Executive Summary

T

he Lao PDR is a dynamic developing economy with a stable political environment. Unlike in some least developed countries, the strong one-party system suggests that political turmoil is less likely to interfere with business operations.

The country has embarked on a progressive path of economic reform to enable its integration into the world economy, as marked by its recent accession to the World Trade Organization (WTO). Laos is also part of the Association of Southeast Asian Nations (ASEAN) effort to create a single market by December 2015, the ASEAN Economic Community (AEC).

Doing business is not yet easy, but it is becoming easier. In the World Bank’s Doing Business Report for 2016, Laos climbed three rungs from the previous year and is now positioned at 134 out of 189 ranked economies. The government is pursuing an investment-friendly strategy by developing one-stop services through the Investment Promotion Department, and starts the implementation of a National Single Window for moving trade goods through customs by 2016. Having become a member of the WTO, Laos has secured access to new dispute-settlement mechanisms in international trade. The country is also collecting more experience in international trade and relations, which may positively influence its regulatory framework in the long-run.

Laos’s geostrategic position offers opportunities for international market connectivity. Laos is the only landlocked country in Southeast Asia – it connects China, Vietnam, Myanmar, Thailand and Cambodia – and is well integrated into the Greater Mekong Sub-Region by economic corridors. The country enjoys privileged access to the EU market under the “everything-but-arms” agreement. Connectivity is further increasing, with more regional and international flights becoming available.

Growth is backed by reliable infrastructure development. The electricity network has spread to cover most of the country and power outages are rare. The telecommunications system has also developed rapidly: telephone lines, mobile phone networks and the internet are readily available. As Laos was the second ASEAN country to launch a 4G network, the use of mobile internet is also spreading. While expansion of the road system and use of waterways face some geographic limitations, Laos is developing its land-links by opening new border checkpoints and moving forward with plans for a railway system.

There is a rising demand for suppliers in various sectors. Business can be found in many fields including tourism, construction, civil engineering for infrastructure projects, power generation and equipment sales, mining and mining equipment, environmental technologies, agro-processing, logistics and the communications sector. The government offers special promotion schemes in all these sectors.

First-mover advantages can be found in numerous market niches. As the Lao economy grows, consumer needs are fuelling greater demand. This is especially true for human resources, with recruitment, development and retention posing a challenge. There is also a shortage of high quality business development services targeted at small and medium enterprises (SME). Lao exports to the EU could be higher as many products do not currently meet EU technical standards. Products and services that help close this gap can be great business opportunities.

Expatriates enjoy good living conditions in Laos. Many expats, especially in Vientiane, enjoy a safe environment, spacious housing at reasonable prices, a variety of sports activities, many dining options and the friendliness of the Lao people. Shortcomings in the healthcare sector are remedied by proximity to Thailand.

 

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