ScientificJournalNUOLVolume6

Study on Volume Index of Asphalt Mixture in Laos Xayasone XONGYONGYAR1, CONG Zhuo-hong2, ZHENG Nan-xiang3 (1.Highway College, Chang’an University, Xi’an 710064, Shaanxi, China; 2. Key Laboratory of Highway Construction Technology and Equipment of Ministry of Education, Chang’an University, Xi’an 710064, Shaanxi, China; 3. Key Laboratory for Special Area Highway Engineering of Ministry of Education, Chang’an University, Xi’an 710064, Shaanxi, China) Keywords: road engineering; Laos; damp heat coefficient; climate division; road performance; volume index. Abstract In this study, Laos climate is partitioned based on the damp heat coefficient method, proposing Laos asphalt pavement performance indicators. Through the study on asphalt mixture design using the Chinese technical specification of the AC-13 gradation median value for asphalt mixture and researching on aggregate ratio, and air void on the performance of asphalt mixtures, void index requirements are proposed in different climatic zones, and further recommended the volume index requirements for asphalt mixture design. 1 Introduction Laos is located in the northern Indochina Peninsula in Southeast Asia, and is a landlocked country. Laos, just like in many rainy countries is mountainous, with an average annual rainfall greater than 1000mm [1]. Further to preserving the natural environment, and the more stringent requirements of the asphalt pavement currently being practiced, Laos has not yet formed a system of asphalt pavement design method. relatively suitable to their own national climate. Through existing road survey’s it shows that water damage often occurs in Laos’s highway asphalt pavement, and the road damage is very serious. Relative to Laos, China has formed a mountain area highway design and road design methods, of which Laos’s highway design could have a very large reference. Laos can refer to the same latitude and climate similar to parts of the asphalt mixture design method to pavement research applied in China whilst departure from the climate terrain can refer to the southern provinces of China such as : Guangdong, Guangxi, and Hainan asphalt mixture design method. According to the special climate and environment in Laos, from the China- Guangdong existing practical experience and in-depth analysis of the asphalt mixture design method, laboratory experiments and asphalt mixture road performance, the asphalt mixture volume design indicators for Laos could be investigated by the improved water stability performance test, 72h residual stability test, once freeze-thaw cycle test, and twice freeze- thaw cycle the cleavage strength test to evaluate the performance of the asphalt mixture to resist water damage. 2 Laos’s climatic partitions for road performance indicators and raw materials 2.1 Climatic partitioning. The Author collected from the Lao national weather center to damp heat coefficient of the country's 17 provinces from 1999 to 2008, a period of 10 years temperatures, rainfall statistics [2] and calculated Φ value. In this paper, the damp heat coefficient as a climate impact for partitioning the climate was used. In this study, Laos’s highway asphalt pavement climatic factors are considered on the basis of high temperature and rainfall, and the national monthly average minimum temperature 206

(December) which is greater than zero. Low temperature can basically not be considered. Considering rainfall and high temperatures, as the main climatic factors, the requirement, for critical climatic impact differed between regions based on the ultimate control factors. Through elements of data distribution characteristics according to the climate impact of the asphalt pavement, and the introduction of damp heat coefficient, Laos’s 17 provinces were divided to distinguish between the different regions in the design emphasis on how to consider some kind of climatic conditions [3,4,5]. Damp heat coefficient Φ model to evaluate the impact of climate on water stability and high temperature stability of asphalt pavement, is calculated as in equation (1), the damp heat coefficient index takes into account the effects of high temperature and water. the larger the Φ value, the mix design for water stability should be the main consideration, conversely high temperature stability should be the main consideration. Φ= Q (1) Tj Where: - Φ damp heat coefficient, mm / ℃; - Q the average annual rainfall in mm; - Tj the highest annual average temperature, ℃. From statistical calculations, the 17 provinces and regions in Laos, the Φ values range from 45 mm / ℃ to 76 mm / ℃, the data follows a normal distribution curve as shown in Figure 1. Fig.1: Damp heat coefficient Φ value probability distribution According to the damp heat coefficient Φ, Φ cutoff values for Lao highway asphalt pavement humidity, temperature effects is further divided into two zones, namely: I zone: ≥ 68, the main water stability, taking into account the high temperature stability. II zone: < 68, the main high temperature stability, taking into account the water stability. In accordance with the above partition method, then Phongsaly province, Luangnamtha province, Vientiane province, Bolikhamxay province, Salavan province, Champasak province, belong to the I zone, that would mainly consider the impact of water stability, taking into account the high temperature stability; Oudomxay province, Huaphan province, Luangprabang province, Bokeo province, Sayabouly province, Xiengkhouang province, Vientiane Capital, Khammouane province, Savannakhet province, Sekong province, Attapeu province belong to II zone, that would consider high temperature stability, taking into account the stability of water. As can be seen from partition I zone and II zone the dividing line is approximately the average annual rainfall of 1900mm dividing line and from the damp heat coefficient Φ distribution law and the average annual rainfall distribution pattern, the Φ value contains 207

reasonable. temperatures and therefore damp heat coefficient Φ of Laos’s highway asphalt pavement temperature for humidity to affect the partition is reasonable. From the summary and analysis of climate data in Laos, the damp heat coefficient method for climate partition of the Laos national road asphalt is adopted and, the results are shown in Figure 2. Fig.2: Result of climate division with damp heat coefficient in Laos 2.2 Laos asphalt mixture performance indicators According to the special climate and environment in Laos, the existing practical experience combined with China - Guangdong province asphalt mixtures technical requirements of reference according to the “Guangdong provincial highway pavement typical structural applications technical guide”[6]. fully considers the Laos climate partition, Lao national rainfall, high temperatures, traffic class, combined with the practical experience of Guangdong, China, Laos asphalt mixture performance indicators, are summarized as shown in Table 1 Tab.1: Pavement performance of matrix asphalt mixture in Laos Road performance Test methods Unit Climate division Water stability 72h Residual stability % High temperature Once freeze-thaw cycle split strength ratio % I zone II zone Twice freeze-thaw cycle split strength ratio % stability 80 75 80 75 60 55 Rutting test DS Times/mm 800 1000 2.3 Raw materials, technical performance and gradation (1) Mineral aggregate technical performance indicators: Laos asphalt mixture used 208

limestone aggregate and coarse aggregate from Jingyang village production of limestone, fine aggregates (stone chips) from Gansu province Zhangye district(China). Mineral filler’s were made from limestone quality ore. From test results, the indicators met the “highway asphalt pavement construction technical specifications” (JTG F40-2004) [7] of the technical requirements of Guangdong. (2) Asphalt technical performance indicators: Asphalt surface layer of asphalt road, the petroleum asphalt technical requirements of the asphalt indicators should be consistent with the technical specifications of the highway asphalt pavement construction (JTG F40-2004). In this study, Shell properties of No.70 plain asphalt, respectively, in accordance with conventional test methods [8] asphalt evaluation, the asphalt main technical indicators are shown in Table 2. Tab.2: Conventional test results of asphalt mixture Test Unit Standard Tested value 64 Penetration(25℃，100g，5s ） 0.1 mm 60～80 24.8 48.5 Ductility at 10℃(5cm/min） Cm ≮15 Softening point (R&B) min ℃ ≮47 Table 2 shows that, the Shell properties of No. 70 plain asphalt met “the road asphalt highway asphalt pavement construction technical specifications”(JTG F40-2004) technical requirements. (3) Graded asphalt mixture selection: In this study, the technical specifications of asphalt pavement construction AC-13 gradation with a median of asphalt mixture volume indicators, shear strength, rutting, water stability and aggregate ratio were used. 3 Asphalt mixture road performance experiments 3.1 Shear strength of the asphalt mixture In this paper, the research group developed a Marshall shear tester for asphalt mixtures whose shear strength test based on positive stress by using a force based on the actual road, to determine the normal stress of 0.3MPa. Test temperature was the same temperature as the Marshall stability test at 60 ° C and the test specimen was placed in a 60 ° C oven thermostat heat for 3 hours, when the specimens inside and outside temperatures were 60 ° C, using the specimen test pieces, in small Marshall diameter of 101.6mm, a height of 6.5 ± 0.3mm moulds at different aggregate ratio, the Marshall specimen were tested for shear. From the analysis of shear strength and aggregate ratio, air void and aggregate ratio relationship are shown in Figures 3 and 4: 209

Fig.3: Relationship between asphalt aggregate ratio and shear strength Fig.4: Relationship between void ratio and shear strength 3.2 Asphalt mixture 72h residual stability test. The aim is to evaluate the residual stability of asphalt mixture for water stability, the higher the residual stability, the better the water stability. AC-13 gradations were done and each aggregate ratio forming eight specimens, that were divided into two groups; for a group of Marshall specimen 30min ~ 40min after its stability measurements were done in a 60 ° C water bath thermostat, whilst another group in a water bath of 60 ° C and determination of stability constant temperature after 72h was done. The last soaking for residual stability were calculated according to standard methods. Results of the same aggregate gradation, with different aggregate ratio after the asphalt mixture 72h residual stability test and the 72h residual stability test and air void, aggregate ratio and air void relationships are shown in Figures 5 and 6. Fig.5: Relationship between asphalt aggregate ratio and 72h residual stability 210

Fig.6: Relationship between void ratio and 72h residual stability 3.3 The asphalt mixture freeze-thaw fracturing test Through the freeze-thaw splitting test cleavage strength, and the TSR an evaluation of the stability of a mixture of water was made. The greater the TSR the better the water stability. The test also graded AC-13 median values in each aggregate ratio molding 12 specimens, by freezing and thaw test environment dividing them into not freeze-thaw cycle, once freeze-thaw cycle and twice freeze-thaw cycles making three groups, and using the 50mm/min loading rate for the splitting test, then calculated splitting intensity and the TSR. Results of the test based, on the same gradation with different aggregate ratio of asphalt mixture once and twice freeze-thaw cycle, and splitting test, calculated freeze-thaw splitting strength ratio, various indicators are shown as follows in Figures 7 and 8. Fig.7: Aggregate ratio-freeze-thaw splitting strength curve 211

Fig.8: Void age-freeze-thaw splitting strength curve 3.4 Asphalt mixture rutting test results Test results, on the same gradation with different aggregate ratio of asphalt mixture, a rutting test, from the determination of dynamic stability, are shown in the following Figure: Fig.9: Aggregate ratio-dynamic stability curve Fig.10: Void age-dynamic stability curve 212

4 Analysis of experimental results based on asphalt mixture void indicators study 4.1 Analysis of experimental results (1) Asphalt mixture shear strength indicators showed a convex curve, with each indicator first increasing and then decreases, for shear strength. With the increase of the aggregate ratio, asphalt mixture cohesion trend shows first an increase and then decreases within the wear resistance angle with the increase of the asphalt content and decrease, comprehensive internal- friction angle and cohesion considerations, it can be seen that with the increase in aggregate ratio, asphalt mixture shear strength first increases and then decreases. (2) As the aggregate ratio increases, asphalt mixture 72h residual stability increases, at the aggregate ratio of 5.1%, the 72h residual attains maximum stability, as the air void increases, asphalt mixture 72h residual stability first increase and then decrease, until at air void of 3.5%, 72h residual attains maximum stability. (3) With the aggregate ratio increase, after once and twice freeze-thaw cycles of asphalt mixes freeze-thaw splitting strength ratio gradually increased; with the increase of air void, asphalt mixture of once and twice freeze-thaw cycle split strength then gradually reduced. after twice freeze-thaw cycles of freezing and thawing splitting strength ratio significantly less than the once freeze-thaw cycle split strength than, showed that twice freeze-thaw cycles worse than once freeze-thaw cycle environment. (4) With the increase of the aggregate ratio and air void, asphalt mixture dynamic stability first increased and then decreased; dynamic stability and the stability of the asphalt mixture with the aggregate ratio trend, whilst shear strength with the aggregate ratio showed the same trend. 4.2 Asphalt mixture volume indicators analysis The asphalt mixture air void affect road performance indicators [9]. Some highway asphalt surface due to larger air void lead to the destruction of the road early. a large number of studies have shown that the air void of asphalt concrete, will affect the durability of asphalt concrete, anti-aging properties and resistance to water damage ability. Recently many highway construction have to improve the degree of compaction of the asphalt pavement, and strictly control the surface voids as one of the important technical indicators for road construction. Guangdong province pavement design and material requirements for dense graded asphalt concrete mixes, the Marshall test technical standards for Guangdong highway air void requirements, the following voids of 4% to 6% are recommended for the same period of rain and heat as Laos. For Laos’s rain and heat period rainfall more than Guangdong province, the design air voids needs to be determined according to Lao climatic characteristics, and the domestic and international experience, as well as from this article in table 2 of Lao matrix asphalt mixture performance indicators. through the analysis of section 4, using interpolation method which satisfy the brightest performance range of the air void, as shown in Table 3: By the following table the climate division I zone air void in asphalt mixtures should range from 3.2% to 4.2% and to meet the II zone air void range should be 3.5% to 4.5%. Tab.3: Range selection of asphalt mixture void ratio Test methods Unit Void range（%） Performance indicators I zone II zone I zone II zone Shear strength MPa 3～6.8 3～6.8 0.7 0.7 72h Residual stability % 3～4.7 3～6.8 80 75 Once freeze-thaw cycle split strength ratio % 3～4.2 3～4.5 80 75 Twice freeze-thaw cycle split strength ratio % 3～4.5 3～4.7 60 55 Rutting test DS Times/mm 3.2～6.8 3.5～6.8 800 1000 213

Air void coincide range % 3.2～4.2 3.5～4.5 From the study of voids in asphalt mixtures indicators and volume indicators , in this paper, the standard asphalt mix design, can meet the requirements of the porosity aggregate ratio, by way of aggregate ratio with volume indicators relationship, by determining the scope of the other volume indicators as shown in Table 4. Tab.4: Void ratio range corresponds to the volume index Climate division Unit I zone II zone 3.5～4.5 Air void range % 3.2～4.2 14.8～14.5 66～76 Void in Mineral Aggregate (VMA) range % 14.7～14.6 Void Filled with Asphalt (VFA) range % 68～78 This article is only a mix design and intends to carry out the above indicators to some extent for epitaxial , applicable in the Laos zone of asphalt mixes volume indicators range recommended as shown in Table 5: Tab.5: Volume index matrix of asphalt mixture based on road performance Climate division Unit I zone II zone 75 The compaction times on both sides times 75 8 Stability，not less than KN 8 20～40 3.5～4.5 Flow 0.1mm 20～40 ＞14 Air voids % 3.2～4.2 66～76 ＞75 Void in Mineral Aggregate (VMA) % ＞14 ＞75 ＞55 Void Filled with Asphalt (VFA) % 68～78 ＞1000 72h Residual stability % ＞80 Once freeze-thaw cycle split strength ratio % ＞80 twice freeze-thaw cycle split strength ratio % ＞60 Rutting test DS Times/mm ＞800 5 Conclusion (1) Applies to Laos matrix asphalt mixture performance technical requirements and water stability test methods 72h residual stability once (twice) and freeze-thaw cycle splitting strength test; (2) With the increase in aggregate ratio, the shear strength of the asphalt mixture, 72h residual stability and dynamic stability first increases and then decreases the trend (at aggregate ratio of 4.8%, the shear strength and dynamic stability peak aggregate ratio is 5.1%, for the residual stability peak), once freeze-thaw cycle twice freeze-thaw cycle freeze-thaw splitting strength ratio gradually increased in the asphalt mixture, twice freeze-thaw cycle splitting strength ratio significantly less than the cleavage strength than once freeze-thaw cycle; (3) The Study based on pavement performance of asphalt mixture volume indicators, is drawn to meet the I zone road performance air void range of 3.2% to 4.2%, whilst II zone use air void requirements range of 3.5% to 4.5%, and therefore proposes asphalt mixture volume indicators for Laos. References [1] Lao PDR, Ministry of Planning and Investment, Department of Statistics Meteorology and Hydrology Data Vientiane Capital, June 2009. [2] Lao PDR, Ministry of Natural Resources and Environment, Department of Meteorology and Hydrology, January 2010. 214

[3] 孙长新,赵毅强,叶燕呼,等.广东省沥青路面气候影响分区[J].西安公路交通大学学 报,2000,20(1):16-19. SUN Chang-x in, ZHAO Yi-qiang, YE Yan-hu, etal. Regionalizing for Asphalt Pavement in Guangdong Province According to the Climate Influence[J]. Journal of Xi’an Highway University,2000,20(1):16-19. [4] 付丽丽,贺跃光.湖南省公路沥青路面气候影响分区[J]. 交通科学与工程,2010,26(2):21-25. FU Li-li, HE Yue-guang. Division for asphalt pavement in Hunan Province according to the climate influence [J]. JOURNAL OF TRANSPORT SCIENCE AND ENGINEERING,2010,26(2):21-25. [5] 苗英豪,王秉纲.中国沥青路面气候影响分区方案[J].交通运输工程学报,2007,12(7):64-69. MIAO Ying-hao, WANG Bing-gang. Zoning scheme of climatic influence for asphalt pavement in China[J].Journal of Traffic and Transportation Engineering,2007,12(7):64-69.(in Chinese) [6] 广东省公路路面典型结构应用技术指南（试用）.广东省交通厅主编.2008 年,广州. [7] JTG F40-2004.公路沥青路面施工技术规范[S].北京:人民交通出版社,2004.11 [8] JTJ 052-2000.公路工程沥青及沥青混合料试验规程[S]. 北京:人民交通出版社,2000.10. [9] 高丹盈,李花歌. SMA 混合料体积参数的试验研究[J].郑州大学学报(工学版),2010,31(4):1-5. 215

The Effects of AFTA on Lao International Trade: Analysis of Major Sectors by Gravity Model XAYAVONG, Sithixay Abstract Lao PDR (Laos) joined ASEAN in 1997 and has been started to reduce the import tariffs from 1998.The elimination of intra-regional tariffs among ASEAN members has been significant progress in creating an entirely ASEAN Free Trade Area (AFTA), and will turn this region into an ASEAN Economic Community (AEC) by 2015. After AFTA has been implemented since 1998, the average of CEPT rate for four priority sectors such as Food (HS01-24); coffee, tea, etc. (HS09); textile products (HS50-63); electrical and electronic equipments (HS85) of Laos has slightly decreased. This study focuses on verifying the effects of AFTA in the four priority sectors for both intra and extra ASEAN region, by separating analyses between (1) Laos and its ASEAN7 and (2) Laos and non-ASEAN13 countries. In order to clarify the impacts of AFTA or RTA on Lao international trade, this study focused on statistically verifying if trade creation effect and trade diversion effect arise in four major products with Gravity Model. Summarized verification results are following. Firstly, in the analysis targeted at all products (total trade), trade creation effects are more seen larger in the case that limits samples to ASEAN7. Analyzing each product more closely, trade creation effects are seen in food (HS01-24), textile products (HS50-63), and electrical and electronic equipment (HS85), especially in the case of analysis that limits samples to ASEAN7 the trade creation effects of food (HS01-24) and electrical and electronic equipment (HS85) are larger. But, in the case of analysis that limits samples to ASEAN7, trade diversion effect is seen in coffee, tea, etc (HS09). This shows that when trading these products, it is not beneficial for Laos to trade these only with ASEAN countries. Therefore, it indicates that trade with non-ASEAN13 countries might bring larger trade creation effects for the case of coffee, tea etc (HS09) products. On the other hand, in the case of the textile products (HS50-63) it indicates that trade with non-ASEAN13 countries gain larger trade benefit. Based on the results of this study, it is considered that the Lao government should promote free trade more in order to increase and diversify FTAs by selecting suitable trading partners and sectors, aim at attracting more FDI inflows to the country. And FDI also create jobs and improve the export competitiveness through technology and know-how transfer. The free trade also generally enforces competitiveness of domestic private enterprises and can develop international trade by exploitation and enlargement of export markets more. I. Introduction 1. Summary of Lao Trade and Economic Policies and AFTA 216

Established in 1975, Lao People’s Democratic Republic (Laos) shared (nationalized) assets and production measures with its society and implemented planned economy by effects of communism. The economic system was literally an economic system that production is based on the plan by its central government and the products are equally distributed to its people. And, Lao external economic interaction (especially, international trade) was conducted only among other communism nations such as Vietnam or former Soviet Union and Eastern European countries. Due to the planned economy, a variety of social and economic problems occurred in Laos. For example: workers in public and private sectors, the major members in the Lao society, lost their incentives and commitments, deteriorating production efficiency. There were many Lao enterprises went bankrupt as well. Along with the internal problems, effects of international environmental changes such as collapse of former Soviet Union and Eastern European communism countries lowered the Lao economy. After all, in 1986, Laos also abolished the planned economy and introduced market economic policies similar to Chinese reform and openness policies, activating external trade and investments from foreign countries. In July, 1997, eleven years after the introduction of market economic systems, Laos officially became a member of Association of Southeast Asian Nations (ASEAN) and implemented ASEAN Free Trade Area (AFTA). ASEAN was established on 8th August, 1967. The major objectives were (1) securement of political and economic stability in the region, (2) promotions of economic growth, society and cultural development in the region, and (3) solutions of problems in the region1. And, ASEAN member states became aware of importance to expand the trade liberalization in the ASEAN market more widely and attract foreign investments, considering acceleration of movement of free trade region such as EU and AFTA and investment boom for market openness progressed in China2. In order to achieve the objectives, ASEAN currently puts AFTA into practice. ASEAN is committed to (1) enforcing horizontal specialization system within its region and enhancing international competitiveness of local enterprises in its member states, (2) enlarging its market scale, establishing scale merit, and attracting foreign capital, and (3) preparing for global free trade system3. Hence, tariff and non-tariff barriers within the region are expected to be phased out. The plan of ASEAN started in January, 1993, based on Common Effective Preferential Tariff, CEPT that initial six member states, Indonesia, Brunei, Malaysia, the Philippines, Singapore, and Thailand concluded. The CEPT covers all manufactured goods including capital goods and processed agricultural products, in which the product descriptions are based on the Harmonized System (HS) code, and covered 98 chapters. The 1 Ishikawa, K. (2009). ASEAN keizaikyodotai: higashiazia togo no kaku to nariuruka[ASEAN Economic Community: Can It Become the Model of East Asia Economic Community?], Japan External Trade Organization (JETRO), p.248. 2 Ibid, p.4. 3 Ibid, p.42. 217

implementation of the CEPT can be classified into 4 product lists: Inclusion List (IL); Temporary Exclusion List (TEL); Sensitive List (SL); and General Exception List (GEL). The gist of ASEN is to gradually include all ASEAN products (which added value of more than 40% in a single state or multiple member states4 except cultural and defense goods in CEPT Inclusion List (IL) and to complete reduction of tariff within a certain period. Even though agricultural products are in the temporary exclusion list, they will eventually be allied to the CEPT list. Deadlines for reduction of internal tariff of the applied CEPT list by less than 5% are 2006 (Vietnam), 2008 (Laos and Myanmar), and 2010 (Cambodia). Furthermore, the tariff is scheduled to be lowered to 0% by 2010 (initial six member states) and 2015 (new four member states)5. During the initial progress of the AFTA, each member maintained a large number of products in the Exclusion List. According to the CEPT Scheme in order to achieve the AFTA, the speed of AFTA development in term of tariff reduction has shown great improvement by 2008. As a result, the numbers of the products in IL slightly increased from 41,157 in 1993 to 97,127 in 2008. Whereas, it remained a small proportion at was less than 1% in SL and GEL. Laos has been started to reduce the import tariffs from 1998 and also remained a small proportion at less than 1% in SE (0.1%) and GE (0.69%)6. The elimination of intra-regional tariffs among ASEAN members has been significant progress in creating an entirely ASEAN Free Trade Area, and will turn this region into an ASEAN Economic Community (AEC) in 2015. Remarkably, ASEAN regional specialization system is expected to be established when AFTA comes into realize in the future. If so, the internal tariff of final products, parts and raw materials turns 0%, which can reduce costs of the internal procurement. Thus, the internal optimal specialization system would dramatically change. As Table1 and Figure1 show, Lao export and import values to ASEAN gradually increased from 2001 to 2011. Notably, its export and import rapidly increased from 2009 to 2011. Lao import value from ASEAN countries was 1.3603 billion US dollars (52% increased from the previous year). Whereas, its export value to ASEAN countries reached to 1.34209 billion US dollars (102.2% increased from the previous year). Therefore, it is supposed that regulations will be gradually eased and international trade and investment environment will become more liberalized along with the realization of AFTA. After AFTA has been implemented, the average of CEPT rate for four priority sectors (namely, Food (HS01-24); coffee, tea, etc. (HS09); textile product (HS50-63); electric equipments (HS85)) of Laos has slightly decreased as shown in the table2 4 In addition to the conventional basis of accumulative origin rate of more than 40%, the ASEAN’s rule of origin became either-or system by the introduction of 4-digit code of Customs Tariff Heading (CTH) in 2008. Ishikawa, K. (2009). ASEAN keizaikyodotai: higashiazia togo no kaku to nariuruka[ASEAN Economic Community: Can It Become the Model of East Asia Economic Community?],, Japan External Trade Organization (JETRO), p.191. 5 Aoki, K. (2001). AFTA (ASEAN jiyuboekichiiki[ASEAN Free Trade Area]): ASEAN keizaitogo no jittai to tenbo[The present condition and prospects of ASEAN Economic Integration], Japan External Trade Organization (JETRO), p.102. 6 See table 2. Source: ASEAN secretariat online website. 218

below. Table 1. Lao Import and Export to ASEAN9 (Unit: US dollars) Year Import Export Increase and decrease of trade balance 2000 -01 2001 02 123,190,512 167,407,507 44,216,995 2002 -03 2003 04 155,547,608 182,089,911 26,542,303 2004 -05 2005 06 381,631,584 183,535,173 -198,096,411 2006- 07 2007 08 358,795,974 175,587,613 -183,208,361 2008- 09 2009 10 539,756,682 230,203,621 -309,553,061 2010- 11 738,342,569 590,039,848 -148,302,721 844,195,642 520,145,947 -324,049,695 1,116,506,314 592,403,361 -524,102,953 897,131,933 678,190,566 -218,941,367 1,360,634,559.34 1,342,086,251.00 -18,548,308 1,064,317,519 1,095,648,697 31,331,178 Source: Ministry of Industry and Commerce, Lao PDR. Foreign Policy Department (http://www.laoftpd.com) Therefore, this study has to answer following questions. What kind of economical impact does AFTA give to Laos as a new member state of ASEAN, especially, to its international trade? How does Lao Ministry of Industry and Commerce deal with the impact as a governmental organization? How should Lao private enterprises react to the impact? Due to the rapid liberalization of trade, Lao economy itself is rapidly being incorporated into the global economy, confronting competition with foreign industries and enterprises. Meanwhile, Lao trade study also has importance on how Lao economy should be positioned in the future global economy. Laos is a country which has transferred from planned economy system to free market economy system as well as being a small backwards country with a characteristic as an inland state (Land Locked Country). It is essential for Laos to develop international trade in order to gain foreign capital for economic development and realize scale economy of production. However, it is considered that Lao policies vary from major nations such as China or India as Laos owns specific conditions as an inland nation, which does not have sea. There are a large number of previous studies on trade policies of developed/ developing nations and trade and economic policies of major nations such as Japan, China. For example, findings on Regional Trade Agreement (RTA) between European Union (EU) and AFTA or among their member states are seen7. However, there are few studies on what kind of policies are needed when a small backwards country such as Laos becomes a member state of ASEAN and practices FTA, incorporated in regional economic integration. Especially, there are many unrevealed points due to a lack of studies on impacts of AFTA on Laos. Therefore, the impact (economic effects) of AFTA on Lao international trade and its correspondence are considered to be essential theme. Although several empirical studies have estimated the impact of AFTA, there are few empirical researches examining about the export of the priority integration sectors that the ten ASEAN members have committed to reduce the import tariffs under the CEPT commitments. This study focuses on verifying the effect of 7 Urata, S. and Okabe, M. (2010). “Trade Creation and Diversion Effects of Regional Trade agreement on Commodity Trade”, RIETI Discussion Paper Series 10-E-007. 219

AFTA in the four priority sectors for both intra and extra ASEAN region, by separating analyses between Laos and its ASEAN78 and Laos and its non-ASEAN13 countries9. Figure 1. Total Export of Laos to Major ASEAN Countries Touusand(USD) 1,800,000 Thailand 1,600,000 Vietnam 1,400,000 Malaysia 1,200,000 Indonesia 1,000,000 Phillipines Singapore 800,000 Cambodia 600,000 Total 400,000 200,000 - Source: International Trade Center (http://www.trademap.org) Note: there is no data identified for Vietnam in the year 2010 and 2011. 2. Objective of the Study As mentioned above, this study considers that regulations will be eased and trade and investment environment will be more liberalized along with the realization of AFTA. This study tries to answer following questions. What kind of economical impact does AFTA give to Laos as a new member state of ASEAN, especially, to its international trade? How does Lao Ministry of Industry and Commerce deal with the impact as a governmental organization? How should Lao private enterprises react to the impact? There are three particular objectives of this study. (1) In order to reveal current situations of Lao trade policies and challenges, it considers inclusively Lao trade and economic policies and AFTA. (2) In order to see changes of economic interactions (especially trade) between Laos and internal ASEAN, it analyzes international trade between Laos and other ASEAN member states. Especially, in order to analyze the impact of AFTA as a regional FTA on Lao trade as a new member state of ASEAN, it statistically verifies if trade creation effect and trade diversion effect arise (with or without trade creation effect and trade diversion effect) in total trade volume (sum of exports and imports) and four major products or industries with Gravity Model. (3) It discusses and suggests concrete actions of enterprises for the impact of AFTA and trade and economic policies which will be suitable for Lao status quo. 8ASEAN7 includes Cambodia, Indonesia, Malaysia, the Philippine, Thailand, Singapore and Vietnam. 9 The major 13 trading partners non- ASEAN (Non-ASEAN13) countries include Australia, Belgium, China, France, Germany, Hong Kong, India, Japan, Netherlands, Republic of Korea, Russia, UK, USA 220

This study is divided into five sections as follows: Section one introduction the background of the study, research objective. Section two reviews the related literature of the international trade integration namely, the gravity model and AFTA. Section three highlights the research framework and explanation data. Section four analyze empirical results of the trade integration (AFTA) on the international trade flows of four priority sectors for both intra ASEAN (the trade flows of Laos and ASEAN7) and extra ASEAN (the trade flows of Laos and non-ASEAN 13 countries) based on the framework of the gravity model. Finally, the section five summarizes major findings, conclusion and policy implications. Table 2: Summary of CEPT products list for 2008 Country Number of Tariff Lines Percentage IL TE SE GE Total IL TE SE GE Total Laos 8213 - - 86 8299 98.96 - - 1.05 100 Myanmar 10613 - 23 51 10687 99.31 - 0.22 0.48 100 Vietnam 8098 - - 144 8242 98.25 - - 1.75 100 CLMV 37462 - 77 378 37917 98.8 - 0.2 1 100 ASEAN 97,127 - 96 674 97,897 99.21 - 0.1 0.69 100 Source: ASEAN secretariat online website. http://www.asean.org II. Literature Review Gravity Model applies a law of gravitation that gravitation between two objects are proportional to mass of these objects and are inversely proportional to square of distance between the two objects originally in physics to international trade. Hence, the original model of the Gravity Model is that bilateral trade volume depends on physical distance and economic scale between the two countries. Therefore, the hypothesis sets a relationship that the closer bilateral physical distance is and the larger bilateral economic scale (GDP in most cases), the larger bilateral trade volume becomes. In addition to the Gravity Model’s estimation of bilateral trade values as explanatory variable and bilateral physical distance and GDP, the analysis includes bilateral neighboring situation, with or without common language which indicates qualitative distance between two countries, and FTA accession situations. Regarding estimated results, it can be judged that trade values between FTA members become positive in the trade creation effect of than between non-FTA members if they are statistically significantly large, and the trade creation effect is recognized. On the other hand, it can be interpreted that if trade values between FTA members and non-FTA members are smaller than other combinations (between FTA members or between non-FTA members), the estimation of trade creation effect becomes negative and trade diversion effect is recognized. Our analysis is based on the estimation of a gravity model, which has been applied extensively to explain the bilateral international trade flows for more than four 221

decades. The pioneering studies in applying the gravity model to study international trade flows are Tinbergen (1962) and Poyhonen (1963), and since then numerous empirical analyses using the model have been conducted to provide various verifications on international trade. However, it was not until the late 1970s that theoretical foundation was developed. The first study that developed the theory is Anderson (1979), which derives a simple theoretical gravity equation from a framework of two countries under complete specialization. In the 1980s, “the new trade theory” with an assumption of monopolistic competition that is used to explain intra‐industry trade was applied to test the gravity equation10. Urata and Ando (2010) insist that their analysis with Gravity Model of impacts on FTA Trade show trade creation effects that enlarge trade among FTA members and trade diversion effect by shifting from import efficient non-FTA member to import inefficient FTA members. It is known that trade creation effect can improve economic welfare while trade diversion effect can lower it. However, the impact of trade members on entire economy through FTA is total of trade creation effect and trade diversion effect. Whether the impact of trade creation effect is positive or negative cannot be judged beforehand and either large or small relationship between trade creation effect and trade diversion effect also cannot also be judged beforehand. Hence, it is the only way to judge the result of the impact of FTA on trade by empirical analysis. Therefore, in order to verify with or without trade creation effect and trade diversion effect, targeting at various FTAs worldwide, this study adopts Gravity Model, which is frequently used in studies of bilateral trade volume11. Urata and Okabe (2010) construct a trade database of 27 years from 1980 to 2006 about 67 countries by trade statistics of the United Nations (UN), analyzing with or without trade creation effect and trade diversion effect of FTA, using information about FTA gained from RTA database of World Trade Organization (WTO). The result of their analysis indicates that trade creation effect was recognized in 18 out of 20 products on FTAs among developed nations whereas trade diversion effect was not utterly recognized. Meanwhile, trade creation effect was recognized in 18 out of 20 products on FTAs among emerging nations whereas trade diversion was recognized in 15 products. Trade diversion effect theoretically arises if most favored nation (MFN) applied tariff rates to the world are high before forming FTA. Therefore, the fact that trade diversion effect was recognized in many products on FTA among emerging nations whose tariff rates are higher than developed nations is consistent. Differences of trade creation effect and trade diversion effect on FTAs between developed nations and emerging nations are shown in the estimated results of North American Free Trade Agreement (NAFTA) and AFTA. Given the classification that NAFTA 10 The detailed developments of Gravity Model are mentioned following. Urata, S., Okabe, M. (2010). “Trade Creation and Diversion Effects of Regional Trade agreement on Commodity Trade,” RIETI Discussion Paper Series 10-E-007,, p.1. 11 Urata, S., Ando, M. (2010), “Jiyuboekikyotei (FTA) no keizaitekikoka ni kansuru kenkyu[A Study of Economic effects of FTA],” RIETI Discussion Paper Series 10-P-022, pp.16-17. 222

is a FTA among developed nations and AFTA is a FTA among emerging nations, it is interpreted that estimated result of EU is positioned between that of NAFTA and AFTA. From estimated results by industry, trade creation effect can be read largely in transportation machinery industry. This result is reflected from that higher tariff rate is imposed on transport machine such as automobile industry12. However, their study does not mention economic effects that a small backwards country with characteristic such as Laos practices FTA. Also, Nu Nu Lwin (2009) used gravity model to test the model is applicable to explain the trade flows of the CLM countries. It is observed that the overall performance of the model seem to be good with high R2 value of 70% and almost all estimates of the coefficients are highly significant with expected sign, indicating that the gravity model are fitting and efficient in explaining the bilateral trade flows of CLM countries. The results indicate that CLM`s trade patterns are mainly affected by partner country`s GDP, the difference between per capital GDPs of two countries, distance, common border, and presence in particular FTA. Because of this study used only the total trade volumes as a dependent variable. As a result, it does not fully explain which industry or item of CLM gives the impact on, and how CLM countries should deal with FTAs. Regarding AFTA, major studies are frequently titled such as “current situations and prospects of AFTA” or “Issues of AFTA”, pointing out AFTA’s inadequate infrastructure. For example, Aoki (2001) mentions ASEAN and actual situations and prospects of ASEAN economic integration in his book13. Phouphet (2004) in his study, “Analyzing the Effect of AFTA on Lao Economy – Macro Economics Model Approach”, analyzes the impact of AFTA on entire Lao economy by Macro Economics Model. The results are following. (1) Joining AFTA has the effect of decreasing import price and general price. (2) The import increasing effect of AFTA is larger than that of export. It becomes clear that Laos will face a larger trade deficit by joining AFTA. (3) The result shows that the effect of AFTA on GDP is very small. Laos will gain few benefits by joining AFTA. Phouphet concludes that accession to AFTA gives few benefits to Laos14. If there are truly few benefits to Laos, it is hard to answer why the Lao government joins AFTA. Phouohet’s study lacks of adequate data and uses date until 2000 which is only two years after Laos practiced AFTA as a member state of ASEAN. Considered total export and import values of Lao traditional industry to Thailand in its initial phase of joining AFTA and Lao governmental income by custom as explanatory variables, it is supposed that 12 Urata, Shujiro and Misa Okabe(2010)“Trade Creation and Diversion Effects of Regional Trade agreement on Commodity Trade,” RIETI Discussion Paper Series 10-E-007,p.9 13 Aoki, K. (2001). AFTA (ASEAN jiyuboekichiiki[ASEAN Free Trade Area]): ASEAN keizaitogo no jittai to tenbo[The Present Conditions and Prospects of ASEAN Economic Integration], Japan External Trade Organization (JETRO),. 14 This paper is one part of Phouphet Kyophilavong’s Ph.D dissertation. It was prepared for the ESRI Asia Workshop on Economic Modeling on Deepening Interrelationships among Asian Countries, held on November 30, 2004 in Bangkok, Thailand. 223

Phoupehet led such a conclusion. The conclusion could explain the initial phase of Laos’s accession to AFTA but could not explain longer period. That is because when investment in new industries (electronic parts, machinery parts, processed agro products etc.) from foreign countries by AFTA increases, exports to new markets of those industries are also expected to increase. Another reason is that reliability to Lao government is expected to become higher. For example, if laws, regulations, or procedures are modified by its accession to AFTA, trade and investment environment will be improved. In addition, as Phouphet’s study analyzes the impact of AFTA on Laos by total trade value, it does not fully explain which industry or item AFTA gives the impact on, and how Laos should deal with AFTA. III. Explanation of Data and Research Methodology This study mainly focuses on estimating the effect of AFTA on trade performance (Especially, the Export) of four priority sectors15 between Laos and major trading partners 7 ASEAN countries (namely, Cambodia, Indonesia, Malaysia, the Philippine, Thailand, Singapore and Vietnam) and verifying trade performance of these products between Laos and its major trading partner non-ASEAN 13 countries16. As an extraction method, based on trade statistics of International Trade Center, it extracts ASEAN countries that Laos deals with on total export and import values over 0.1% in 2009 and non-ASEAN major trade countries that Laos deals with on those values over 1% as trade partners. The gravity equation that this study seeks to estimate follows closely the standard gravity model developed by Frankel (1997), in which emphasis is given to the role of geopolitical factors such as distance, adjacency and regional blocs. factors In this study, total trade values and export-import values by product between Laos and each country are sets as explained variable(dependent variable), gained from the date of International Trade Centre from 2001 to 2010 (http://www.trademap.org). The Data of real Gross Domestic Product (GDP) and real GDP per capita are gained from World Development Indicator (http://data.worldbank.org/country/lao-pdr). Bilateral distance (Dist) is gained from CEPII Research Center (http://www.cepii.fr ). Regarding Dist, it uses the distance between densely-populated capitals of each country and Lao capital, Vientiane. Whereas, concerning dummy variables of ASEAN in the Gravity Model, it sets ASEAN (AFTA members) that trade with Laos as “1” and the others as “0”. Also, it sets neighboring countries (shared border) with Laos as “1” and the others as “0”. And, the model also includes some variables like with or without common language between Laos and other countries that show qualitative distance, and situations for accession of WTO. The Gravity Model by product analyses Laos’s major export and import products by 15 Food (HS01-24); coffee, tea(HS09); textile product(HS50-60); electric equipments(HS85) 16 The major 13 trading partners non- ASEAN countries are Australia, Belgium, China, France, Germany, Hong Kong, India, Japan, Netherlands, Republic of Korea, Russia, UK, and USA. 224

using two-digit numbers of Harmonized System (HS). In other words, it targets at HS01-24 (food), HS09 (coffee, tea, mate and spices, etc.), HS50-63 (textile products), HS85 (electrical, electric equipment). The panel data analysis will be applied for the periods 2001-2010. Table3. Independent variable and dummy in 2010. countries Distance(Km) AFTA Dummy WTO Dummy Sharing a LAN Adjacenc Lao PDR 0 1 0 ー ー Australia 7696.208 0 1 0 0 Belgium 9038.533 0 1 0 0 Cambodia 753.4552 1 1 0 1 China 2778.652 0 1 0 1 France 0 1 0 0 Germany 9245.57 0 1 0 0 Hong Kong 8386.077 0 1 0 0 India 1293.925 0 1 0 0 Indonesia 2846.594 1 1 0 0 Japan 2721.996 0 1 0 0 Malaysia 4143.801 1 1 0 0 Netherlands 1655.925 0 1 0 0 Philippines 8951.699 1 1 0 0 Republic of Korea 1992.991 0 1 0 0 Russia 3218.349 0 0 0 0 Singapore 6809.734 1 1 0 0 Thailand 1863.448 1 1 0 1 UK 525.2488 0 1 0 0 USA 9311.193 0 1 0 0 Veitnam 13706.34 1 1 0 1 478.553 Source: CEPII Research Center (http://www.cepii.fr ) Note: For the GDP of each country see World Bank, World dataBank, http://databank.worldbank.org. IV. Estimation and Considerations of the Results 1. Estimation of Gravity Model The estimation formula of trade values is following. 4 log�Xijt� = α + β1 log�YitYjt� + β2 log�Dij� + � γK (1) K=1 4 log�Xijt� = α + β1 log�Yit)+β2log(Yjt� + β3 log�Dij� + � γK (2) K=1 Xijt: Trade volume from country\"i\" to country \"j\" country in year \"t\"(US dollars) Yit: Real GDP per capita of country \"i\" in year \"t\" (US dollars) Yjt: Real GDP per capita of country \"i\" in year \"t\" (US dollars) Dij: Distnace of capitals between country \"i\" and country \"j\" (Km) γ1: AFTA dummy; γ2: GATT/WTO dummy γ3: Language dummy; γ4: Border dummy 225

2. Estimation Results This part explains the following questions, based on the analysis results by product and total trade. Are the effects either trade creation effect or trade diversion effect which are mentioned above? Before explaining the results, it is needed to briefly introduce explained variable and explanatory variable used in analysis and explanation. This study analyzes with following samples. (1) For ASEAN7, samples are limited to major trading partner ASEAN7 countries, (2) For non-ASEAN13, samples are limited to major trading partner non-ASEAN 13 countries. The explained variable is natural logarithm of trade volume from Laos to its trade partners (US dollars) and the explanatory variable is natural logarithm of product of Lao GDP per capita (US dollars) and its trade partners’ GDP per capita (US dollars). In order to summarize the explanation, control variable are not included in the table 3. Based on these explanations, it shows results concisely. Firstly, table3 shows both (1) For ASEAN7 and (2) For non-ASEAN13 have positive effects and are statistically significant for the trade of all products (total trade volume), which means that trade creation effects are seen in both of case. However, comparing the large and small effects, the effects are clearly larger when samples are limited to ASEAN. Therefore, it shows that the trade creation effect is larger in trade with ASEAN countries in the case of trade of all products. Because, the export of Laos is dominated by intra ASEAN members that accounted for approximately 80%, especially the trade with its neighboring countries such as Thailand and Vietnam accounted for 70% of total trade volume17. Secondly, regarding table3 it summarizes the analysis results by the product. In the case of analysis that limits samples to ASEAN countries (For ASEAN7), trade creation effects are seen in each product (HS01-24, HS50-63, HS85), excepting coffee, tea, etc (HS09). Also, for the food (HS01-24) and electrical and electronic equipment (HS85), the size of the effects is larger if compared to the case of analysis that limits samples to non-ASEAN13. In other words, it indicates that trade with ASEAN countries brings larger effects in electrical and electronic equipment (HS85) and food (HS01-24). While, In the case of textile products (HS50-63) it shows that the size of the effect is larger if compared to the case of analysis that limits samples to ASEAN7.It means that when trading textile products, it is more beneficial for Laos to trade with non-ASEAN13 countries. On the other hand, in the case of analysis that limits samples to ASEAN7, trade diversion effect is seen in coffee, tea, etc (HS09). This shows that when trading these products, it is not beneficial for Laos to trade these with ASEAN countries. Therefore, it indicates that trade with non-ASEAN13 countries might bring larger trade creation effects for the case of coffee, tea, etc products. Because of the process of tariff reduction for agricultural products of the ASEAN 17 See the figure1 and table4. 226

members were relatively slow. And, most of ASEAN members had high potential for exporting the agricultural products. For example, Thailand, Vietnam, Indonesia, Myanmar and Malaysia have potential in the production of agricultural products. These countries are dominant in exporting the agricultural products intra-ASEAN and around the world. As a result, the export of these products to ASEAN market is relatively hard for Laos. Therefore, trade diversion effects are seen only in agro sectors, such as coffee, Tea, spices, etc. which Laos competes aggressively against other ASEAN countries among four products. Table4. Regression Result of Gravity Equation of Laos and ASEAN7 and Non- ASEAN13 members Sectors log(real-GDP) Std.err t p R2 Adj R2 F Ststc No. Obs All Products (Total trade) 1. ASEAN7 2.051*** 0.370 5.550 0.000 2. Non-ASEAN 0.292*** 0.077 3.800 0.000 Food ( HS01-24) 1. ASEAN7 1.588*** 0.255 6.24 0.000 0.624 0.604 32.56*** 63 2. Non-ASEAN 0.154 0.129 1.19 0.234 0.561 0.547 39.06*** 127 Coffee, Tea, etc.(HS09) (-0.692)** 0.276 (-2.510) 0.017 0.323 0.257 4.93* 35 1. ASEAN7 2. Non-ASEAN 0.863** 0.348 2.48 0.016 0.174 0.128 3.74* 76 Textile Product(HS50-63) 0.100 0.307 0.33 0.746 0.410 0.379 13.23*** 61 1. ASEAN7 2. Non-ASEAN 0.765*** 0.117 6.52 0.000 0.542 0.528 37.02*** 130 Electric equipment (HS85) 0.987*** 0.234 4.09 0.000 0.657 0.638 33.89*** 57 1. ASEAN7 2. Non-ASEAN 0.5488*** 0.164 3.35 0.001 0.438 0.149 23.35*** 125 Note: ***, ** and * mean significant at 1%, 5% and 10% level, respectively. V. Conclusion and Policy Implications As mentioned before, ASEAN countries practice AFTA in order to realize one of the most important objectives, securement of political and economic stability in the region and promotion of economic growth. In the near future, it is expected that the realizations of AFTA and AEC will promote establishment of ASEAN regional specialization system. If AFTA and AEC come to realize, internal tariffs of final products, parts and raw materials will be 0%. It will enable cost reduction of internal procurements and internal optimal specialization system could change dramatically. Hence, along with the realization of AFTA, it is anticipated that regulations will be gradually eased and environment of international trade and investment 227

will become even more liberalized. In order to clarify the impacts of AFTA or RTA on Lao international trade as a new member of ASEAN, this study focused on statistically verifying if trade creation effect and trade diversion effect arise in four major products with Gravity Model. Summarized verification results are following. Firstly, in the analysis targeted at all products (total trade), trade creation effects are more seen larger in the case that limits samples to ASEAN7. Secondly, analyzing each product more closely, in the case of analysis that limits samples to ASEAN countries (For ASEAN7),trade creation effects are seen in each product (HS01-24, HS50-63, HS85), excepting coffee, tea, etc (HS09). Furthermore, the effects are larger for electrical and electronic equipment (HS85) and food (HS01-24). It means that when trading these products (HS85, HS01-24), it will be more beneficial for Laos to trade with ASEAN countries. But, in the case of analysis that limits samples to ASEAN7, trade diversion effect is seen in coffee, tea, etc (HS09). It indicates that the trade with non-ASEAN13 countries might bring larger trade creation effects for the case of coffee, tea, etc products. Trade diversion effects are seen only in agro sectors, such as coffee, Tea, spices, etc. which Laos competes aggressively against other ASEAN countries among four products. Therefore, when trading these products, it is not beneficial for Laos to trade only with ASEAN countries. On the other hand, for the case of the textile products (HS50-63), it indicates that trade with non-ASEAN13 countries might gain larger trade benefit. Based on the results of this study, it is considered that the Lao government should promote free trade more. That is because Laos is a country which transferred from planned economy system to free market economy system. At the same time, since Laos is a small backwards country with characteristic as an inland state, its domestic market is very tiny. It is essential for Laos to develop international trade in order to gain foreign capital for economic development and realize scale economy of production. However, Lao policies vary from major nations such as China or India as Laos owns specific conditions as an inland nation, which does not have sea. Accession of ASEAN and practice of AFTA might lead to reduction of governmental revenue, trade deficit, and bankruptcies of small and medium-sized enterprises (SMEs) which are not competitive in the initial phase. However, in the long run, they will bring economic effects such as enlargement of export market, increase of internal trade volume, reduction of production costs by imports of reasonable products, and coordination of industrial structures. Although free trade can cause bankruptcies and mergers of enterprises which are not competitive, it generally enforces competitiveness of domestic private enterprises and can develop international trade by exploitation and enlargement of export markets more. Even, it is supposed that free trade will activate investments from overseas and develop domestic industry and economy. However, in order to promote free trade, it is needed to (1) support business 228

resources (technology, capital and humane development) for competition with foreign enterprises; (2) provide information for exports to foreign markets and promote the utilization of the preferences of AFTA to the private sectors; (3) arrange law systems and infrastructure by taking advantage of FTAs. For the private sectors need to continue to improve and diversify the products to process them, in order to create more value added as well as to meet the international standard and its demand. And it is needed to continue to improve the marketing and management capability to deal with international trade and investment activities. Table5. Total Export to Laos and Import from Laos of 7 ASEAN members (1,000US$) Thailand Vietnam Malaysia Indonesia Philippines Singapore Cambodia export import Year export to laos import export import export import export import export import export import 64,345 68,030 2001 410,679 89,076 64,683 62,583 1,712 312 1,438 203 81 6 26,334 426 813 58 51,777 60,744 2,549 386 710 177 22 27 26,431 507 2529 21 2002 398,149 93,452 68,426 74,335 2,296 120 473 3,321 131 50 20,365 255 118 69,204 97,541 2,479 148 237 - 38,348 648 878 332 2003 456,869 103,800 94,958 166,618 6,248 12,913 1,570 4 721 - 39,966 1,464 412 200 109,682 211,250 5,671 49,143 1,753 64 452 - 41,093 573 206 959 2004 580,809 114,517 160,342 278,691 9,298 35,538 4,345 167 444 1,270 276 600 172,209 248,511 8,648 2,944 3,711 2,935 717 9 39,256 920 624 113 2005 768,878 226,804 6,853 111 3,993 211 1,568 3 25,427 252 845 525 -- 15,092 2,267 4,663 439 301 38 36,476 2,824 361 1498 2006 1,022,082 499,805 -- 13,860 740 5,504 616 611 12 22,972 465 884 - 99 34,790 - - 2007 1,313,711 470,066 - 2008 1,754,783 614,129 2009 1,642,618 462,708 2010 2,135,935 749,411 2011 2,777,266 1,138,843 Source: International Trade Center (http://www.trademap.org/). Note: export of each country means export to Laos. And import of each country means import from Laos. HS Code Appendix A. Food (HS01-24) HS01 Live animals HS02 Meat and edible meat offal HS03 Fish, crustaceans, molluscs, aquatic invertebrates nes HS04 Dairy products, eggs, honey, edible animal product nes HS05 Products of animal origin, nes HS06 Live trees, plants, bulbs, roots, cut flowers etc HS07 Edible vegetables and certain roots and tubers HS08 Edible fruit, nuts, peel of citrus fruit, melons HS09 Coffee, tea, mate and spices HS10 Cereals HS11 Milling products, malt, starches, inulin, wheat gluten HS12 Oil seed, oleagic fruits, grain, seed, fruit, etc, nes HS13 Lac, gums, resins, vegetable saps and extracts nes HS14 Vegetable plaiting materials, vegetable products nes HS15 Animal,vegetable fats and oils, cleavage products, etc HS16 Meat, fish and seafood food preparations nes HS17 Sugars and sugar confectionery HS18 Cocoa and cocoa preparations HS19 Cereal, flour, starch, milk preparations and products HS20 Vegetable, fruit, nut, etc food preparations HS21 Miscellaneous edible preparations HS22 Beverages, spirits and vinegar HS23 Residues, wastes of food industry, animal fodder HS24 Tobacco and manufactured tobacco substitutes 229

Source: International Trade Center (http://www.trademap.org/) HS Code Appendix B. Textile Products (HS50-63) HS50 Silk HS51 Wool, animal hair, horsehair yarn and fabric thereof HS52 Cotton HS53 Vegetable textile fibres nes, paper yarn, woven fabric HS54 Manmade filaments HS55 Manmade staple fibres HS56 Wadding, felt, nonwovens, yarns, twine, cordage, etc HS57 Carpets and other textile floor coverings HS58 Special woven or tufted fabric, lace, tapestry etc HS59 Impregnated, coated or laminated textile fabric HS60 Knitted or crocheted fabric HS61 Articles of apparel, accessories, knit or crochet HS62 Articles of apparel, accessories, not knit or crochet HS63 Other made textile articles, sets, worn clothing etc Source: International Trade Center (http://www.trademap.org/) Appendix C. Coffee, Tea, etc (HS09) O900 All industries in sector 09 O901 Coffee O910 Ginger,saffron,turmeric, thyme, bay leaves & curry O902 Tea O908 Nutmeg, mace and cardamons Source: International Trade Center References ASEAN Summit. (2004). the ASEAN Framework Agreement for the Integration of priority Sectors. Vientiane, Lao PDR, 2004, 1-15. Aoki, K. (2001). AFTA (ASEAN jiyuboekichiiki[ASEAN Free Trade Area]): ASEAN keizaitogo no jittai to tenbo[The Present Conditions and Prospects of ASEAN Economic Integration], Japan External Trade Organization (JETRO). Austria, M.S. (2004).The pattern of Intra-ASEAN Trade in the Priority Goods Sectors, REPSF Project Paper, 03/006e, 1-182. Ishikawa, K. (2009). ASEAN keizaikyodotai: higashiazia togo no kaku to nariuruka[ASEAN Economic Community: Can It Become the Model of East Asia Economic Community?], Japan External Trade Organization (JETRO), 191. Ishikawa, K. Shimizu, K. (2009). “Sekaikeizai no kozohenka to ASEAN keizaitogo: ikinaikeizaikyoryoku no AEC he no shinka to higashi ajia he no kakudai”, ASEAN keizai kyodotai: higashiajia togo no kaku to nariuruka, Japan External Trade Organization (JETRO). Kimura, F. (1995). Jissho kokusaikeizainyumon[International Economic Practice], Nippon Hyoron Sha, Co, Ltd. 230

Frenkel, M. Funke, K and Stadtmann, G. (2004). A Panel Analysis of Bilateral FDI Flow to Emerging Economies, Economic Systems, 281-300. Fukase, E. and L. A. Winters. (2003). Possible Dynamic Effects of AFTA for the New Member Countries, 853-871. Nu Nu Lwin.( 1998).“Analysis on International Trade of CLM Countries”, IDE Discussion Paper No. 215, 2009. Shimizu, K. (1998). ASEAN ikinaikeizaikyoryoku no seizikeizaigaku[The political Economic of ASEAN Economic Cooperation], Minervashobo. Urata, S., and Ando, M. (2010). “Jiyuboekikyotei (FTA) no keizaitekikoka ni kansuru kenkyu[A Study of Economic effects of FTAs]”, RIETI Discussion Paper Series 10-P-022, pp.16-17 Urata, S. and Okabe, M. (2010). “Trade Creation and Diversion Effects of Regional Trade agreement on Commodity Trade” RIETI Discussion Paper Series 10-E-007. Urata, Shujiro and Misa Okabe. (2010). “Trade Creation and Diversion Effects of Regional Trade agreement on Commodity Trade”, RIETI Discussion Paper Series 10-E-007. Websites 1) ASEAN- Japan Centre, http://www.asean.or.jp. And ASEAN, http://www.asean.org 2) Centre d'Etudes Prospectives et d'Informations Internationales (CEPII), http://www.cepii.fr. 4) Foreign Trade Policy Department, Ministry of Industry and Commerce, Lao PDR, http://www.laoftpd.com. 5) International Trade Center, Trade Map, http://www.trademap.org. 6) Ministry of Industry and Commerce, Lao PDR, http://www.moc.gov.la. 7) World Bank, World dataBank, http://databank.worldbank.org. 8) WTO: Members and Observers, http://www.wto.org. 231

The Emergence of Social Entrepreneurship and its Supporting Environment in the Lao People’s Democratic Republic (Lao PDR) Mr. Lavanh Vongkhamsane The Graduate Office (GO), National University of Laos (NUOL) and Faculty of Management and Economics (FME), Kunming University of Science and Technology (KUST) Dongdok Campus, Vientiane, Laos [email protected] ABSTRACT A social enterprise, which incorporates a business scheme in its system and tries to address significant social issue, is emerging globally in general and in its infant stage in Laos in particular. It is assumed that the social entrepreneurship concept is very new and its potential has not yet been explored in Laos. Therefore, this paper focuses on examining the emergence of social Entrepreneurship; its environment (political, legal, social-cultural, economics, and education environment); attitudes of the social entrepreneurs, and subsequently, the prospective social entrepreneurship development. The research method is conducted through in-depth interviews with existing social entrepreneurs in Vientiane Capital and Champasack Province. The concept covers supporting environment, types of social entrepreneurs, personal attributes and skills, enterprise activities, and method of training social entrepreneurs. The results shows that the supporting environment (insufficient support legally, socially, economically, financially) are evidenced. Personal intent, attribute, and skills are also limited in the Lao context; and the context in which social entrepreneurs serves is very narrow. The existing social entrepreneurs provide good guidelines and recommendations for preparing education program for prospective social entrepreneurs. Skills attributes persistence, self-confidence, commitment to work contact, demand for quality and efficiency, persuasion, networking skills are necessary for social entrepreneurs Keywords Social Entrepreneurship, Social Innovation, Social Innovation Cluster, Nonprofit Venture 232

1. Introduction The economic development has widened the gap between the rich and the poor in many economies; despite of overall economic situation is progressing and advancing. As a result, many social problems emerge, for example, gender inequality, homeless, less opportunity for the disadvantaged people (the disabled), as well as environmental issues, fair- trade, and redevelopment of under-served communities. Although the government has put utmost efforts to solve the issues, there are rooms to improve. In many countries, there is an emergence of a group of people who take responsibility for those problems and provide social services according to the social needs. These people are called social entrepreneurs who support what the out-of-government reach issues in managing and providing social services by themselves. The argument that should take the lead in solving problems, whether it is Government or the market, has been made in Economics (Economic Policy) for many years. But it is difficult to overcome the social issues. As values diversify in society, people’s awareness of social issues has matured and civil society organizations have occurred even without policy or regulatory support in Laos. The occurrence of new breed organization is usually followed by the government’s attention generating legal and policy framework to support and manage the situation. Thus the Degree on Association establishment was enforced in 2009 and international Non-profit Organization (INGO) decree was enforced in 2010. Up to now 29 associations and Foundation in the form of nonprofit organizations have been registered with the Ministry of Home Affair (MOHA) under 115/PM dated 29 April 2009. Moreover, there are many social-oriented companies established by private individual or entity, operating under the Public Private Partnership Program. In addition, under the new Decree on Association, there is a trend of specialists forming associations, aiming at taking care of community and environment by coordinating experts to handle social and environmental issues. A lot of supports from society energize and encourage nonprofit organizations. Not only traditional nonprofits for charity are actively operating in the society, but also nonprofit ventures, which provide social goods and services in the market, have expanded support in society. A new breed of business corporations, which have a mission of solving social issues, is named a socially-oriented company. Due to the lack of legal support and the lack of organizational legislature of social enterprises, these companies register themselves as private company, yet the activities are gearing towards solving social issues. A new legislation on Association is a new legal framework allowing a group of qualified individual to form association to help the government solving social and environmental issues. In addition, big businesses are also getting involved in corporate social responsibility (CSR) and they develop their social business and humanitarian activities. Thus, we call the business style which addresses the social issues in various ways \"Social Enterprise\" in common. For these reasons, I define \"social entrepreneur\" as a person who identifies the social needs, starts a new business and promotes social innovation. This paper examines a new trend of social enterprise and the process of \"social innovation\" that develops social goods and services and a new business style in Laos. The issue of social entrepreneurship has no prior study in Laos; therefore, this paper seeks to interrogate existing theory and practices on social entrepreneurship and to explore the pattern of social enterprise emergence and its environment in Laos. Furthermore the types of social entrepreneurship undertaken, profiles of social entrepreneurs, and the levels of entrepreneurial and managerial skills typically associated with successful social entrepreneurs are examined. 233

2. Research Objectives The broad aim of this study is to analyze the role of an emerging form of an organized economic activity, social entrepreneurship. The interest of the study is to (1) explore the process of social entrepreneurship emergence in Laos; (2) explore its pattern and environment in the Lao P.D.R.; (3) explain the levels of entrepreneurial and managerial skills typically associated with successful social entrepreneurs. 3. Research Methodology This paper exploits the case of social enterprises in Laos to contribute to the knowledge about social entrepreneurship emergence and development. Due to the scarcity of social entrepreneurs, the author conducted in-depth interviews with 12 social entrepreneurs in Vientiane Capital and in Champasack Province. The focus of the interview was on their personal histories up until they established their current businesses. In addition to the qualitative interview, questionnaires on entrepreneurial attitudes were distributed to these entrepreneurs. Apart from fundamental statistical analysis, the life histories of the entrepreneurs in the samples enable us to investigate important issues concerning social entrepreneurship. 4. Literature Review 4.1. Social entrepreneurship definition Houtbeckers (2011) stated that social entrepreneurship has several definitions and are widely studied (Zahra, Gedajlovic, Neubaum 2099), quoted in (Houtbeckers, 2011). According to Mair and Marti (2006) social entrepreneurship refers to a process where resources are used and combined innovatively and opportunities are pursued in order to achieve social change and address social needs. Laville & Nyssens (2001) suggest that the aim of social entrepreneurship is to achieve social gains by possibly limiting the material interests of capital investors. Another perspective to the definition of social entrepreneurship is the idea of active persons; it is claimed that inventive individuals come up with an idea, enable its execution or take part developing the idea. Instead of waiting someone else to do it, these people do it themselves (Bronstein 2007). Nevertheless, Peattie and Morley (2008) pointed out that the choice of a definition should not leave out the variety of social entrepreneurship, even though it is hard to grasp the vast variety of different activities in a single definition. Moreover, the concept of social entrepreneurship is rather new, emerging in the United States as well as in the UK in the 1990’s (Hockerts and Morsing 2008, 16), but as an activity, social entrepreneurship can be recognized in the history (Boddice 2009; Dees 2001). Ziegler (2009) concludes that although social entrepreneurship is a contested concept, it still uniquely combines social aims and entrepreneurship. In the “social entrepreneurship” literature, debates over definition persist. For example, Brock, Steinder and Kim (2008) conducted a review revealing more than a dozen different definitions for “social entrepreneurs” and “social entrepreneurship” (see table 1). 234

Table 1: Definition of Social Entrepreneur and Social ntrepreneurship Author(s) Definitions of Social Entrepreneur & Year Ashoka Social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling Bornstein, major social issues and offering new ideas for wide-scale change. D., (2004) A path breaker with a powerful new idea, who combines visionary and real-world problem solving creativity, who has a strong ethical fibre, and Dees, J. G., who is ‘totally possessed’ by his or her vision for change. (2001) Social entrepreneurs play the role of change agents in the social sector, by: Adopting a mission to create and sustain social value (not just private Light, (2006) value); Recognizing and relentlessly pursuing new opportunities to serve that Martin, R. L. mission; & Osberg, S., Engaging in a process of continuous innovation, adaptation, and learning (2007) Acting boldly without being limited by resources currently in hand; Exhibiting heightened accountability to the constituencies served and for PBS’ “The New the outcomes created. Heroes” A social entrepreneur is an individual, group, network, organization, or alliance of organizations that seeks sustainable, large-scale change through Schwab pattern-breaking ideas in what or how governments, non-profits, and Foundation businesses do to address significant social problems The social entrepreneur should be understood as someone who targets an Skoll Foundation unfortunate but stable equilibrium that causes the neglect, marginalization, or suffering of a segment of humanity; who brings to bear on this situation Thompson, his or her inspiration, direct action, creativity, courage, and fortitude; and (2002) who aims for and ultimately affects the establishment of a new stable Austin, J., equilibrium that secures permanent benefit for the targeted group and Stephenson, H., & society at large. Wei-Skillern, J., A social entrepreneur identifies and solves social problems on a large (2006) scale. Just as business entrepreneurs create and transform whole industries, Johnson, (2000) social entrepreneurs act as the change agents for society, seizing opportunities others miss in order to improve systems, invent and disseminate new approaches and advance sustainable solutions that create social value. What is a Social Entrepreneur? A pragmatic visionary who achieves large scale, systemic, and sustainable social change through a new invention, a different approach, a more rigorous application of known technologies or strategies, or a combination of these. The social entrepreneur as society’s change agent: a pioneer of innovation that benefits humanity. Social entrepreneurs are ambitious, mission driven, strategic, resourceful, and results oriented. People with the qualities and behaviors we associate with the business entrepreneur but who operate in the community and are more concerned with caring and helping than “making money” Social entrepreneurship is an innovative, social value-creating activity that can occur within or across the non-profit, businesses or government sectors. Social entrepreneurship is emerging as an innovative approach for dealing with complex social needs. With its emphasis on problem solving and social innovation, socially entrepreneurial activities blur the traditional boundaries between the public, private and non-profit sector and emphasize hybrid model of for-profit and non-profit activities. 235

Nichols, A., Social entrepreneurship entails innovations designed to explicitly improve (2007) societal well being, housed within entrepreneurial organizations which initiate, guide or contribute to change in society. Mair, J. & Marti,I., Social entrepreneurship: Innovative models of providing products and (2006) services that caters to basic needs (rights) that remain unsatisfied by political or economic institutions. Source: Wendy Cukier et al, (2011). Social Entrepreneurship: A Content Analysis, p.101-102 In this paper, the pattern of social enterprise is defined as an organization with earned income approach in assisting people with inability: (disabled, poor people, disadvantaged people, and environment protection) as a social business sector or as part of a mixed revenue stream including charitable contributions and public sector subsidies. Social entrepreneur is a private non-profit entity assisting the community as to improve local business and social and environmental problem solution in a sustainable manner by stimulating existing resources. 4.2. Construct Development of Social Entrepreneurship Social entrepreneurship is better understood as a construct rather than a concept. As used in social sciences research, a construct is an idea specifically invented for theory building purpose, a construct combines simpler concepts especially when idea is least observable and most complex to measure (Cooper and Emory, 1995). To a large extent SE embodies such tendencies, where social entrepreneurs are reformers and revolutionaries, as described by Schumpeter (1934), but with a social mission, they affect fundamental changes in the way things are done in the social sector (Dees, 1998). Social entrepreneurs are perceived as mission-based businesses rather than as charities, they seek to create systemic changes and sustainable improvements, and they take on risks on behalf of the people their organization serves (Brinckerhoff, 2000). Though they may act locally, their actions have the potential to stimulate global improvements in various fields, whether that is education, health care, economic development, the environment, the arts, or any other social field (Dees, 1998). To further demonstrate the SE construct, Peter Drucker (1979 p. 453) introduced the concept of social enterprise. He indicated that even the most private of private enterprise is an organ of society and serves a social function. He further asserted that there was a need for a social sector in addition to the private sector of business and the public sector of government in order to satisfy social needs and provide a sense of citizenship and community. Similarly, Spear (2004) poses the question of whether SE is about creating social enterprise or is more concerned with those particular aspects of entrepreneurship that have a social dimension. Based on the Global Entrepreneurship Monitor reports (GEM), SE is defined as follows: Social entrepreneurship is any attempt at new social enterprise activity or new enterprise creation, such as self employment, a new enterprise, or the expansion of a existing social enterprise by an individual, teams of individuals or established social enterprise, with social or community goals as its base and where the profit is invested in the activity or venture itself rather than returned to investors (Harding, 2006 p. 5). 4.3. Social entrepreneurship and societal impact Haugh (2005) argued that societal impact of social entrepreneurship is little studied. Haugh emphasized that claimed social benefits from social entrepreneurship are intangible, not easily quantified and difficult to attribute to a single organization. In addition, Haugh continued that the impacts of social entrepreneurship may not be necessarily positive to the society, since they may for example increase transaction costs or decrease the quality of jobs or services. 236

However, McLoughlin et al. (2009) point out that social entrepreneurs are required to demonstrate their value to the society because their funders require it (for example customers, foundations, capital investors or government providing subsidy). This leads to a practice of providing impact assessments (Dees & Anderson 2006), and consequently, there are many tools developed for social entrepreneurship impact assessment (McLoughlin et al. 2009). Yet, used and developed tools are focusing on limited aspects of societal impact assessment, when creating more suitable models is required. However, assessing societal impact of social entrepreneurship is not a technical matter, but a social construct negotiated in interaction. (McLoughlin et al. 2009) 4.4. Social entrepreneurship and societal context According to Vasi (2009) the effect of societal context of social entrepreneurship has gained too little acknowledgment in previous research. Moreover, Boddice (2009) argues that social entrepreneurship is a historical product and its context should be more carefully studied. Furthermore, majority of empirical social entrepreneurship research is carried out either in English speaking countries or in some developing country contexts, but not yet in the Lao P.D.R, where the government has a central role in providing services for its citizens. 4.5. Research Results 4.5.1. Overall situation of the sampling Since there were no registered social enterprises, the samplings for this research were identified through personal network and Ministry of Home Affairs, in an attempt to understand the entrepreneurs’ operation activities and relate it to the definition of social enterprises. Through this process, 12 entities have been identified and interviewed. The overall sampling can be classified into three groups of social entrepreneurs: community group, social oriented companies, and association. There are four community groups namely Kiat Ngong Bush Walk, Women Weaving Group, Pineapple Jam Group, Women Union Saving Group. The Kiat Ngong Bush Walk provides tourist guide services, specifically on elephant riding and bush walking. The Pineapple Jam Group is village organization that promotes families to jointly grow pine apple, produce and market pineapple jam product. The Women Union Saving Group provides the micro-financial support to the village members. The four social oriented companies refer to Green Discovery, Phasuam Park, Markphet Restaurant and Saoban Bamboo Handicraft. The Green Discovery specializes in sedentary development changing rural lifestyle from hunting, shifting cultivation and fisherman to recreational practices as professional tour guide specialists. For example, they turn hunting or fisherman specialists to tourist guide to preserve and watch wildlife and aquatic life instead of destroying them as in their previous career. Associations comprise of Life Skill Association, Participatory Development Training Center, Association for Poor People, and Lao Disabled People Association. The Life Skill Association carries out training needs analysis and provides professional knowledge and abilities needed by community both in urban and rural areas. The Participatory Development Training Center enhances youth leadership, rural development, micro-enterprise development, technical training, local government capacity building and distance learning. The Association for Poor People provides support for social welfare, education, health and environmental protection in rural areas. The Lao Disabled People Association searches for disabled people and provides knowledge and job opportunities. 237

4.5.2. The process of social entrepreneurship emergence in Laos The three types of organization the author interviewed have different background and motivation to become social entrepreneurs. One key finding is that most of the entrepreneurs were former government officials who quit the government job to become the social entrepreneurs. Some of the entrepreneurs have strong connection with government officials who facilitate the activities as well as providing valuable information. Process 1 Identify Personal Formal unmet needs Initiation Organization Government Official Process 2 Village Group Government Potential Establishment Support Village Identification Poverty Process 3 Business Acknowledge Involving/ Community Oriented PPP Potential Integrating enforcement Individual Directives Community in business model ** PPP = Public Private Partnership The result of the study indicates that there are three processes leading to the social entrepreneur. In the first process, the entrepreneurs start with being government officials. During their official term, they had identified the unmet need that they felt they are capable to fulfill and they had desire to do it. At the same time, they also felt that they contributed too little in the position that they were handling. Therefore, they quit the government job and started their social mission. These social entrepreneurs might have connection with international organization or other government officials who shared the same ambition. At the start of their new mission, the legal environment still did not allow social enterprises, association, NGO or NPO. Therefore, some of the organizations were registered as private entity or semi-governmental organization. In the later stage, they became a formal organization, either association, or social group, or social-oriented enterprises. The second process begin with the village poverty, yet surplus of some agricultural products or village product potential exists. The government directives or movement in terms of one district one product, women organization, trade union and other organizations have supported in training, seminar, or bringing villagers for excursion in some successful development area. The results of such movement create villagers to organize their similar interest team and propose to the village or district authority for necessity approval or supports. The successful cases are used as model by the government official and disseminate to other locations. Such movements in the area are women union microfinance, women weaving groups, handicraft association, agriculture group, livestock farming, or even rice group. The third process emerges by an individual who create private enterprises. During their struggle developing their enterprises, government improvement in business support and country development emerges. In the past 10 years, more than 90 laws have been inaugurated, including business promotion, business law, tax law, and others. Some other policies, such as public-private partnership scheme, and inauguration of new decree in terms 238

of new types of organization, such as association or business group have been issued. Business people see opportunity with government policy in terms of environmental promotion, poverty eradication, health, education, rural electrification, agricultural development, and others; they turn to integrate these issues into their business model. Once they involve community into business processes, some of them prosper into it while other simply cannot leave the business cycle. 4.5.3. Pattern and environment in the Lao P.D.R. Most of the social enterprise pattern in Laos is mainly to fill the gaps without having been fulfilled by the governments or international organizations in terms of both fund raising and social problem solutions. It can be observed that some basic characteristics of social enterprises consist of (1) social mission: addressing business with social issues. Social enterprises can operate their businesses only by supporting their social mission from the community and stakeholders. (2) Social business: creating a new comprehensive business or promoting the existing local business. Social enterprises take various legal forms to set up an organization. (3) Social innovation: developing of new social goods and services, and systematically addressing the social issues through generating business ideals. The major activities currently practiced are training and development, career development, product development, sales promotion, local knowledge enhancement within the social norm, facilitating quality improvement, environmental protection, rural area access support to information, education, health services, and networking in agricultural sector. Entrepreneurial skills, life skills, and open access to legal practices, politics, gender equality, and human right are also the evidenced. Recently, since the inauguration of association establishment Decree No. 115/PM dated 29 April 2009, groups of experts are gathering to establish association to fulfill some social missions. Yet the approval procedure is relatively slow. Since 2009, there have only been 29 associations approved. Table 2: Patterns of Social Enterprises Characteristics Social Mission, Social Business, Social Innovation Organization Type Nonprofit Ventures, (Community Groups) Nonprofit Organizations For Profit Organization Intermediate Corporation, (Associations) Socially Oriented Companies, (Private Company) Three patterns of social enterprises are indicated from the result of this study, namely: 1) Community group, 2) Associations, and 3) private companies with socially oriented mission. The details of each are explained as follows: 1) Community Group (Non-profit Venture): Nonprofit ventures have come to play various roles as they are receiving social expectation and support. Nonprofit ventures offer social goods and services in the market. In some cases a nonprofit organization (donations) manages the profit-making activities, particularly at household level. Nonprofit ventures are emerging with social and government influence in Laos, for examples, Participatory Development Training Center (PADETC). The center offers training to existing small businesses or household in order to improve their life skills and business skills so that their trainees can enhance and succeed in daily lives. Other examples are Kiat Ngong Bush Walk, Women Weaving Group, Pineapple Jam Group, and Women Union Saving Group. 239

2) Association: most of associations were from individual or entity because those are start-up in two different types in Laos: 1) existing businesses unite as an association in order to enhance negotiating power with the government or trading partners abroad or for society’s conflict solution. The examples of these types include furniture association, handicraft association, and etc. and 2) establishment by scholars. The scholars are ambitious and persistent, tackling major social issues and offering new ideas for large-scale change. The example in this group is Vulnerable Youth Development Association. 3) Socially-Oriented Companies: new waves of businesses with social missions have emerged to solve the social issues particularly after the introduction of the government policy in public-private partnership. Most of the schemes the entrepreneurs take are businesses as funding and technical know-how partners while local people contributed by providing land and labor. Government facilitate the whole cooperation and ensure that the operation benefit all parties, including the government. For example, Green discovery and Phasuam Park. 4.5.4. Social Entrepreneurship Environment The results indicate that the entrepreneurs need supports from macro level in various levels. The highest need is identifying the emerging challenges and opportunity with the mean score of 5.4 out of 7 likert scale. Social cultural environment, legal environment, political and economic environment are reasonably highly needed with the mean score of 5.0, 4.9, and 3.9 respectively. The social entrepreneurs felt that the need of supports at micro level also varies. The highest need is from NGO/NPO and research institutions with the mean score of 5.9. Fund provider support needs are also high with 5.1. Other supports, such as from existing social organization and supporting organizations are relatively good with mean score of 4.6 and 4 respectively. The entrepreneurs felt that the support from private enterprises and public institutions are still not very highly needed. The current entrepreneurs’ feeling toward the support is relatively low. Except the support from governing bodies, government, NGO/NPO with the mean score of 5, 4.6, and 4.6 consecutively, other agencies, such as international organization, social organization, national organization, individual donation, university, beneficiary, funding agency, and business corporation are very low at the current stage of development. 4.5.5. Current Attributes and Skills of Social Entrepreneurs The analysis into the attributes of the existing social entrepreneurs exhibits that the highest attribute is persistence, followed by self-confidence, commitment to work contract, demand for quality and efficiency and persuasion and networking with mean score of 5.8, 5.5, 5.3, and 5.0 respectively. Other attributes with the mean score between 3.7 and 4.9 are goal setting, opportunity seeking, information seeking, systematic planning and monitoring, and finally risk taking. The entrepreneurs felt that the skill they currently possess the highest is idea generation and creative thinking, and leadership skill with mean score of 6.1 and 5.7 respectively. Management skill, communication skills, networking, and negotiation skills are reasonably high, higher than 4. The lowest skills the entrepreneurs have is commercial awareness. 4.5.6. Ideal Attributes and Skills for Social Entrepreneurs The entrepreneurs felt that all the attributes assessed are needed, yet the level of need varies. The highest attribute needed is communication skills (6.9), followed by commercial 240

awareness (6.3), idea generation and creative thinking, networking (6.2), negotiation and management (6.1), and research and analysis (6.0). Other attributes with the mean score between 5 and 6 are leadership, and financial literacy. The ideals skills social entrepreneurs need also varies. The highest needed skill is leadership (7), followed by idea generation and creative thinking (6.8), management (6.6), networking (6.3), financial literacy (5.9), negotiation (5.7), communication (5.3). Research and analysis and commercial awareness skills are needed at lower level, with mean score of 4.6 and 3.8 respectively. Apart from the assessed skills and attributes, the entrepreneurs provide comments that other necessary skills for social entrepreneurs are interpersonal skills, teamwork skills, project planning or/and management skills, presentation skills, flexible attitudes toward risks, and increased self confidence respectively. 4.6. Discussion The result of this study shows that social enterprise in Laos consists of three different types which differ from in other countries or regions. Since the social enterprise is very little known in terms of its reputation, significance, with limited support in legal, policy, and social entrepreneurial ambitions, it is important to realize a new social value through social ventures. In many arguments in Europe, \"social ownership and management\" is one of the important factors, controlled by multi-stakeholders and has the principle of “one member, one vote” (Borzaga et al, 2001). In the United States, most social enterprises have the legal status of a nonprofit organization. The principal concept and its legal form of organizations of a social business are various in each country (region). In Japan, there are two basic styles of social enterprises such as profit organizations and nonprofit organizations (Tanimoto, 2008). From the argument above, there is no universal form of social venture in the world due to the differences in social issues, environmental, legal, political, and economic conditions. The way of addressing social issues and the styles of the organizations differ in the market system, the relationship between citizen and the Government, and the legal system. The social entrepreneurial environment in the Lao PDR also has its uniqueness, following the same argument as in the distinction in EU, US and Japan. 5. Conclusion The study has identified that there are three processes and three types of pattern of the social entrepreneurship in Laos. The first process is the starting point of being government official acknowledging unmet need, having an ambition and capacity to tackle the issue. The second process is through the poverty situation that villagers are facing and struggling to survive, usually with guideline, recommendation and supports from the government authority to launch a group for social-economic development unit. The third process is through business person who integrate the government policy of public-private partnership into business model while business people contribute funding and know-how, community providing land and labor and government takes care of the coordination between the two ensuring the benefit of all parties. The pattern includes community group, social oriented company, and association. Legal support, social awareness, policy support, financial contribution, and social entrepreneurial skills are still limited. The promotion of these issues will help enhancing to solution of social problem, contributing to the well-being of the society, reducing the social gap and social issues. The author believes that the more promotion on developing social entrepreneurs, enhancement of environment for them to play, as well as the provision of legal and financial support, and highlighting the social entrepreneurial image in the society will create a peaceful social condition. 241

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The Impact of Beliefs on Business Practice in the Lao People’s Democratic Republic Mrs. Thongsavanh NAKHAVITH ABSTRACT The Lao PDR is multi-ethnic groups and cultural diversity country. The government of Lao PDR reserves this multi-ethnic and diversity as the core economic development. The beliefs of Lao vary from one group (geographic and demographic) to another throughout the country. The comparative analyses of factors: religions, beliefs, myths, culture, level of economic development, business development, natural resource use, and education, influencing the business managementhas never been carried out in Laos. Thus, this study aims at firstly examining to what extent and how background beliefs affect the business practices. Secondly, the research attempts to identify whether one groupbeliefs nurture the characteristics associated with entrepreneurship more than others. Finally, the paper analyzes the degree of respects to successful entrepreneurs in certain ethnic beliefs. Samplesare selected in different domain(District level, provincial level, and capital city level) and also classified in terms of demography. Source of belief, if it is human, are also interviewed. The results shows that astrological belief and religion is greatly influencing the livelihood of people in the society; including business practices, which have been mainly influenced by management science, human resource management, economics, psychology, and other. In business practices, the entrepreneurs who need to make decision consider the uncertainty and problems. They decide the solution option from many alternatives which have been analyzed and think that which alternative is the best one. Astrological, religious, and animism belief is one option that the entrepreneurs choose to support their confidence in the case of risky decision making in business practices, as has been seen from entrepreneurs checking appropriate timing with fortune tellers, monks, or clan leaders.From various phenomena that have been explained by the source of belief (astrological and/or religious) and entrepreneurs, the belief enhances confidence and sometimes resulted in miracle outcome. The results, nevertheless, show that different groups of people have different level of religious and astrological practices, both in geography and demography. Key words: entrepreneurs, belief, astrology, religious, business practice 243

1. Introduction Belief is a way of thinking culture which human created in order to secure their mental peacefulness since the happiness is born in the mind, which is the basic need of humankind. Happy mind is fundamental need for human. Brosnislar Malinowski (1997:31) classified human needs into three categories: basic physical and mental needs, the needs to be a member in the society, and a need for identity which needs to be catered for by the development of sciences, religion, magical arts, and performance in the society. One of the learning system have identified that there are many scientific story that cannot cater for the learning and explanation of a phenomenon. Human have created astrological and religious belief system to explain the phenomenon and to assist humankind to understand and to feel safe. Belief has influenced the Lao lifestyle since the ancient period; and currently, human are so advanced in science and technology by utilizing modern equipment in their living support. The advancement in science and technology have changed or eliminated many beliefs; nevertheless, some of the beliefs still have tremendously influence the mentality and lifestyle of human, such as astrological belief, magical power, and etc. (Pakaphone Vichivathakane, 1989:13). Astrological and religious belief has been one of the Lao local knowledge since ancient time. There are evidence in the Lao Bailane script and famous literature, namely Sangsinxay Story, Khouncheuang story, Nang Phomhom story, and others. Besides, tradition such as wedding, new house construction has shown that Lao people look for good dates in accordance with astrological belief for auspiciousness and success. Therefore, the astrological and religious belief is a practice to enhance the confidence, brave, and attacking societal program. Having a particular belief and practice, according to each individual horoscope, an entrepreneur gains more confidence and endurance. It can make the surrounding people also accept the belief since they think it will bring good things for them. Therefore, astrological belief has been a science relating to human psychology for a long time. As it is a science that cannot be proved by evidence, reason, or history, the science has not been accepted; as it may be relevant to the sayings of Monk Vichitvathanakane: “maybe we don’t know or not knowing enough as ancient people” (Lavan Soukri 1994: 7). Although nowadays scientific knowledge and technology has been so advanced, we still find that the astrological belief and religion is greatly influencing the livelihood of people in the society; including business practices, which have been influenced by management science, human resource management, economics, psychology, and others, so that the business management is governed by proper principles and rules with high effectiveness and efficiency. Nevertheless, the current business practices, the decision on business practices are facing problem of uncertainty due to the changing business environment or the result of decision is feasible in many ways. Business people have to understand the current situation, forthcoming situation, and future situation which is difficult to predict. Future is difficult to predict precisely. Sometimes an occurring situation might positively or negatively affect the business practices; it may be a bottle neck preventing the fulfillment of the target (Souyouthon Minaphan, 1997:9-20). In real situation of business practices, the entrepreneurs who need to make decision will consider the uncertainty and problems. They will decide the solution option from many alternatives which have been analyzed and think that which alternative is the best one. The selection of a solution strategy will consist of an uncertainty element in the decision making process because there may be some changes that they expect to occur. The option that has been selected might not be the best one due to the option has some feasibility of success or 244

failure; therefore, in any option the entrepreneur adopts, they still face some risk on the decision making (Sourayout Minaphan, 1997:289). This characteristic causes the entrepreneur to search for mental soundness support by various ways. Astrological belief is one option that the entrepreneurs choose to support their confidence in the case of risky decision making in business practices, as has been seen from entrepreneurs checking appropriate timing with fortune tellers, monks, or clan leaders. From past to present, Lao economy has been changing continuously and has been growing rapidly recently. The evidence is seen from the increase of new business establishment, leading to industrial development. Such rapid growth cause intensive competition as well as entrepreneur’s confidence level is declining. Therefore, these entrepreneurs search for other means of confidence support, which is highly sensitive and never enough. For this reason the belief system has played important roles as the need to find mental support and ways to release tensions, creating confidence in business conducts (Nithi Iaosrivong, 1993:42-45). From various phenomena that have been explained above, belief (astrological and/or religious) is the fact in the society which many people know, yet lack of systematic research regarding the influences of beliefs and correlation between beliefs and the business practices of the entrepreneurs. Therefore, I am interested in conducting the research in this area in order to understand the insight of entrepreneurs’ beliefs and their business practices. I am confidence that the result of this research will be beneficial to the business development so that the entrepreneurial activity can support economic and social development in the future. 2. Literature Review The study on religious influence business practiceby Anderson et al, (2000) on the Christianity influence business practice in Western country while Islam shape the business environments in many countries where Islam is the dominant religion (Ali and Al-Owaihan, 2008;Ali and Gibbs, 1998). Chinese and East Asian firms was influenced by Confucian philosophy (Yan and Sorenson, 2004), however, there were many philosophical orientations shaping Chinese management theory including Confucianists, the Legalists, and the orientations. Theravada Buddhism seemed to have influence on business environment and practice in mainland Southeast Asia. This region is, however, difficult to define as there are also distinct divisions within the region. The Philippines is influenced by Catholic while Indonesia, Malaysia and Brunei are Islamic countries. Singapore is somehow associated with Chinese and Confucian values; Vietnam is the mix of variety of religions including Mahayana Buddhism and Catholicism, Lao PDR, Cambodia, Myanmar and Thailand have traditionally been centers of Theravada Buddhism. Theravada Buddhism was more a philosophy than a religion and according to the Buddhist doctrine; the Buddha is not a god or a supernatural being. In theory, Theravada Buddhism “has no dogmas, superstitions, necessary rituals, mediating priests or blind faith in an unknown (and unknowable) God” (King, 2001). However, most daily practice the followers are mixed with animist beliefs including praying for intervention in daily life of the Buddha, saints or spirits and other practices and beliefs with similarities with the practice of other religion. Thus, there are significant changes or difference from its origin (Jackson, 2003;Schober, 1989) Belief and culture can be defined as an interpretive framework through which individuals make sense of their own behavior. It is a set of historically evolved learned values and meanings shared by the members of a given community that influence the material and non-material way of life(Hofstede, 1994). Members of the community learn these shared 245

characteristics through different stages of socialization processes of their lives in institutions such as family, religion, formal education, and the society as a whole. Kutcher et al, (2010) study found that there were strong religious beliefs correlated with improved ability to cope with stress in the workplace. Their study was supported by Vitell’s research that an individual religious value would affect ethical behavior. Religious beliefs in some context appear to influence consumer behavior (Doran, C.J., and Natale, S.M.,, 2011)whereas Cole’s (2009) study indicated that individual religious values can have an effect on that individual’s views about organizational justice. However, at macro level, the dominant religion of a region or country has often been found to have an impact on the overall business environment. There seems to be a correlation between the dominant religion in a country and the level of corruption, although other factors, specifically low gross domestic products per capita, also appear to play an even more important role in contributing to high levels of corruption (Samanta, Pleskov, Zadeh, 2010). Some studies also indicated that religious practices and values play a less important role in daily life than they once did due to the decline of its level and intensity or the role of religion in daily life specifically incomes rise and economies develop (Barro and McCleary, 2003;McClearly and Barro, 2006). 3. Research Objectives The main objectives of the research are to firstly examine to what extent and how background beliefs affects the business practices. The research also identifiesthe differencesbetween the belief practices of the different region. Secondly, the research identifieswhether beliefs nurturethe characteristics associated with business operation more than others.Finally,the paper analyzesthe degree of respects to successful entrepreneurs incertain region’sbeliefs. 4. Research scope The belief is studied in the following elements: belief on fates, belief on horoscope, Belief on timing, belief on prediction or fortune telling, Belief on geographic prediction (Huang Chui). The belief and the astrological practices in business activities analyzed covers formulation of policy, investment decision, business planning, and Personnel recruitment: personnel selection, and space arrangement, human resource management, and marketing management. The study site covers Vientiane Capital City, representing the central part of Laos, and Sayaboury Province, representing the north. 5. Population and sampling The population in this study is the successful business people, the number of which is not precisely reported. Therefore, in this study, due to the limitation of time and resources, the author used random sampling technique. With the assistance of the district officials, successful entrepreneurs are identified, approximately 30 samples in a district so that statistical analysis can be carried out. The sampling selection also attempted to involve women entrepreneur as much as possible. 6. Data Collection Indepth interviews with business owners who were selected by a purposive sampling based on business experienceswere conducted. The in depth interview wereheld during the observation period. In participant observation, the researcher learned about theirexperiences of those involved by not merely observing what is happening butalso feel it. In addition, survey questionnaires were distributed to the business owners for detail belief and its usage status. 246

7. Data Analysis and Reporting The data analysis in this paper is mostly descriptive data analysis and report, particularly on the survey questionnaires. The statistical analysis will be on means, sum, standard deviation, and correlation. As for case study and qualitative information, the author will synthesize the information so that pattern and classification can be sported and will be reported in story telling or in life story method. 8. Findings 8.1. Overview of Sampling The overall samplings include 160 subjects. The ratio of surveyed subjects from the north covers 44.4% (71) and from central part is 55.6% (89). Among them, 48.8% are female and 51.3% are male. Female subjects totaled 48.8% and male consists of 51.3%. The majority of the respondents (83%) are married, 11.3% single, 4.4% divorced, and 1.3% are widowers. The highest age group ratio is between 31 and 40, covering 34%, followed by the age group between 41 and 50, between 51-60, between 21 and 30, and more than 60, with the ratios of 32.7%, 17%, 15.1% and 1.3% chronologically.Education background of the respondents isbachelor degree 30.8%, higher secondary education 28.9%, and diploma degree 23.9%. Early secondary education and primary education cover 5.7% each, while Master’s degree is 3.8% and Ph.D. degree of 1.3%. As many as 97.5% of the respondents are Buddhists. Regarding business experiences of the respondents, higher percentage is between 6 and 10 years (36%). The business experience of between 3 and 5 years covers 23.8%, between 11 and 15 and over 20 years are 13.8% each, and between 16 and 20 years covers 12.5%. The types of businesses shows 29% services, 20.6% commerce, 18.1% retail shops, 6.9% construction, 6.3% construction, 4.4% transportation. Tourism and cultural promotion, agricultural production and others are 3.8% each. Communication technology business covers only 3.1%. 8.2. Differences between the belief practices of the different region. The nature of belief of the respondents is that 51.6% have Buddha statue, 27.4% carry non-Buddhastatue, 48.4% have spiritual house in their business facility, and 76.4% have Buddha shelves in business compound. 7.6% uses sacred text. The entrepreneurs believe that Buddha image helps business success at a very much level by 28%, much 32% and medium 25.5%. Monks are also believed to influence business success in a very much level by 17.5%, much by 21.9%, and medium by 33.6%. Other types of beliefs are not very influential. An analysis of mean score shows that the entrepreneurs believe that Buddha image help them succeed at a relatively high mean score (3.65 out of a 5 point scale), followed by monk (3.15) and non-Buddha image by 2.3. The classification between the north and the central part shows that the central part is more reliance on spiritual or religious belief for their business conducts in most items. Northern region has higher mean score on Buddha image for business success than the central region by 3.71 and 3.60; and marginally varies in the belief that magical plants contribute to business success of 1.57 and 1.55, and monk’s contribution to business success of 3.16 and 3.15. In all other categories, the central part has higher mean score. 8.3. Influence of beliefs on the characteristics associated with business operation The result of the analysis shows that the entrepreneurs believe in astrology relatively high. They believe that timing prediction leads to success is the highest with mean score of 3.78 out of a five point scale; followed by the belief of human elements consists of various components: earth, water, wind, fire (3.54), selection of location according to astrology or 247

Feng Shui leads to happiness and prosperity(3.44), auspicious naming brings prosperity to the owner (3.38), auspicious number e.g. 9 signifies prosperity (3.37), and conducts according to fate or timing support expectations, ease and self-confident (3.07). A lower level of believes are on the beliefs that fate or timing helps supporting decision making in travelling or action e.g. business launching (2.99), human characteristics and morals is from the main components or zodiac (2.98), auspicious ornamentation to birth zodiac help bringing auspiciousness (2.91), business establishment or job relavant to zodiac bring success (2.85), facial characteristic: forehead, eyebow, eye, nose, mouth indicates the person's habit (2.7), auspicious letter signifies power, color, and prosperity (2.67), using the belief on fate or zodiac as one component in setting policy or business goal (2.67), position of beauty spots or birth mark exhibits the merit and the bad (2.62), zodiac signifying fate (2.6), knowing person's elements or zodiac helps understanding the person's characteristics (2.56), zodiac owner can utilize power freely to perform well and make benefit (2.51), checking zodiac or palm reading help forcasting a person's potential (2.5), zodiac indicates characteristics and behavior (2.47), and knowing element's comflicts helps avoiding conflicts (2.26). The analysis between north and central part shows that most of the item in this section, the central part has a higher mean score, except auspicious letter signifies power, color, and prosperity with 2.71 and 2.64. 8.4. Utilization of Magical Arts, Astrology, and Religion in Business Practice In policy formulation, the results shows that entrepreneurs use at an average level with means score between 2 and 3. Praying for sacred things to help in policy setting has the highest score in policy formulation category (2.8), followed by using the belief on fate or zodiac as one component in setting policy or business goal (2.67),considering stars or zodiac in selecting business location (2.62), selecting business partners with similar fate or zodiac that support each other (2.48), and considering stars or zodiac as part of activity or business type selection (2.32). The north and central part analysis shows that all except praying for sacred thing to help in policy setting, the central part has higher mean score. In investment decision, a similar trend and level with policy formation is found. Praying for sacred things to help in investment decision has a mean score of 2.56, using fate and zodiac as part of creating alternative in business execution is 2.55, using personal belief on fate and zodiac as part of business performance evaluation is 2.5, using fate and zodiac as part of alternative evaluation for decision making is 2.44, and using fate or suggestion from astrologer as part of decision making for business operation is 2.4. There are differences between north and central part. Northern part has a higher mean score in terms of using fate and zodiac as part of creating alternative in business execution, using fate and zodiac as part of alternative evaluation for decision making, and praying for sacred things to help in investment decision. As for business operation planning, a higher variation is found in the result. Selecting timing for operation, considering auspicious time period has a higher mean score (3.06), followed by praying for sacred things to direct business planning (2.54), using personal belief on fate and zodiac as part of operation strategy formulation (2.37), using personal belief in fate and zodiac as part of business planning (2.36), and using fate or suggestion from fortune teller as part of problem solution planning (2.26). The analysis between north and central shows that the higher mean score of the north are in using personal belief in fate and zodiac as part of business planning, and praying for sacred things to direct business planning. In resource procurement, the mean score are relatively lower than the above categories. Location selection is based on geographical auspiciousness or geographical forecasting has a mean of 2.8, praying for sacred things in business resources procurement (location, staffing, financing) with 2.48, using belief in fate and zodiac as part of operation 248

material procurement with 2.26, using personal belief in fate and zodiac as part of operation budget planning with 2.19, and using belief in zodiac as part of employee selection with 2.06. The differences between the north and the south are that all except praying for sacred things in business resources procurement (location, staffing, financing), the central part has higher mean score. Human resource management shows little usage of the beliefs. Praying for sacred things to help solving staff problems has a mean score of 2.05, using belief or ceremony as part of altering staff behavior 2.03, using belief in astrology as part of task assignment to staff1.91, using belief in zodiac for understanding staff behavior 1.9, and using belief in astrology as part of selecting staff for managerial position has the lowest mean score (1.87). The distinction between north and south in human resource management is that the north has higher means score in most of the categories, except using belief or ceremony as part of altering staff behavior. The entrepreneurs use astrology and religious belief to influence marketing management at a relatively high level. Using personal belief in selecting color, logo, business sign for auspiciousness and sale promotion has a mean score of 3.03, followed by decorating shops or business location (inside-out) according to geographical forecasting for sales promotion2.95, praying for sacred things to support sales or obtaining customer 2.86, selecting sales agents with the characteristics according to the entrepreneur’s belief 2.47, and using personal belief in auspicious timing as part of product pricing 2.39. In marketing, the northern entrepreneurs result shows higher mean score in all items mention above. 8.5. Degree of respects to astrological and religious belief of successful entrepreneurs The analysis of religious belief shows that the entrepreneurs are very religious with the mean score of 4.2 out of a five point scale. Astrological belief, however, has a lower score, 2.55. The entrepreneurs believe that the contribution of these practices to the business success is relatively high, with a mean of 3.18. Magical art belief level has the lowest mean score of all, 2.48. Among these believe, the central part has higher mean scores, except contribution of belief on business success. 9. Conclusion This empirical research looked intothe extent and how background beliefs affect the business practices. It identifies the differences between the belief practices of the different region, exploring whether beliefs nurture the characteristics associated with business operation and identifying the degree of respects to successful entrepreneurs between North and Central part of Laos. The results indicated that the belief in astrology and religion, in this case, Buddhism, as a reasonably strong role to play. Many of the entrepreneurs have Buddha image or non-Buddha image, Buddha shelf or house in their business compound for spiritual support. The use of zodiac, astrology, and religious principle into business activity is also evidenced. Central part uses belief on astrology and religious principle to support their business activity and success more than the northern part entrepreneurs. Strong evidence that the northern entrepreneurs does more than the central enprepreneurs is praying for sacred things to support their business fate, decision, and operation, and other activities. The result, nevertheless, need further exploration and confirmation by larger samplings and in-dept analysis. 249

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The satisfaction of learners toward English learning and teaching managerment in the Department of Geographic and GIS, Faculty of Social Science, NUOL. Research by Salika Onsy ABSTRACT The purpose of this research to study and compare the satisfaction of learners towards the English learning and teaching management in the Department of Geography and GIS, Faculty of Social Sciences, National University of Laos. In this research, the data is collected from both primary and secondary data. For the raw data the questionnaire was used to collect data from 152 students and then all the data is revised before analyzing. Moreover, secondary data is also collected from library and internet. Inaddition, SSPSS program for window was used order to analyze the data as Frequencies, percent, mean (�������), standard deviation (S.D) and compare mean. All of these use to analysis genders; grades and provinces by consider finding mean in midpoint of score’s and class interval. In general, students have high satisfaction with five issues referring to English learning and teaching management. In these five components they have different satisfaction as follow. Firstly, students have high satisfaction in lecturers section that lecturers are knowledgeable in the subject, lecturers give home work and well-prepared By the contrast, the item has low satisfaction that lecturers’ ability in motivating students’ participation. Secondly, students have high satisfaction in curriculum section. But the item has low score that were curriculum continuity and coherence. Thirdly, all of items in learning and teaching aids have high satisfaction. The item has high score that lecturers used high-technology in learning and teaching process. In contrast, the item that has low score is appropriateness and adequacy of teaching aid for practicing listening, speaking, reading and writing. Fourthly, for buildings and facilities, students have high satisfaction that the size and the variability of classroom. But the item which has low score is the variability of the library and books to be provided in library. Finally, students have high satisfaction in all sections in measurement and evaluation. The item has high score that evaluation is moral and ethical. On the other hand, students don’t have high satisfaction with information of the examination results. Additionally, the satisfaction of learners towards the English learning and teaching management was classified by gender, provinces and grades. From the data analysis the following important students have different genders, provinces and grades that they have different satisfaction in English learning and teaching management. The mean difference is significant at the .05 level. Students have some suggestions to improve learning and teaching English management such as inform the examination results on time, students can review the result of the test, lecturers should be punctual when teaching and improve the techniques how to motivate students. Moreover, the facilities need be checked and improved lights in class room, table and chair for study out door and internet provided. Finally, the Department should provide more books in English language in library. 1. Background. National University of Laos with its abbreviation hereinafter to as “NUOL” is the first and historical University of Lao PDR. Since its founding in late 1996, NUOL has developed 152

itself to be one of the leading universities in the country. The establishment of NUOL is aiming at reforming and consolidating higher education in Lao PDR to gradually improve the quality of education approaching to regional and international education bench marking. Nowadays, English subject is a one the subjects that is the most important subject for students in Department of Geography and GIS, because when they graduate they will need a lot of English language competency for their work rather than other foreign languages. According to Inthiphone (2010) studied the problem of teaching GIS in department of Geography and GIS, the result shows that a student who has good knowledge in specific subjects and English subject can easily find a job with a high salary than a student who does not have a good ability in English subject. Therefore, English subject is the most important subject that students must study in their course. However, due to the restricted learning environment students learning a foreign language at Geography and GIS department are facing various difficulties in learning English language. Therefore, it is interesting to investigate the satisfaction of students in the English learning and teaching management in Department of Geography and GIS, Faculty of Social Sciences, National University of Laos. 2. Objectives 1. To study the satisfaction of learners towards the English learning and teaching management in Department of Geography and GIS, Faculty of Social Sciences, National University of Laos. 2. To compare the satisfaction of learners towards the English learning and teaching management in Department of Geography and GIS, Faculty of Social Sciences, National University of Laos by genders, province and grades. 3. Research Methodology 3.1 Sampling The population for the research is students from second year to year fourth who study in the Department of Geography and GIS, Faculty of Social Sciences, National University of Laos, academic 2010-2011. From second year to year fourth there are 246 students but only 152 students are selected for study by using R.V. Krejcie of D.W. Morgan table (1970). 3.2 Tools for Collecting Data The tool used for this study was questionnaires and it was divided in to two parts as follows: Part one is about general information. In mainly this part the information is mainly referring to, gender, grades and provinces. Part two is the question finding out about the satisfaction of learners towards the English learning and teaching management. For this part, the information about lecturers, curriculum, learning and teaching aids, building and facilities, measurement and evaluation is questioned. 3.3 Data Collections In this research, the data is collected from both primary and secondary data. For the raw data the questionnaire was used to collect data from 152 students and then all the data is revised before analyzing. Moreover, secondary data is also collected from library and internet. 153

3.4 Data Analysis SSPSS program for window was used order to analyze the data as Frequencies, percent, mean (�������), standard deviation (S.D) and compare mean. All of these use to analysis genders; grades and provinces by consider finding mean in midpoint of score’s and class interval. 4. Results Table 4.1: Satisfaction of learners towards the five components. No. Items Satisfaction levels Result ������� S.D High 1. Lecturers 3.67 .88 High 2. Curriculum 3.72 .85 High 3. Learning and teaching aids 3.72 .87 High 4. Building and facilities 3.68 .87 High 5. Measurement and evaluation 3.67 .85 High 3.69 .86 Total Table 4.1 Table 4.1 shows the general status attitudes of students towards the English learning and teaching management in the Faculty of Social Sciences, Department of Geography and GIS. According to data collected, various components including lecturers, curriculum, learning and teaching aids, building and facilities and measurement and evaluation were mention regarding to students satisfaction. However, both learning and teaching aids and curriculum are the two issues that satisfy students the most. Building and facilities, lecturers and measurement and evaluation are considered as insufficient. Table 4.2: Satisfaction of learners towards lecturers component. No. Items Satisfaction Levels I. Lecturers ������� S.D Result 1. The lecturers knowledge in 3.82 .94 High the subject teaching 3.56 .79 High 3.67 .77 High 2. Lecturers’ ability to deliver .96 High knowledge 3.55 .87 High 3.82 3. Lecturers’ qualification in teaching 4. Lecturers’ ability in motivating students participation 5. Lecturers’ punctuality in 154

teaching 3.56 .94 High 6. Lecturers’ commitment in 3.72 .96 High teaching 7. Lecturers’ performance in 3.74 .97 High 3.75 .77 High teaching 3.56 .90 High 8. Lecturers’ enthusiastism in 3.67 .86 High Table 4.2 teaching 9. Lecturers’ leadership skill 10. Lecturers’ judgment ability Total Table 4.2 illustrates students have towards on lecturers section. The average of score that they have high satisfaction (�������= 3.67, S.D= .86). From ten items above, the scores are different referring to students’ satisfaction. Obviously, the items that students have very high satisfaction for the lecturers’ knowledge in the subject teaching. Meanwhile, the lecturers’ punctuality in teaching and lecturers’ leadership skill have high satisfaction too. However, the section students have low scores were lecturers’ commitment in teaching, and lecturers’ judgment ability. Table 4.3: Learners’ satisfaction towards the satisfaction of learners in curriculum provided. No. Items Satisfaction Levels II. Curriculum ������� S.D Result 11. The curriculum used 3.71 .80 High currently 12. The course contents 3.86 .83 High included 3.61 .76 High 13. Curriculum continuity and 3.76 .75 High coherence 3.74 .86 High 14. The relevance of contents 3.75 .87 High 15. Matching your purpose of 3.72 1.01 High 3.68 .93 High study 3.72 .85 High 16. Appropriate levels for Table 4.3 learners 17. Up to date contents 18. Motivated and interesting topic included Total Table 4.3 demonstrates the result of how about students curriculum provided in the course. The overall, students have high satisfaction level (�������= 3.72, S.D=.85). The first high ranking satisfaction was the course contents included. In addition, students still gave high satisfaction in relevance of contents and appropriate levels for learners. Moreover, students 155

stated that the contents are highly up to date. Moreover, a student though matching your purpose of study was very important. However, one of the issues that students are not satisfied with is the curriculum continuity and coherence, and motivated and interesting topic included. Table 4.4: satisfaction of learners towards in learning and teaching aid component. No. Items Satisfaction levels ������� S.D Result III. Learning and Teaching Aid 19. Learning and teaching 3.98 .78 High materials used in the course .85 High 20. The introduction to the use of 3.66 .93 High teaching materials 3.59 .86 High 21. Appropriateness and adequacy .79 High teaching aid for practicing 3.70 listening, speaking, reading 3.65 .89 High and writing 3.67 .96 High 22. Creative teaching materials .90 High 23. The relevance of the teaching 3.62 .87 High 3.89 materials 3.72 24. Using authentic material in learning and teaching to encourage students thinking 25. The frequency of using teaching materials 26. Using high-technology in teaching-learning process Total Table 4.4 It is clearly seen from the above table that students have satisfaction with the English learning and teaching management at Faculty of social Sciences, Department of Geography and GIS. In additionally, all of the items above have high satisfaction level (�������= 3.72, S.D=.87). Moreover, the first ranking of high satisfaction levels was learning and teaching materials used in the course (�������= 3.98, S.D= .78). Students prefer lecturers using high- technology in teaching-learning process and creative teaching materials. Nevertheless, the section students didn’t have a lot of satisfaction that were the frequency of using teaching materials, and appropriateness and adequacy teaching aid for practicing listening, speaking, reading and writing. Table 4.5: Learners’ satisfaction towards the satisfaction of learners in building and facilities provided. 156