic Agriculture Sole Co Ltd, Ms Nidtaya Phetdavan, told a Vientiane Times reporter on Friday that her business mainly imports agricultural production equipment from Thailand and always uses foreign currencies for payments.
“Of course, the drop in the value of the kip against the baht has hurt local businesses a lot. We depend on many imported goods, mainly consumer products and agricultural production materials,” she said.
Major products imported into Laos are agricultural machinery, fertilisers, and other essential items.
“The rising exchange rate of the baht has caused a trade deficit for my company but we still make a little profit from our sales,” Ms Nidtaya said, adding that almost 70 percent of products sold by her firm are imported from Thailand and the rest from China and Vietnam.
Ms Nidtaya said the only way to ensure a stable turnover with this variable exchange rate is to minimise profits.
“For example, we used to make 5,000 baht from selling an agricultural machine. Now, we make about 2,000 baht from the sale of the same machine,” she said.
Many other importers in Laos are facing the same problem, but use different tactics to sustain their businesses.
“As a business operator, I’d like to ask the government to do whatever it can to control the exchange rate of foreign currencies in order to minimise the negative impact on local businesses, including short-term and long-term solutions,” Ms Nidtaya said.
Over the past few years, a significant drop in the value of the kip against the baht has posed challenges for local entrepreneurs in keeping the price of imported goods at a low level.