Laos - Market ChallengesLaos - 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 not transparent. Sanctity of contracts 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 through the streamlining of processes in methods such as using electronic systems to enhance customs administration and inspections for imports and exports. As a result, the customs clearance processing time dropped from an average 11 hours in 2012 to 9 hours in 2018. The cost for a standard shipping container fell from USD 2100 to USD 1810 in 2016.
Despite government efforts to establish “one stop service” for business registration and licensing, procedures for investment are cumbersome and approvals often fail to occur within stated times or rules.
Human resources are underdeveloped in Laos, and employers frequently face difficulty in finding and retaining qualified employees. The market for skilled and unskilled workers is tight, though some provinces with larger populations, such as Savannakhet, are able to support some manufacturing for export.
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 project ranks Laos 154 out of 190 economies in 2019.
The current government is working to address corruption, which is that seriously hampers the efficient operation of the Lao economy and society. Competitors from countries without legal or moral sanctions against corrupt practices have long enjoyed an advantage in securing government approvals and concessions. Frequent bribes and payoffs are an accepted part of Lao business culture.
Laos Trade Development and Promotion