Sourcing from Laos
From searching for suppliers to having products shipped, buyers looking to diversify their sourcing within Laos can find step-by-step support in this guide. In a free, downloadable PDF format, each guide provides information on:
✓ Key export statistics top trading partners and principal exports ✓ Manufacturing centers major production centers, special economic zones and export processing zones ✓ Trade services trade offices, services and resources ✓ Banking & finance major commercial banks and loan availability ✓ Paying for your purchase preferred payment methods ✓ Export documentation step-by-step export procedure ✓ Settling trade disputes tips to avoid and handle trade disputes
View the complete eBook online by clicking the tabs below. You may also download your free PDF copy here.
Sourcing from Laos: Getting oriented
Getting oriented highlights international airports, central business districts and common office hours in Laos for readers.
Sourcing from Laos: Key export statistics
This section discusses key industries and products of Laos. It is part of the Developing Country Sourcing’s Sourcing from Laos series to empower buyers looking to enter new supplier markets in Asia.
After the government of the Lao People’s Democratic Republic announced the New Economic Mechanism in 1986, the private sector’s efficiency and profitability improved compared to previous state-centered industries. The program implemented reforms such as a pricing system dictated by market forces instead of the national administration. Farmers were allowed to own land and sell crops. Exchange rates were patterned after market levels and trade barriers were lifted.
The number of private enterprises slowly increased as management became decentralized and most key services prices, except of basic utilities, air transport, postal service and telecommunications, became free of government control.
To further facilitate international trade, the local government, in partnership with the Australian administration, built a bridge across the Mekong River going to Thailand. Upon completion, however, getting a permit to cross the bridge was difficult and release of approvals was delayed. Even with the construction of buildings and roads as well as the abundance of rivers and waterways, infrastructure in Laos remains generally underdeveloped.
Products and exports
Mining (mainly copper, tin, gold and gypsum), timber, electric power, agricultural processing, rubber, construction, garments, cement and tourism are the major industries of Laos. Its agricultural sector, which comprised 23.1 percent of the country’s GDP by sector of origin in 2015, produces sweet potatoes, vegetables, corn, coffee, sugarcane, tobacco, cotton, tea, peanuts, rice; cassava water buffalo, pigs, cattle and poultry.
In 2015, Laos’ industrial production growth rate was at 10 percent and its GDP (purchasing power parity) reached $37.2 billion – an increase of 7 percent from the previous year.
Foreign direct investments
Energy generation had the highest rate of foreign direct investments in 2015 with 44.8 percent, followed by agriculture (36.8 percent), mining (14.5 percent), and industry and handicrafts (2.9 percent), according to the Ministry of Planning and Investment.
Hydropower is the main source of energy in Laos, comprising 56 percent of renewable energy sources, which also include 22 percent biogas, 11 percent each of solar and biomass. Electricity demand is met by 80 percent renewable and 20 percent nonrenewable energy sources.
The government acknowledges the energy sector as one of the significant drivers of social and economic growth. It has approved the promulgation of the “Policy on Sustainable Hydropower Development in Lao PDR.”
The country aims to be the net exporter of electricity generation from hydropower using abundant water resource from the Mekong River and tributaries.
The agriculture sector contributed 23.1 percent to the GDP and employs approximately 2.6 million workers or 73.1 percent of the total 3.5 million (2015 est.) labor force, according to 2015 estimates of the World Bank. It shared 36.8 percent of foreign direct investments in 2015.
Mining attracted about 14.5 percent of foreign direct investment. In the first six months of 2013, the government reported that mining has become the main contributor to exports at 47 percent, followed by electricity and industrial goods and services.
Aside from accounting for most of the foreign revenue, mining provides 12 percent to government income.
Top 10 exports
Sourcing from Laos: Manufacturing centers
This section discusses key manufacturing centers in Laos. It is part of the Developing Country Sourcing’s Sourcing from Laos series to empower buyers looking to enter new supplier markets in Asia.
Laos is landlocked by Myanmar, Thailand, Vietnam, Cambodia and China. This makes Laos largely dependent on the Greater Mekong Subregion (GMS) countries for trade.
The manufacturing center of Laos is concentrated in the Vientiane capital city, particularly for the garment factories and furniture sectors.
Most of raw materials are produced in Vientiane and nearby districts that can be accessed by road.
Local transportation is mostly by road but is not well connected and in poor condition. Road links between the capital Vientiane and other provinces, however, have been improved in recent years, particularly Route 13 which connects 18 provincial capitals.
The Asian Development Bank has been spearheading projects for the construction of transport infrastructure in the GMS since 2009. In December that year, the institution released funding to start the rehabilitation of Cambodia’s rail network and Thailand’s highways.
These investments aim to build “economic corridors” that will facilitate trade in certain areas.
The economic corridors are as follows:
The East-West Economic Corridor: This runs from Da Nang in Vietnam to Laos and from Thailand to Myanmar. It will also be the only continuous land route connecting the South China Sea with the Andaman Sea. This project aims to improve regional trade among Laos, Thailand and Vietnam by improving the road conditions.
The North-South Economic Corridor: This corridor covers a number of major routes from China through Laos and Myanmar. It will also link Chiang Rai and Bangkok in Thailand and Hanoi and Haiphongin Vietnam. This route has the heaviest traffic because of its proximity to Bangkok, Thailand.
The Southern Economic Corridor: This road will go through southern parts of Thailand, Cambodia and Vietnam. An important trade corridor between Bangkok and Ho Chi Minh– Vung Tau, its major trade flows are between Bangkok and the entry to Highway 359.
Special Economic Zones
The National Committee for Special Economic Zone (NCSEZ) was established to assist the government in managing special economic zones or SEZs in Laos. The institution is also the main coordinator between local and foreign parties to ensure the implementation of state policies.
The NCSEZ also identifies economic opportunities that will attract both domestic and foreign investors by offering tax and duty incentives to promote service, skill and infrastructure development.
There are currently 10 SEZs in Laos. In order to guarantee transparency regarding investment and tax collection, the NCSEZ and the Ministry of Finance have an agreement on management policies.
The main roles of NCSEZs include:
- Considering and approving the policies and legal acts pertaining to the development and management of SEZ activities in the whole country.
- Formulating strategic plans for SEZ development.
- Advertising, disseminating and attracting investments.
- Researching, seeking and managing funding from local and foreign parties.
- Advising, facilitating and resolving all problems arising in the SEZ, and ensuring maximum economic and social efficiency, justice, security, environmental protection and sustainable development.
Sourcing from Laos: Trade services
This section discusses trade services in Cambodia. It is part of the Developing Country Sourcing’s Sourcing from Cambodia series to empower buyers looking to enter new supplier markets in Asia.
When sourcing from Laos, the following are important sources of verified suppliers and information regarding trade procedures:
Laos National Chamber of Commerce and Industry
The Laos National Chamber of Commerce and Industry or LNCCI is an independent organization that represents the business community. The LNCCI was established in 1989, a collaboration between state-owned and private enterprises. It coordinates amongemployers, groups and joint ventures across all agencies. It also negotiates and deals with trade and labor issues at both regional and international levels.
The LNCCI also strengthens members’ production capabilities by providing seminars, business meetings and participation in trade shows.
Trade and Product Promotion Department (TPPD)
The Trade and Product Promotion Department is under the Ministry of Industry and Commerce. Its main task is to support entrepreneurs by promoting products through domestic and international trade shows. The agency also updates suppliers about marketing trends and export regulations.
Phonexay Road, Phonxay Village, Vientiane, Laos
P.O. Box: 4107
Tel: (865-21) 454-091
Fax: (865-21) 454-090
Department of Planning and Cooperation
The Department of Planning and Cooperation is under the Ministry of Industry and Commerce. It provides information and statistics on industries as well as domestic and international trade.
In addition, the department coordinates with sectors to improve the development policies related to their fields, and conducts research to assist in creating policies for industries. It also helps implement such policies to attract national and international investments.
Department of Industrial Property, Standardization and Metrology
The Department of Industrial Property, Standardization and Metrology is now working on behalf of the government to improve the country’s ability to adhere to conventions and international protocols regarding intellectual property rights.
The Intellectual Property division within this department is responsible for the protection of:
- Industrial Designs
- Utility models
Sourcing from Laos: Banking and finance
This section discusses banking & finance in Laos. It is part of the Developing Country Sourcing’s Sourcing from Laos series to empower buyers looking to enter new supplier markets in Asia.
Bank of the Lao PDR (BOL), located in Vientiane, is the central bank of Laos. It controls the money supply, manages the country’s reserves and supervises the commercial banks operating in Laos.
Per BOL requirements, commercial banks should maintain the liquidity of their assets and have a reserve capital set by law and a debt ratio of a specified rate. Offering agricultural sector loans amounting to at least 15 percent of the total amount of their deposits is also a mandatory requirement from BOL. The loans may be operated by the bank itself or deposited with the Agricultural Promotion Bank.
- Bank of Foreign Trade with head office in Vientiane, two branches in Savannakhet and Pakse
- Phaktai Bank with head office in Pakse
- Aloun Mai Bank, regional bank with office in Xamneua
- Lao Mai Bank, regional bank with head office in Savannakhet
- Lane Xang Bank, head office in Luang Prabang
- Agricultural Promotion Bank, head office in Vientiane
- Lao Development Bank
- Vientiane Commercial Bank
- Joint Development Bank
- Public Bank, Malaysian branch
- Standard Chartered Bank
- Bangkok Bank branch
- Siam Commercial Bank branch
- Krung Thai Bank branch
- Thai Farmer’s Bank branch
- Thai Military Bank branch
- Ayudhaya Bank branch
With the strong presence of foreign banks in Laos, local banks are more familiar with international banking standards and have become increasingly competitive, especially in ways to effectively increase deposits. More importantly, they have been absorbing knowledge of international financial practices, enabling them to provide support to importers and exporters in Laos.
Another positive development is that the Bank of Foreign Trade has made changes to meet the requirements of the growing business community. For instance, Laos has greatly relaxed its control over interest rates since 1991. At present, the BOL determines only the prime rate of deposits and the advanced interest rate on loans, according to a report of BusinessInAsia. com.
Most suppliers in Laos prefer to transact businesses through cash. However, exporters and importers can avail of a wider range of payment options through a number of commercial banks. Below are some of the commercials banks in Laos and the payment services that they offer:
ACLEDA Bank Lao Ltd
1. Documentary Collection
A. Import documentary collection
An import bill received by ACLEDA Bank from a bank of seller enclosing drafts, invoices, bills of lading, etc., requesting ACLEDA Bank to present documents to the buyers for either payment or acceptance.
B. Export documentary collection
The seller obtains the usual transport documents such as bills of lading, insurance certificates, commercial invoice, inspection certificates, etc., to request to ACLEDA Bank to forward to the bank of buyer.
2. Letter of Credit (L/C)
A. Letter of Credit (Import)
ACLEDA Bank Lao Ltd issues L/C on behalf of the buyer to guarantee the seller for accuracy payment to the seller.
B. Letter of Credit (Export)
This is another type of service that ACLEDA Bank Lao Ltd advises, confirms, or negotiates on L/C issued by the buyer’s bank. In this case, ACLEDA Bank checks the authenticity of the L/C by referring to the sale contract.
3. Bank Guarantee
A. Shipping Guarantee
ALCEDA Bank issues Shipping Guarantee on behalf of the importer (buyer) to assure the shipping company for damaging, losing or risking of goods released without documents to the importer.
B. Retention Money Guarantee
A Retention Money Guarantee is used for buyers to give retention money to the supplier. If the supplier did not adhere to the agreement or contract, the buyer can settle from the bank.
Australia and New Zealand Banking Group Limited (ANZ)
1. Import Trade Finance (trust receipts)
Assists with meeting working capital shortfalls generated by the timing mismatch between the payments buyers make to suppliers and the receipt of sales proceeds from customers.
2. Import Documentary L/C
Provides businesses with a secure method by which to transfer funds to international suppliers and can be available within 24 hours of lodging correct import documentation with the bank. ANZ offers several types of Documentary Letters of Credit, including sight and issuance Documentary Letters of Credit, Standby Letters of Credit and revolving Documentary Letters of Credit.
Lao Viet Joint Venture Bank
International Money Transfer
Meets the needs of buyers with speed, accuracy and security through the correspondent bank network of Lao Viet Bank to many countries in the world.
Money transfers can be made via:
– SWIFT as an international standard system. – Internal channel through the two branches of Lao Viet Bank in Vietnam.
Banque Pour Le Commerce Exterieur Lao Public
1. Letter of Credit
A. Import services
The provision of L/C services facilitates and builds confidence between importers and suppliers where the bank, takes on the responsibility of paying the overseas supplier for the imported goods in place of the importer.
Those who wish to import goods from abroad must get an L/C from the bank so the overseas suppliers can be sure they will receive payment for the goods from the bank and the buyer can be sure the bank will pay the supplier for the goods provided the supplier fulfills the conditions set out in the L/C.
B. Export services
BCEL inspects and approves the L/C to ensure that the bank of the importer is able to pay for the goods in accordance with the agreed terms and conditions.
2. Letter of Guarantee
This service is to help legal entities engaged in business as well as other organizations who wish for BCEL to guarantee the full repayment of a debt as well as its interest and expenses accrued based on the loan contract with the receiver of the guarantee.
Sourcing from Laos: Export documentation
Although obtaining the necessary documents and preparing them correctly and consistently is the responsibility of the supplier, it is in the buyer’s interest to have an accurate knowledge of the export process and the required documentation.
Below are some of the requirements and export documents that a volume buyer from Laos must be aware of.
Sanitary and phytosanitary requirements
To export goods, it is required to comply with the sanitary and phytosanitary measures with the special regulations relating to those products.
To help importers, the Lao PDR Trade Portal has a tool for searching on its database specific commodities or products and their generic measure or requirement.
The technical regulations are administered by the Ministry of Science and Technology. It may be necessary for certain types of products to obtain a permit to certify these products conform to certain technical standards.
Commodities in Laos are classified using the Harmonized System (HS) Code which is compliant with the ASEAN Harmonized Tariff Nomenclature (AHTN). The 2015 ASEAN Trade in Goods Agreement tariff reduction schedule became effective on January 1, 2015 and will remain in force until further notice.
The Lao PDR Trade Portal provides a search engine where either HS Code or Description of a commodity can be typed in to show the schedule of country group, activity, tariff rate, unit and validity.
Export inspection is not required for all commodities but pertains only to those initiated by the government. To maintain the good reputation of Lao export goods and enhance their international credibility, the government, in some cases, conducts uniform inspections of designated export items prior to shipment.
The declaration process is made and signed by submitting a duly completed ACDD Form. The declarations can be submitted to a regional custom office within 15 days from the date of lodgment with the transport documents notifying the arrival of the cargo, together with the following minimum supporting documents:
- A commercial invoice or contract of sale document from the supplier of the goods
- Transport documents such as Bill of Lading or Air Way Bill
- Packing list (if available)
Certificate of Origin
Any export licenses or permits obtained from other ministries depending on the type of goods you are exporting.
Temporarily exported goods from Laos for the purposes of exhibitions, experiments and research, or other purposes that will be brought back into the country must be declared to customs in the standard manner. Goods exported under the temporary exports regime are exempt from customs duties and other obligations.
Duty exemption for exports
He export duty is payable on certain types of products. Applicable products are listed under the relevant HS Commodity classification.
Sourcing from Laos: Settling trade disputes
Laos is closely aligned with Vietnam politically, militarily and through trade. It has strong and growing ties with China and is now friendly with its capitalist neighbor Thailand. Trade is flourishing and disputes are mainly around border demarcation.
Lao judges are trained primarily to deal with criminal, family and civil court matters. They have little experience or interest in handling commercial disputes, especially in Intellectual Property (IP) infringement.
As a result, the courts often persuade commercial disputants to seek other means of resolving disputes. If one party insists on court proceedings, then the court will often attempt to mediate or arbitrate the dispute, instead of issuing judicial decisions. Foreign investors are generally advised to seek arbitration outside the country.
Meeting the needs of a modern market economy is a challenge to the judicial system because contract law in Laos is lacking in many areas important to trade and commerce. Foreign professionals have described contracts in Laos as “a framework for negotiation,” instead of a binding agreement.
Laos is not a member of the International Center for the Settlement of Investment Disputes, but a member of the United Nations Convention on International Trade Law.
At present, Laos has separate commercial courts, where commercial disputes are heard by judges in charge of business issues at the district or provincial court level, depending on the causes importance.
For dispute settlement by administrative procedure, a petition or complaint should be lodged to the Department of Intellectual Property Standardization and Meteorology (DIPSM). It is key in contacting relevant authorities, such as the departments of trade, customs, economic police and others to hear and consider data or information provided by parties concerned.
The decision of a case will be based on the agreement of parties in writing and statement of the reasons on which the decision is based. It will be made available to the defendant for possible appeals.
According to the Lawon Investment Promotion, investors should resolve disputes in the following order: mediation, administrative dispute resolution, dispute resolution by the Committee for Economic Dispute Resolution and finally, litigation.
Ministry of Planning and Investment
For disputes involving the Ministry of Planning and Investment, a decision can only be appealed back to the Ministry itself. There is no separate independent body. A company that feels it is receiving unfair treatment from the government has no independent recourse.
Lao laws often contradict each other and lack implementation regulation. Some laws have been officially translated into English, including business, tax, bankruptcy, customs and secured transaction laws.
Sourcing from Laos: Product gallery
Choose from our gallery of innovative and new products from Laos selected by our export consultants and as featured on the Analyst’s Choice section of GlobalSources.com. For more Laosn suppliers and their latest products, visit DevelopingCountrySourcing.com.
The model 002PK30 from SMP Enterprises of Laos is a pumpkin home décor made of solid wood. Measuring 19x12cm, it is priced at $50 to $60 per piece and exported mainly to North America, Eastern Europe and Asia. Other fruit and vegetable designs are available.
Sisterhood Handicrafts of Laos offers model H022C, a hemp clutch bag that is adorned with silver and colored wooden beads and silver-plated pendant. The product is purely handcrafted. The minimum order requirement is 50 pieces. The supplier exports mainly to North America, Eastern Europe and Asia.
Laos supplier Bountom Bamboo Handicraft offers this dining set made of bamboo. The set consists of a table and six chairs. Dimensions are 111x66x70cm and weight is 25kg. FOB price starts at $150 per set. MOQ is one set. The supplier’s main export market is Asia.
The model A-03 from Viengniyom Furniture of Laos is a lectern constructed purely from high-quality teak wood. Measuring 110x68x110cm, the product is exported mainly to Asian markets. FOB price is $500. The minimum order requirement is 1 piece.