Doing Business in Laos. Economy Foreign Trade imports exports

Course summary (Doing Business in Laos)

Laos: a free market system with active central planning by the government

The economy of Laos is essentially a free market system with active central planning by the government, similar to the Chinese and Vietnamese models. Agriculture, mostly subsistence rice farming, dominates the economy, employing an estimated 75% of the population and producing 29% of GDP. In 2010, donor-funded programs accounted for approximately 8.5% of GDP. Today China is becoming a major player in Laos; Chinese investment in Laos is increasing at a rapid rate, bringing with it a growing number of Chinese workers.

Despite the global financial crisis, the Lao economy has performed relatively well. The GDP has reported stable growth at above 7 percent in 2009 and it is projected to continue growing steadily in the coming years.

Foreign Trade of Laos:
- Exports (2010 est.): $1.950 billion. Main exports products: gold and copper, electricity, wood and wood products, garments, coffee and other agricultural products, rattan, and tin.
- Major export markets: Thailand, Vietnam, China, Switzerland, United Kingdom and Germany.
- Imports (2010 est.): $2.258 billion. Major imports: fuel, food, consumer, goods, machinery and equipment, vehicles and spare parts.
-Major suppliers: Thailand, Vietnam, China, South Korea and Belgium.

Foreign Direct Investment (FDI) in Lao. During the first half of the fiscal year 2009-2010, the number of investment applications have increased slightly compared to the same period of the last fiscal year (there are 104 applications with total value of 927 million US dollars at the central level over 2009-2010). China is now the largest source of foreign direct investment (FDI) in Laos.

Savan-Seno Special Economic Zone. Savannakhet Province in Lao PDR is a thriving hub of trade and services in the Greater Mekong Sub-region (GMS). The total value of export in Savannakhet was US$238 million in 1998-1999, of which nearly 92% (US$218 million) was transit goods.

Lao Brewery Co., Ltd. was founded in 1973 as a joint-venture between foreign investors and Lao businessmen originally under the registered name of Lao Beer and Ice Factory. At that time, the company had an annual production capacity of 3 million litres of beer, 1.5 million litres of carbonated drinks and a daily production capacity of 120 tonnes of ice.

Xaobangroup produces and supplies home-made yogurt, fruit juice, honey, fruit jam, tomato sauce, pre-packed salad and salad dressing and other natural seasonal products to customers in Vientiane and other urban areas in Lao PDR.

The National Poverty Eradication Programme (NPEP) is central to the national development agenda. The NPEP encapsulates the essence of the Lao PDR’s approach towards achieving the goal set in 1996 by the 6th Party Congress, namely, exiting the group of LDCs by 2020.

Laos was admitted into the Association of Southeast Asian Nations ASEAN in July 1997 and applied to join the World Trade Organization (WTO) in 1998. The government hopes to accede to the WTO by 2011. Laos maintains a "special relationship" with Vietnam and formalized a 1977 treaty of friendship and cooperation that created tensions with China.

International Economic Relations. Lao is member of: Association of Southeast Asian Nations (ASEAN), Mekong Economic Cooperation Strategy (ACMECS), Mekong River Commission (MRC), Boao Forum For Asia (BFA), Forum for East Asia-Latin America Cooperation (FEALAC), Asia-Europe Economic Meeting (ASEM), Asia - Middle East Dialogue (AMED), Asia Cooperation Dialogue (ACD), Asian Development Bank (ADB), Economic and Social Commission for Asia and the Pacific (ESCAP), Colombo Plan, Food and Agriculture Organization (FAO), G-77, International Bank for Reconstruction and Development (World Bank), International Development Association (IDA), International Finance Corporation (IFC), International Monetary Fund, United Nations, United Nations Convention on Trade and Development (UNCTAD), United Nations Educational, Social and Cultural Organization (UNESCO), United Nations Industrial Development Organization (UNIDO), World Customs Organization, World Intellectual Property Organization (WIPO) and World Trade Organization (observer)

Lao Free Trade Agreements (FTAs): ASEAN Economic Community - ASEAN Free Trade Area (AFTA).
ASEAN Agreements: Australia New Zealand, Canada, China, India, European Union, Japan, Korea, Russia, US, Pakistan . Asia-Pacific Trade Agreement (APTA).  Is beneficiary of EU's Generalised System of Preferences (GSP)

The Investment Promotion Department (IPD), operating under the Ministry of Planning and Investment, formerly known as the Department for Promotion and Management of Domestic and Foreign Investment (DDFI) from 2004-2007, administers the foreign investment system and reviews investment applications in accordance to the Investment Promotion Law.

Lao National Chamber of Commerce and Industry (LNCCI) established in 1989 is an independent body which represents the business community in Lao PDR.

The Lao PDR has a population of about 6.8 million. About half the country's people are ethnic Lao. The predominant religion is Theravada Buddhism. The only legal political party is the Lao People's Revolutionary Party (LPRP).

Languages: Lao (official), English, French, and various ethnic languages. The government introduced English at the primary school level in 2010.

Borders of Laos (Lao People's Democratic Republic): Vietnam, Thailand, Cambodia, China and Myanmar