Local Time in Thailand: Print

Laos Market Profile

Market Overview

  • The Lao market economy has grown at nearly 8 percent for the last decade and is heading into a new phase of regional and global integration. The Lao government’s commitment to WTO accession and the creation of the ASEAN Economic Community (AEC) in 2015 led to major reforms of economic policies and regulations aimed at improving the business and investment environment. The Lao government is increasingly tying its economic fortune to the economic integration of ASEAN and export-led development.
  • Laos is one of the world’s few remaining communist countries. The Lao economic model bears some relation to its Chinese and Vietnamese counterparts, in that it has implemented market-based economic practices while maintaining a high degree of state control. Laos is politically stable.
  • Laos and the United States signed a bilateral trade agreement in 2005, although the terms of the agreement are still being implemented in Laos, with U.S. assistance. Since 2005 trade has increased from $14 million to $86 million per year in 2016. China, Vietnam and Thailand have dominant trade and investment roles in the Lao economy, with participation in certain sectors by Japan, Singapore, Malaysia, the Netherlands, U.K and South Korea. Bilateral trade between Laos and Thailand, its largest trading partner by far, totaled $4.6 billion in 2016.
  • Laos’ GDP reached $15.9 billion in 2016, up 7.02 percent from the prior year. The Lao economy’s growth is projected to remain at an annualized rate of 7 percent in 2017.
  • The Lao population was 6.6 million in 2016. Approximately 70 percent of the workforce is employed in agriculture, mostly in small scale farming. The Lao population is young, with more than half under 25 years of age and 70 percent under 35.
  • The country has a small but growing middle class concentrated mostly in the capital and larger cities.
  • The Lao government weathered a fiscal and monetary crisis in 2013 and into 2014, brought about by poor budgetary processes, uncontrolled provincial spending, and a large raise for civil servants. The government continues to take steps to address some deficiencies, though overall, fiscal and budgetary policy formulation and implementation remain weak.
  • Major international companies have begun to invest in Lao Special Economic Zones, particularly near Savannakhet and Vientiane. Investors include Toyota, Nikon, and Essilor. Coca Cola opened a bottling plant in 2015. GE opened a representative office in June 2017 to develop opportunities in the energy – specifically, hydropower – and medical equipment sectors.

  • Laos ran a projected trade deficit of approximately $2.88 billion in 2016, with merchandise imports of $7.68 billion, exports of $4.8 billion and net services of $543 million. Laos imported $30.9 million worth of goods from the United States and exported $55.1million to the United States in 2016. Top U.S. exports to Laos include man-made cloth, gems and diamonds, precious metals, specialized mining and industrial machines, passenger cars, excavating machinery, civilian aircraft engines, equipment and parts. Top U.S. imports from Laos are green coffee, nonferrous metal, industrial supplies, cellphones, telecommunication equipment, gem diamonds, Jewelry, apparel household goods, apparel, and jewelry.
  • The Lao Trade Portal, established in 2012, has information for exporters and importers at: http://www.laotradeportal.gov.la . The Lao Electronic Gazette, http://laoofficialgazette.gov.la , is a repository of all Lao legislation and offers the public the opportunity to comment on proposed legislation. Though most information is in Lao, many laws have been translated into English as well.

Market Challenges

  • The Lao government has a goal of becoming a rule of law state by 2020. Currently, commercial law and the commercial court system in Laos are still developing and are not transparent. Sanctity of contract is not well understood in Laos and concessions or property rights granted by the government are liable to overlap or conflict with other claims.
  • Customs procedures are improving but remain opaque. Customs clearance speed has improved markedly in recent years with the introduction of automated customs procedures, dropping from an average 11 hours in 2012 to 6.5 hours in 2016. The cost for a standard shipping container fell from $2100 to $1810 in 2016.
  • Despite government efforts to establish “one stop service” for business registration and licensing, procedures for investment are cumbersome and approvals often do not occur within stated times or rules.
  • Human resources are underdeveloped in Laos, and employers frequently have a difficult time finding and retaining qualified employees. The market for skilled and unskilled workers is extremely tight. A World Bank survey found that nearly half of advertisements for low-skilled workers attract no applicants.

  • Tax administration is consistently cited as one of the largest barriers to commerce in Laos in surveys of small and medium enterprises.
  • The World Bank’s “Ease of Doing Business” project ranks Laos 139 out of 190 other economies at: http://www.doingbusiness.org/data/exploreeconomies/lao-pdr
  • The current Government is working hard to address corruption which is still a major problem and seriously hampers the efficient operation of the Lao economy and society. Competitors from countries without legal or moral sanctions against corrupt practices have long had a major advantage in securing government approvals and concessions. Frequent bribes and payoffs are an accepted part of Lao business culture. https://www.transparency.org/news/feature/corruption_perceptions_index_2016

Market Opportunities

  • Increases in disposable income, particularly among elites with access to resource-based industries, and a slowly expanding middle class mean that the consumer and services sectors are likely to experience continued growth in the future.
  • The government is strongly committed to becoming “the battery of Southeast Asia” by harnessing hydropower, and to a lesser extent wind, solar, and thermal energy resources to export electricity throughout the region. The power sector is open to foreign investment, with many international firms represented. Hydropower and transmission and distribution infrastructure will be the focus of increasing investment by the Lao government as it develops its power industry.
  • The Lao agricultural sector also shows promise and is a priority for the Lao government. Land is underutilized. The low population density in Laos and large markets for agricultural goods and livestock in neighboring markets have brought many new investors to explore agricultural opportunities. There are opportunities for exports of modern harvesting, planting, processing, and other technologies that would help the sector to grow.
  • Many international companies are exploring Special Economic Zones (SEZs) in Vientiane and Savannakhet provinces. SEZs offer a range of incentives and tax holidays to investors depending on the industry. International investors have been attracted by the relative abundance of inexpensive electricity and the low cost of labor.
  • The Lao government has targeted tourism, especially ecotourism, as a major area of future growth. Laos is attempting to attract more upmarket tourists to its market and has liberalized air services resulting in more frequent and less expensive flights to and from the country.
  • The Lao government fully liberalized the retail sector in 2015, allowing foreign retail establishments to enter the country.
  • Laos has a poorly developed infrastructure with only a few kilometers of rail, few decent roadways, and underdeveloped medical, water, and sewage systems. The GOL is likely to make investments in these areas in coming years in keeping with its goal of graduating from Least Developed Country status by 2020.
  • The minerals and mining sector has been a major driver of growth in Laos, particularly copper and gold. Other mineral resources include bauxite and potash.

Market Entry Strategy

  • American companies considering investments in Laos are advised to visit the country several times, as personal relationships are essential to locating suitable Lao business partners and avoiding misunderstandings. In some types of business, 100 percent foreign ownership is permitted, although many foreign businesses take on a Lao partner or agent and consult closely with law firms with local practices.
  • The American Chamber of Commerce (AMCHAM) in Laos was established in 2012 and was rebranded “the American-Lao Business Association” in mid-2017 pending completion of their registration with the Lao government and the U.S. Chamber of Commerce and fulfilment of other AmCham requirements.
  • The Lao National Chamber of Commerce and Industry (LNCCI) may help locate suitable local partners or distributors http://www.laocci.com/ . Foreign businesses can also apply for membership.

  • In addition to the American Lao Business Association, there are business chambers or associations from Australia, China, France, India, Japan, Korea, Taiwan, Vietnam, and the European Union.

Contact Us

Hong-Phong Pho
Cambodia, and Laos Desk
International Trade Administration
U.S. Department of Commerce
Tel: [202] 482-3877
E-mail: hong-phong.pho@trade.gov

Joseph Narus
Economic and Commercial Officer
U.S. Embassy Vientiane, Lao PDR
Tel: [856] 21 487-156
E-mail: NarusJJ@state.gov

Greg Wong
Senior Commercial Officer
U.S. Commercial Service,
U.S. Embassy, Bangkok
GPF Witthayu Tower A, Suite 302,
93/1 Wireless Road Bangkok 10330
Tel: [662]-205-5090
E-mail: Office.Bangkok@trade.gov
Website: www.export.gov/thailand

For more information on Intellectual Property Rights Protection in Lao P.D.R, contact:

Kitisri Sukhapinda
Regional Intellectual Property Attaché
U.S. Patent and Trademark office
U.S. Embassy, Bangkok
GPF Witthayu Tower A, Suite 302,
93/1 Wireless Road Bangkok 10330
Tel: [662]-205-5090
Email: Office.Bangkok@trade.gov

Country Commercial Guide
Country Fact Sheet
Market Overview
Laos Map

  Notice to Visitors!

  The link you have chosen will take you to a non-U.S. Government website.

  If the page does not appear in 5 seconds, please click this: outside web site

  Export.gov is managed by the International Trade Administration and external links are covered by its website  disclaimer statement.

  Notice to Visitors!

  The link you have chosen will take you to a non-U.S. Government website.

  If the page does not appear in 5 seconds, please click this: outside web site

  BuyUSA.gov is managed by the International Trade Administration and external links are covered by its website disclaimer statement.