Lower labour costs draw bag maker to Laos factory

Lower labour costs draw bag maker to Laos factory

Dpac Inter Corporation, the plastic bag making subsidiary of the King Pac Group, plans to set up its production in Laos in the fourth quarter to avoid rising wages in Thailand and expand its Asean presence.

Deputy managing director Methee Athichiskul said the machine tools will be relocated to the factory in Laos, which Dpac will rent from a local company.

Distribution will start after the set-up is complete in next year's first quarter.

Wages are lower in Laos than in Thailand, where the daily minimum was lifted to 300 baht nationwide on Jan 1, while machinery is also cheaper there, said Mr Methee.

He said the company will spend 300-400 million baht on the move, and up to 90% of the production in Laos will be exported to Thailand, with the rest distributed in Laos.

Output from the Laotian plant will be shipped to a warehouse in Khon Kaen that can hold 300-400 tonnes of the product.

The company expects to rent the warehouse for 70,000 to 100,000 baht a month, although lease details have not yet been finalised.

Northeastern Thailand will be the main distribution channel for the bags manufactured in Laos, although distribution and logistics details are still being worked out.

Dpac will outsource logistics operations in both Laos and Thailand's Northeast.

As well, joint venture offices are planned for Myanmar and Cambodia as part of a regional expansion.

An office will open in Laos this month and in Cambodia in the third quarter.

Dpac will enter Vietnam this month with the appointment of local distributors in Hanoi and Ho Chi Minh City.

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