Bureau of Economic and Business Affairs
July 5, 2016

This is the basic text view. SWITCH NOW to the new, more interactive format.

Executive SummaryShare    

Laos, officially the Lao People’s Democratic Republic (Lao PDR), is a rapidly growing developing economy at the heart of Southeast Asia, bordered by Burma, Cambodia, China, Thailand, and Vietnam. Laos’ economy has grown at an annual average of eight percent for a decade, placing Laos amongst the fastest growing economies in the world. Over the last thirty years, Laos has made slow but steady progress in implementing reforms and building the institutions necessary for a market economy, culminating in accession to the World Trade Organization (WTO) in February 2013.

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 fortunes to the economic integration of ASEAN and export-led development.

The rapid economic growth of the country has been driven by the exploitation of natural resources and development of hydropower, with both sectors largely led by foreign investors. However, the government recognizes that growth opportunities in these industries are finite, and has prioritized the development of high-value agriculture, light manufacturing, and tourism while continuing development of a range of energy resources and improving electrical transmission capacity to neighboring countries.

Laos in 2016 holds the rotating chairmanship of ASEAN, and has chosen to use its chairmanship to focus on ASEAN “connectivity.” The Lao government hopes to leverage its lengthy land borders with Burma, China, Thailand, and Vietnam, and to implement policies that showcase Laos not as landlocked, but “land-linked,” providing easy access to larger, emerging neighbor economies. The government hopes to increase exports of agriculture, manufactured goods, and electricity to its more industrialized neighbors.

Some businesses and international investors are beginning to use Lao production bases as an opportunity to reach the broader Mekong region, including southern China. Others are placing parts of their global value chains in Laos, often as a way to diversify from existing production bases in Thailand. The Special Economic Zone in Savannakhet has successfully attracted major manufacturers from Europe, North America, and Japan.

Economic progress and trade expansion in Laos remain hampered by a shortage of workers with technical skills, weak education and health care systems, and poor—although improving—transportation infrastructure. Institutions, especially in the justice sector, remain highly underdeveloped and regulatory capacity is low. Investors report that corruption at all levels is a major concern.

The lack of clarity in policy and the uneven application of law are disincentives to further foreign investment in the country. The Lao government is making efforts to improve and its five-year plan directs the government to formulate “policies that would attract investments” and to “begin to implement public investment and investment promotion laws.” Investors, however, have found that practice has not yet caught up with the spirit of new laws. Furthermore, the multiple ministries and three separate methods for foreign investment into Laos lead to confusion, with many potential investors turning to either engaging local partners or law firms to navigate the often confusing bureaucracy, or turning their efforts entirely toward other countries in the region.

Table 1



Index or Rank

Website Address

TI Corruption Perceptions index


139 of 168

World Bank’s Doing Business Report “Ease of Doing Business”


134 of 189

Global Innovation Index


Not ranked

U.S. FDI in partner country ($M USD, stock positions)


USD Amount

No available data

World Bank GNI per capita



Millennium Challenge Corporation Country Scorecard

The Millennium Challenge Corporation, a U.S. Government entity charged with delivering development grants to countries that have demonstrated a commitment to reform, produced scorecards for countries with a per capita gross national income (GNI) of $4,125 or less. A list of countries/economies with MCC scorecards and links to those scorecards is available here: Details on each of the MCC’s indicators and a guide to reading the scorecards are available here:

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude Toward Foreign Direct Investment

The Lao government officially welcomes both domestic and foreign investment as it seeks to keep growth rates high and graduate from Least Developed Country status. The pace of foreign investment has increased over the last several years. According to the Lao government’s statistics, mining and hydropower compose eighty percent of Foreign Direct Investment (FDI). China, Vietnam, Thailand, Korea, France, and Japan are the largest sources of foreign investment.

The 2010 Law on Investment Promotion introduced uniform business registration requirements and tax incentives that apply equally to foreign and domestic investors. Foreigners may invest in any sector or business except in cases where the government deems the investment to be detrimental to national security, health or national traditions, or to have a negative impact on the natural environment. There are no statutory limits on foreign ownership or control of commercial enterprises, but in practice, many companies seek a local partner. Companies involved in large FDI projects, especially in mining and hydropower, often either find it advantageous or are required to give the government partial ownership, frequently with money borrowed from the investor or multilateral institutions.

Foreign investors seeking to establish operations in Laos are typically required to go through several steps prior to commencing operations. In addition to an investment license, foreign investors are required to obtain other permits, including; an annual business registration from the Ministry of Industry and Commerce; a tax registration from the Ministry of Finance; a business logo registration from the Ministry of Public Security; permits from each line ministry related to the investment (i.e., Ministry of Industry and Commerce for manufacturing; Ministry of Energy and Mines for power sector development); appropriate permits from local authorities; and an import-export license, if applicable. Obtaining the necessary permits can pose a challenge, especially in areas outside the capital. In 2013, the Lao government began allowing businesses to apply for tax registration at the time of incorporation, slightly simplifying the business registration process.

Many business owners and potential investors claim the process to be overly complex and regulations to be erratically applied. Investors also describe confusion of roles between the ministries, with multiple ministries unexpectedly involved in the approval process.

Foreign partners in a joint venture must contribute at least 30 percent of the company’s registered capital. Capital contributed in foreign currency must be converted into Lao kip (LAK). Currency conversion is based on the exchange rate of the Bank of the Lao People’s Democratic Republic on that given day, typically near 8000 LAK to USD during the reporting period. Wholly foreign-owned companies may be either a new company or a branch of an existing foreign enterprise. Throughout the period of operation of a foreign invested enterprise, the assets of the enterprise must not be less than its registered capital.

Individual companies in the petrochemical industry are required to file an annual import plan. The government controls the retail price and profit margins of gasoline and diesel. Goods prohibited for import and export range from explosives and weapons to certain forestry products and wildlife. Agriculture production and most manufacturing production are private. State-owned enterprises (SOEs) currently account for only one percent of total employment. Over 90 percent of manufacturers have fewer than 10 employees. Equity in medium and large-sized SOEs can be obtained through a joint venture with the Lao government.

Although accurate statistics are difficult to obtain, there is no question that foreign investment has increased dramatically over the last several years. According to UNCTAD, total FDI stock doubled between 2008 and 2013, reaching USD 2.8 billion. There are also small but growing signs of growth in higher-quality FDI, focused on manufacturing, largely through one Special Economic Zone in the southern part of the country.

Other Investment Policy Reviews

The Organization for Economic Cooperation and Development (OECD) initiated an Investment Policy Review of Laos in April 2015 and plans to release the document in mid-2016.

The World Bank's 2014 Lao PDR Investment Climate Assessment is available at

Laws/Regulations on Foreign Direct Investment

The 2010 Law on Investment Promotion introduced uniform business registration requirements and tax incentives that apply equally to foreign and domestic investors. Foreigners may invest in any sector or business except in cases where the government deems the investment to be detrimental to national security, health or national traditions, or to have a negative impact on the natural environment. There are no statutory limits on foreign ownership or control of commercial enterprises, but in practice many companies seek a local partner.

Most laws of interest to investors will be featured on the Lao Trade Portal website,, with many laws and regulations translated into English, or on the Official Gazette, The 2012 Law on Making Legislation stipulated that any legislation not posted by the end of 2014 to the electronic Official Gazette would be void. While many laws were placed on the site before the end-2014 deadline, others older laws, which would have been voided on January 1, 2015, have been placed on the site since without being formally re-approved by the relevant legal bodies, resulting in a legal gray area.

The Lao National Assembly approved a new Competition Law in July of 2015, which also affected the investment environment. In addition to provisions that outlaw restraint of competition, the law also contains provisions addressing consumer protections, unfair or abusive business practices, monopolies, mergers, and acquisitions.

Neither the government’s investment bureaucracy nor the commercial court system is well developed. Investors have experienced government practices that deviate significantly from publicly available law and regulation. Some investors decry the court’s limited ability to handle commercial disputes and the judicial system’s vulnerability to corruption. The Lao government has repeatedly underscored its commitment to increasing predictability in the investment environment, though in practice, with some exception in the special economic zones and for larger companies, foreign investors describe inconsistent application of law and regulation.

Business Registration

Laos does not have a central business registration website. Timelines and government agencies involved in business registration can vary considerably. Many investors and even locals will hire consultancies or law firms to shepherd the effort-intensive registration process, which can take from a few weeks to several months.

The Lao government has attempted to streamline business registration through the use of a “one-stop shop” model. For general business activities, this service is located in the Ministry of Industry and Commerce. For activities requiring a government concession, the service is located in the Ministry of Planning and Investment. For Special Economic Zones (SEZ), one-stop registration is run through the Secretariat to the Lao National Committee on Special Economic Zones (SNCSEZ) in the Office of the Prime Minister. According to Prime Minister’s Decree 177, the Savan-Seno SEZ authority is required to establish one-stop service to facilitate the issuing of investment licenses and improve the efficiency of business operations.

Business owners give the one-stop shop concept mixed reviews. Many acknowledge that it is an improvement, though describe it as an incomplete reform with several steps that must still be taken outside of the “single stop.”

The 2004 decree on the promotion and development of small- and medium-sized enterprise (SME) does not differentiate between Lao and foreign-owned business. According to the Lao government, small enterprises are those having an annual average of less than 20 employees, or total assets below 250 million kip (USD 31,000), or an annual turnover below 400 million kip (USD 50,000). Medium-sized enterprises are those having an annual average of less than 100 employees, or total assets below 1.2 billion kip (USD 150,000), or an annual turnover below 1 billion kip (USD 125,000). In practice, services and special funds for SMEs are only known to be available to Lao businesses.

  • provides quantitative indicators on 104 economies’ laws, regulations, and practices affecting how foreign companies invest across sectors, start businesses, access industrial land, and arbitrate disputes.
  • provides links to business registration sites worldwide. Navigate through that site to the best official business registration site in your country/economy. The site’s ten green dot rating indicates whether a website provides clear and complete instructions for registering a limited liability company. Business registration in practice involves registration with multiple public agencies and websites often don’t describe the full process. Learn more at:
  • provides indicators from 189 economies on the ease of starting a limited liability company, based on a survey of incorporation lawyers.

Industrial Promotion

The government has informally encouraged foreign investment in several key industries, including light manufacturing, agribusiness (with a particular focus on local processing and organics), tourism and travel, energy, mining, and transport and logistics services. The Lao government's official website for industrial promotion is

Limits on Foreign Control and Right to Private Ownership and Establishment

Legislation does not clearly establish a “right” to establish and own a business, though that right exists in practice. The right to own land is a subject of some debate, though private land, or in some cases land use rights, are bought and sold by Lao individuals and entities. Foreign individuals and entities are unable to own land in Laos, though may obtain extended leases of up to 99 years in some circumstances.

The 2010 Law on Investment Promotion introduced uniform business registration requirements and tax incentives that apply equally to foreign and domestic investors. Foreigners may invest in any sector or business except in cases where the government deems the investment to be detrimental to national security, health or national traditions, or to have a negative impact on the natural environment. There are no statutory limits on foreign ownership or control of commercial enterprises, but in practice, many companies seek a local partner. Companies involved in large FDI projects, especially in mining and hydropower, often either find it advantageous or are required to offer the government partial ownership, frequently purchased with money borrowed from the investor or from multilateral institutions.

Privatization Program

The Lao government has no specific privatization program.

Screening of FDI

The government has no known official policy for screening FDI in Laos, although senior government officials have occasionally stated in public that Laos should only accept the “right kinds” of investments.

Competition Law

A new competition law was approved in 2015 which applies to both foreign and domestic individuals and entities. The law was drafted with the assistance of the German government and other donors. The competition law was one of the Lao government’s policy efforts to implement the ASEAN Economic Community, or AEC, before 2016. The law established two new government entities, the Business Competition Control (BCC) Commission and the BCC Secretariat. The BCC Commission is the senior body and its membership is decided by the Prime Minister with the advice of the Minister of Industry and Commerce. According to the legislation, it should include senior officials from multiple ministries as well as businesspeople, economists, and lawyers. The BCC Commission can draft regulations, approve mergers, levy penalties, and provide overall guidance on government competition policy and regulation. The BCC Secretariat, a lower-level institution equivalent to a Ministry of Industry and Commerce department or division, can hear complaints, conduct investigations, and conduct research and reporting at the request of the Commission.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

There are no current restrictions on foreign exchange conversion, though restrictions have previously been imposed. In 2013, Laos suffered fiscal and monetary difficulties, which resulted in low levels of foreign reserves. In response, the Bank of the Lao PDR (BOL) imposed daily limits on converting funds from Lao kip into U.S. dollars and Thai baht, leading to difficulties in obtaining foreign exchange in Laos. The BOL restricts loans made in USD and Baht to businesses that generate foreign currency. There were no reports of restrictions on, or difficulties in, repatriating or transferring funds associated with an investment.

In order to facilitate business transactions, foreign investors generally open commercial bank accounts in both local and foreign convertible currency at domestic and foreign banks in Laos. The Enterprise Accounting Law places no limitations on foreign investors transferring after-tax profits, income from technology transfer, initial capital, interest, wages and salaries, or other remittances to the company’s home country or third countries provided that they request approval from the Lao government. Foreign enterprises must report on their performance annually and submit annual financial statements to the Ministry of Planning and Investment (MPI).

The Bank of Lao PDR maintains an adjustable peg against the U.S. dollar for the Lao currency, the kip or LAK, and allows fluctuations within a band of plus or minus five percent. The peg is adjusted to account for fluctuations in value of both the U.S. dollar and the Thai baht. In recent years, the kip's value has fluctuated far less than the allowed five percent from the adjustable peg. In 2015, the kip appreciated against the Thai baht while depreciating slightly against the U.S. dollar.

Remittance Policies

There have been no recent changes to remittance law or policy in Laos. Formally, all remittances abroad, transfers into Laos, foreign loans, and payments not denominated in Lao kip must be approved by the BOL. Related rules can be vague and official practice is reportedly inconsistent. The U.S. Treasury has not identified unfair currency manipulation techniques in Laos.

3. Expropriation and CompensationShare    

Foreign assets and investments in Laos are protected by laws and regulations against seizure, confiscation, or nationalization except when deemed necessary for a public purpose. Public purpose can be broadly defined, and land grabs are feared by Lao and expatriates alike. In case of government expropriation, the Lao government is supposed to provide fair market compensation. Revocation of an investment license cannot be appealed to an independent body, and companies whose licenses are revoked must then quickly liquidate their assets. Small landholdings, land with unclear title, or land on which tax has not been paid is particularly risk to expropriation.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Laos currently has a poorly developed legal sector. The government aims to become a "rule of law state" by 2020 and continues to work with many international donors on a comprehensive legal sector reform plan. From 1975 to 1991, Laos did not have a constitution, and government decrees, issued by many ministries and officials, provided the country’s legal framework. While there have been dramatic improvements in the legal system in more recent years, there are relatively few lawyers, inexperienced judges, and laws often remain vague and subject to broad interpretation. The Lao judicial system is not independent and faces challenges in meeting the needs of a modern market economy. Contract law in Laos is lacking in many areas important to trade and commerce. While it does provide for sanctity of contracts, in practice contracts are subject to political interference and patronage. A contract can be voided if it is disadvantageous to one party, or if it conflicts with state or public interests. Foreign businessmen have described contracts in Laos as being considered “a framework for negotiation” rather than a binding agreement. Although a commercial court system exists, in practice most judges adjudicating commercial disputes have little training in commercial law. Those considering doing business in Laos are strongly urged to contact a reputable law firm for additional advice on contracts.


The 1994 bankruptcy law permits either the business or creditor the right to petition the court for a bankruptcy judgment, and allows businesses the right to request mediation. The law authorizes liquidation of assets based upon the request of a debtor or creditor. There is no record of a foreign-owned enterprise, whether as debtor or as creditor, petitioning the courts for a bankruptcy judgment. According to the World Bank's Ease of Doing Business Report, Laos ranks 189 of 189 countries for ease of resolving insolvency.

Investment Disputes

According to the Law on Investment Promotion, dispute resolution should be escalated through the following methods: mediation, administrative dispute resolution, dispute resolution by the Committee for Economic Dispute Resolution, and finally, litigation. However, due to the poor state of the Lao legal system and low capacity of most Lao legal administrators, foreign investors are generally advised to seek arbitration outside the country. There are few publicly available records on international investment disputes. In disputes involving the Ministry of Planning and Investment, decisions can only be appealed back to the Ministry itself. There is no separate independent body. Thus, a company alleging unfair treatment by the government has no independent recourse. Lao laws can contradict each other and lack implementing regulations. Application of Lao law remains inconsistent and knowledge of the laws themselves is often limited, especially outside of the capital.

International Arbitration

Laos is a member of the United Nations Convention on International Trade Law (UNCITRAL Model Law) abiding by their rules on ad hoc International Arbitration. There is no clear information on Lao government recognition or arbitration of international arbitral awards.

ICSID Convention and New York Convention

Laos is not a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention). It is, however, a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Duration of Dispute Resolution – Local Courts

Relatively few records of successful dispute resolution are available. Anecdotal evidence suggests that disputes can carry on for years, though the most well-known cases are also extremely complex. Enforcement of decisions is reportedly inconsistent.

5. Performance Requirements and Investment IncentivesShare    


There is no information available on TRIMS-related disputes or complaints involving the Lao government.

Investment Incentives

Laos offers a range of investment incentives through its Special and Specific Economic Zones, managed by a department directly under the Prime Minister, and through special government concessions managed by the Ministry of Planning and Investment. Many of these incentives can be found at and are generally governed by the Investment Promotion Law.

Research and Development

There is not a clear precedent to determine whether U.S. or foreign firms can participate in government financed/subsidized research and development. Government funding for such endeavors is minimal and usually occurs in government-run research centers.

Performance Requirements

Laos does not have performance requirements. Requirements relating to foreign hiring are governed by the 2014 Labor Law, though in practice, large investors have been able to extract additional government concessions on use of foreign labor.

Data Storage

Laos does not currently have laws or regulations on domestic data storage or “forced localization.”

6. Protection of Property RightsShare    

Real Property

The government continues to consider changes to its existing land policy, though progress has been slow and is complicated by sensitive issues including community-held land rights, traditional land rights, slash-and-burn or “shifting cultivation,” and a history of expropriation for infrastructure, mining, and power projects.

Foreign investors are not currently permitted to own land in fee simple. However, Article 58 of the Law on Investment Promotion stipulates that foreign investors with registered investment capital of USD 500,000 or above are entitled to purchase land use rights of less than 800 square meters in order to build housing or office buildings. The Lao government grants long-term leases, and allows the ownership of leases and the right to transfer and improve leasehold interests. Government approval is not required to transfer property interests, but the transfer must be registered and a registration fee paid.

A creditor may enforce security rights against a debtor and the concept of a mortgage does exist. Although the Lao government is engaged in a land parceling and titling project through the Ministry of Natural Resources and Environment, it remains difficult to determine if a piece of property is encumbered in Laos. Enforcement of mortgages is complicated by the legal protection given mortgagees against forfeiture of their sole place of residence.

Laos provides for secured interest in moveable and non-moveable property under the 2005 Law on Secured Transactions and a 2011 implementing decree from the Prime Minister. In 2013, the State Assets Management Authority at the Ministry of Finance launched a new Secured Transaction Registry (STR), intended to expand access to credit for individuals and smaller firms. The STR allows for registration of movable assets such as vehicles and equipment so that they may be easily verified by financial institutions and used as collateral for loans.

Outside of urban areas, land rights can be even more complex. Titles and ownership are not clear, and some areas practice communal titling.

Intellectual Property Rights

Intellectual property protection in Laos is weak, but steadily improving. The U.S.-funded Lao PDR-U.S. International and ASEAN Integration (LUNA II) project is assisting the Lao government to build capacity in the area of IPR and to assist with progress on the IPR-related commitments undertaken as a part of Laos' 2013 WTO accession package.

Government reorganization in 2011 created the Ministry of Science and Technology, which controls the issuance of patents, copyrights and trademarks. Laos is a member of the ASEAN Common Filing System on patents but lacks qualified patent examiners. Since Thailand and Laos have a bilateral Intellectual Property Rights (IPR) agreement, in principle a patent issued in Thailand would also be recognized in Laos.

Laos is a member of the World Intellectual Property Organization (WIPO) Convention and the Paris Convention on the Protection of Industrial Property but has not yet joined the Bern Convention on Copyrights.

In 2011 the National Assembly passed a comprehensive revision of the Law on Intellectual Property which brings it into compliance with WIPO and Trade-Related Aspects of Intellectual Property standards (TRIPS). The consolidation of responsibility for IPR under the Ministry of Science and Technology is a positive development, but it lacks enforcement capacity.

Laos is not listed in USTR's Special 301 Report or the Notorious Markets report.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at

Resources for Rights Holders

Regional Contact:

Peter Fowler
Regional IP Attaché

Contact at Embassy Vientiane:

Noah Geesaman
Economic and Commercial Officer
(+856) (20) 487 000

Country/Economy resources:

The American Chamber of Commerce in Laos:
U.S. Embassy Attorney List:

7. Transparency of the Regulatory SystemShare    

Regulations in Laos can be vague and conflicting. The 2013 Law on Making Legislation mandated that all laws be available online at the official gazette website, Draft bills are also available for public comment through the official gazette website. Though the situation continues to improve, the realities of doing business in Laos can fail to correspond with existing legislation and regulation. Implementation and enforcement often do not strictly follow the letter of the law, and vague or contradictory clauses in laws and regulations provide for widely varying interpretations. Many local firms complain of informal or gray competition from firms that offer lower costs by flaunting formal registration requirements and operating outside of government regulatory structures.

The nascent legal, regulatory, and accounting systems are not particularly conducive to a transparent, competitive business environment. International accounting norms apply and major international firms are present in the market, though understanding and adherence to these norms is limited to a small section of the business community. There are only four companies listed on the Lao stock exchange. Regulations dictate that companies listed on the exchange are to be held to accounting standards, but capacity to enforce those standards is low. According to the Law on Making Legislation, laws should be made available for comment through the electronic gazette, though this occurs inconsistently in practice.

8. Efficient Capital Markets and Portfolio InvestmentShare    

Laos does not have a well-developed capital market, although government policies increasingly support the formation of capital and free flow of financial resources. Due to a monetary and fiscal crisis in 2013, there have been liquidity concerns, particularly related to foreign currency. The soundness of the banking system also appears to have suffered due to lending to off-budget infrastructure projects and provincial spending, and there are reports of some companies in the construction sector facing asset seizures by commercial banks.

The largest denomination of currency is LAK 100,000 (USD 12.50). Credit is generally not available on the local market for large capital investments, although letters of credit for export can sometimes be obtained locally. Laos completed its first Thai-baht denominated bond sale in 2013, raising USD 49 million. In January 2014, Laos issued a second round of government bonds denominated in Thai baht, raising approximately USD 90 million, and a third round in October 2014 worth USD 170 million.

The banking system is under the supervision of the Bank of Lao PDR, and includes 32 banks with assets of approximately USD 6.8 billion. Private foreign banks can establish branches in all provinces of Laos. ATMs have become ubiquitous in urban centers. Technical assistance to Laos’ financial sector has led to some reforms but overall capacity within the governance structure remains poor.

The Lao Securities Exchange (LSX) began operations in 2011 with two stocks listed, both of them state-owned – the Banque Pour l’Commerce Exterieur (BCEL), and electrical utility Electricité du Laos (EDL). In 2012, the Lao government increased the proportion of shares that foreigners can hold on the LSX from 10 to 20 percent. As of April 2016, there are only four listed companies: BCEL, EDL-Gen, Petroleum Trading Laos, and Lao World.

Money and Banking System, Hostile Takeovers

The banking system is dominated by large, government-owned banks. The health of the banking sector is difficult to determine. The Bank of Lao PDR (BOL), the central bank of Laos, temporarily ceased licensing new banks in 2014. BOL officials justify the move as a means to better regulate existing banks which rapidly moved into the market. There is no publicly available data, but non-performing loans are widely believed to be a growing concern in the financial sector, fueled in part by years of rapid growth in private lending. The government's fiscal difficulties in 2013 and 2014 led to non-payment on government infrastructure projects. The construction companies implementing the projects in turn could not pay back loans for capital used in construction. Many analysts believe the full effects of the government's fiscal difficulties have not yet worked their way through the economy.

9. Competition from State-Owned EnterprisesShare    

The Lao government maintains ownership stakes in key sectors of the economy such as telecommunications, energy, finance, and mining. Where state interests conflict with private ownership, the state is in a position of advantage.

In 2011, under the auspices of the Ministry of Post and Telecommunications, four large telecoms with high state ownership stakes cut service connections to a foreign-owned telecom in retaliation for alleged marketing violations.

There is no centralized, publicly available list of Lao SOEs. The Lao government reports that there are 135 State-Owned Enterprises in Laos with more than USD five billion in assets. The government occasionally floats ideas of increasing private ownership in SOEs through listing on the LSX, such as Lao Airlines, or spinning off parts of larger organizations, such as the state electrical utility.

OECD Guidelines on Corporate Governance of SOEs

The government has not specified a code or policy for its management of SOEs and has not adopted OECD guidelines for Corporate Governance of SOEs. There is no single government body that oversees SOEs. Several separate government entities exercise SOE ownership in different industries. SOE senior management does not uniformly report to a line minister. Comprehensive information on boards of directors or their independence is not publicly available. While there is scant evidence one way or the other, private businesses generally assume that court decisions would favor an SOE over another party in an investment dispute.

Sovereign Wealth Funds

There are no known sovereign wealth funds in Laos.

10. Responsible Business ConductShare    

There is low general awareness of responsible business conduct (RBC) and corporate social responsibility (CSR). There is no systematic government or NGO monitoring of RBC. RBC is not generally included in the government’s investment policy formulations.

11. Political ViolenceShare    

Laos is generally a peaceful and politically stable country. The risk of political violence directed at foreign enterprises or businesspersons is low. A string of unexplained attacks on vehicles traveling in the area of Xaysomboun province in late 2015 and early 2016 caused several diplomatic missions to issue warnings to their citizens to avoid the area. For similar reasons, restrictions have also been placed on routes between Vang Vieng and Luang Prabang. The motives for the attacks remained unclear as of the time of reporting. There has been little-to-no political violence in the last decade.

12. CorruptionShare    

Corruption is a serious problem in Laos that affects all levels of the economy. The Lao government has developed several anti-corruption laws but enforcement remains weak, with no high-profile cases ever having been brought to trial. According to the state inspection authority, the Lao Government has prosecuted some individuals for corruption, but reports are made only to the National Assembly and press coverage of such National Assembly sessions tends to cover the issue broadly without giving details. In September 2009, Laos ratified the United Nations Convention against Corruption.

The Lao Government Inspection and Anti-Corruption Authority (GIACA), located in the Prime Minister’s Office, is charged with analyzing corruption at the national level and serves as a central office for gathering details and evidence of suspected corruption. Additionally, an office of GIACA within each Ministry and provincial government office is responsible for combating internal ministry/provincial government corruption.

Laos is not a signatory to the OECD Convention on Combating Bribery. According to Lao law, both giving and accepting bribes are criminal acts punishable by fine and/or imprisonment. Nonetheless, foreign businesses frequently cite corruption as an obstacle to operating in Laos. Officials commonly accept bribes for the purpose of approving or expediting applications.

In 2014 an asset declaration regime entered into force for government officials requiring them to declare income, assets and debts for themselves and their family members. Assets over USD 2,500 are required to be disclosed, including land, structures, vehicles and equipment, as well as cash, gold, and financial instruments. Implementation of this program appears weak.

Domestic and international firms have repeatedly identified corruption as a problem in the business environment and for the further development of the Lao economy.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Laos has signed and ratified the UN Anticorruption Convention. Laos is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:

At the central level, contact the Government Inspection Authority:

Dr. Bounthong Chitmany
Chair of Government Inspection Authority
Sivilay Village, Xaythany District, Vientiane Capital, 13th South Road
5570 8217

At the provincial level, contact the local provincial office of the inspection authority.

13. Bilateral Investment AgreementsShare    

According to UNCTAD, Laos has bilateral investment agreements with Australia, Burma, Cambodia, China, Cuba, Denmark, France, Germany, India, Indonesia, Japan, Kuwait, Malaysia, Mongolia, Netherlands, North Korea, Pakistan, Philippines, Russia, South Korea, Singapore, Sweden, Switzerland, Thailand, the United Kingdom, and Vietnam. On February 1, 2005 a Bilateral Trade Agreement (BTA) came into force between the United States and the Government of Laos which contains some investment provisions.

Bilateral Taxation Treaties

Laos and the United States do not have a bilateral taxation treaty.

14. OPIC and Other Investment Insurance ProgramsShare    

The U.S. Overseas Private Investment Corporation (OPIC) has no bilateral agreement with and no exposure in Laos, but the organization is actively exploring options to enter the country.

15. LaborShare    

The labor market is very tight with employers reporting shortages of labor at all levels. The World Bank reported in 2014 that nearly half of advertisements for low-skilled workers in Laos receive no applications.

The government enacted a new labor law in late 2014 that established many new protections for workers. It also contained provisions aimed at increasing the skills of the Lao labor force and established stricter provisions on the hiring of foreign workers.

The new law authorized independent worker's groups to elect their own leaders and to represent their interests and engage in collective bargaining on their behalf. The Lao Federation of Trade Unions, which is associated with the ruling Lao People's Revolutionary Party, also represents workers in tripartite processes.

Child labor is outlawed except under very strict, limited conditions that ensure no interference with the child's education or physical wellbeing. The new law outlaws several forms of employment discrimination and provides standards for work hours. The minimum wage is set by separate regulation. The new law established occupational health and safety standards, but the effectiveness of inspections remains unclear.

Foreign investors using a concession as the investment vehicle are reportedly able to negotiate the percentage of foreign labor to be used in the investment. However, labor standards such as minimum wage and health and safety standards apply uniformly regardless of investment vehicle or use of a special economic zone.

The new labor law authorizes strikes if several steps of dispute resolution fail; however, there is no record of a strike occurring in Laos. A cultural distaste for open confrontation and the general shortage of labor continue to make strikes highly unlikely.

Employment contracts are required under the labor law, but are rarely used in practice. As of early 2016, the government continued to work on new regulations relating to labor dispute resolution.

Collective bargaining is typically undertaken by representatives of the Lao Federation of Trade Unions, though a new labor law provides independent workplace-based unions the ability to negotiate their own collective bargaining agreements with employers. Basic and subsistence agriculture, informal businesses, and small family businesses make up the vast majority of employment, thus collective bargaining is relatively rare in the overall economy and unfamiliar to many.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

The Foreign Investment Law allows for the establishment of Special Economic Zones (SEZ) and Specific Economic Zones as an investment incentive. Prime Ministerial Decree 443 on Special Economic Zones and Specific Economic Zones was issued in 2010 and provides guidance on the establishment of the zones, though as of April, 2016 the Lao government continued work on a new law on SEZs.

Special Economic Zones are intended to support development of new infrastructure and commercial facilities and include incentives for investment. Specific Economic Zones are meant to develop existing infrastructure and facilities and provide a lower level of incentives and support than Special Economic Zones. Laos has announced plans to construct as many as 40 special and specific zones over the coming years hoping to attract USD three billion in foreign investment.

There are currently 12 SEZs across the country, including: Savan-Seno Special Economic Zone, Golden Triangle Special Economic Zone, Boten Beautiful Land Specific Economic Zone, Vientiane Industrial and Trade Zone, Saysettha Development Zone, Phoukyou Specific Economic Zone, Thatluang Lake Specific Economic Zone, Longthanh – Vientiane Specific Economic Zone, Dongphosy Specific Economic Zone and Thakhek Specific Economic Zone.

The Savan-Seno Special Economic Zone in Savannakhet province is developing as a production, supply, and distribution center with increasingly sophisticated manufacturing businesses and advanced infrastructure. Savannakhet has drawn several large foreign investors and opened a new dry port and logistics center in early 2016. Other SEZs in the northern part of the country have targeted growth through a tourism model, relying upon casinos to attract tourists from neighboring countries. Prostitution, wildlife trafficking, and drug trafficking have been reportedly problematic in these SEZs.

Lao laws pertaining to trade should be applied uniformly across the entire customs territory of Laos, including all sub-central authorities, special economic zones, specific economic zones and border trade regions. In practice, however, customs practices vary widely at ports of entry in the provinces. Centralization of customs collection by the central government has led to more uniform practices and increased the flow of customs revenue to the central government. In order to comply with National Single Window requirements under the ASEAN Single Window, in 2012 Laos began operating the Automated System for Customs Data (ASYCUDA) at the busiest point of cross-border trade, the Lao-Thai Friendship Bridge linking Vientiane with Thailand, and has slowly expanded the use of ASYCUDA at other border crossings as well. On several border crossings with Vietnam, Lao and Vietnamese officials will jointly conduct inspections to facilitate movement of goods.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy


Host Country Statistical source

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data






Host Country Gross Domestic Product (GDP) ($M USD)





Foreign Direct Investment

Host Country Statistical source

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)





BEA data available at

Host country’s FDI in the United States ($M USD, stock positions)





BEA data available at

Total inbound stock of FDI as % host GDP






Table 3: Sources and Destination of FDI

The IMF does not maintain foreign investment data for Laos.

Table 4: Sources of Portfolio Investment

Data not available.

18. Contact for More InformationShare    

Noah Geesaman
Economic and Commercial Officer
U.S. Embassy Vientiane
(+856) (20) 487-000

Sivanphone Thoummabouth
Economic and Commercial Assistant
U.S. Embassy Vientiane
(+856) (20) 487 000