Laos

Laos location

Laos• Laos is on of the few remaining communist countries in the world• Transferring in market economy• Land block country• 70 % of the total area is still forest• Rich id natural recourses • Lack of capital and technology• Mining industry still relatively important• Member of ASEAN 1997

Laos• Natural Increase: 1.6% • Density: 29 Inhabitants/km² • Urban Population: 37.6% • Religion: Buddhist 65%, Animist 32.9%, Christian 1.3%, Others and unspecified

0.8%. • Literacy Rate: 68.• Internet Suffix: .la • Telephone Lines: 1.8 per 100 Inhabitants • Internet Users: 10.7 per 100 Inhabitants • Access to Electricity: 55% of the Population

Laos• Strong influence of French colony

• Heavily suffer from Vietnam War

• Most bombing country in the world (Problem of Infrastructure)

• Communist republic 1975

Laos• Communist policy including• Centralized planning• Total political control• Led to a deterioration of economic conditions and exodus for the elite

Political system• Unicameral system • 115 member (5 year)• Prime minister is appointed by president and elected by national

assembly• 4 deputy prime minister• Policies are formed by the 11 member politburo and 55 – member

central committee

Political system • Recently more open foreign relations to the west• Better relations now days for neighbouring's countries• Join WTO 2010

Legal system

• Three court level• District, provincial and supreme• Legal system based in French legal system with norms and procedures

including socialist practise and traditional customs• THE JUDICIARY IS POORLY TRAINED AND RATHER INEFFICIENT< EVEN

CORRUPT• Judges are all members of communist party and appointed by party• Workers can form unions and joint trade unions

Economic environment• The Laos government allowed private enterprises in 1986 and now is

transiting in market economy.• Still governmental participation• Prices are generally determined by the market • Import barriers have been eased and replaced with tariff• Now days private sector is allowed direct imports and people can own

their land and sell their crops in market• Economy growth 6 to 8 % annually

Economic conditions• Despite high level of natural recourses the country is underdeveloped • 70 % or population lives off subsistence agriculture which contribute

30% of GDP• Main crops are• Rice, potatoes, corn, coffee, sugarcane, tobacco, cotton, tea, gonger,

soy bean • Other important sector is industry, (33%) including

Laos economy continue• Extractive industry with mining• Tin• Gold• Gypsum• Other industries are• Timber• Electric power (water)• Agricultural processing• Construction• Garments• tourism

Economy continue• The service sector accounts around 37% of GDP• Laos operates managed exchange rates• New commercial banking law 2006• Stock Exchange open 2010 with 10 companies• Poverty has reduced from 46% (1992) to 26% in 2009

Export• Main export• Hydro power around 6 billion US$ (Thailand, Vietnam China)• Timber • agariclture

Doing in Business In Laos• Difficult to do business in Laos in generally• It ranked 167 out of 183 to do business• Protecting investors right 182 out 183• Only Afghanistan is behind in Laos• Laos is listed 158 out of 180 nations in case of corruption

Investors rightsCountry Comparison For the Protection of I nvestors

Laos East Asia & Pacific

United States Germany

Index of Transaction Transparency*

2.0 5.0 7.0 5.0

Index of Manager’s Responsibility**

1.0 5.0 9.0 5.0

Index of Shareholders’ Power***

2.0 6.0 9.0 5.0

Index of Investor Protection****

1.7 5.4 8.3 5.0

FDI• In recent years, foreign investment in Laos has stagnated at a level

below USD 300 million. The Government has been pursuing a national policy of FDI promotion, but there are still remaining barriers to attract FDI, especially the length of time invested in the procedures to obtain the required authorisations, inequalities in terms of tax benefits, the high cost of some applied tariffs and the poor-quality infrastructure.

FDI• Regional actors are slowly overtaking Western groups and multilateral

institutions in the hydroelectric sector. For example, Thailand has benefited extensively from Laotian electricity and therefore it has strongly invested in it. The projects in the areas of hydraulic energy production and the exploitation of the mining resources represent half of the foreign investment accumulated over the last ten years.• Transportation infrastructure, tourism and large agro-forestry projects

are also attracting new investors. The main investing countries are Laos' large neighbours Vietnam, China and Thailand, followed by France.

FDI

Foreign Direct I nvestment

2012 2013 2014

FDI Inward Flow (million USD)

294 427 721

FDI Stock (million USD) 2,482.9 2,909.5 3,630.4

Number of Greenfield Investments***

15.0 17.0 20.0

FDI Stock (in % of GDP)