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Sourcing from Laos a Country Guide for Volume Buyers

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Sourcing from Laos a Country Guide for Volume Buyers with the support of Sourcing from Laos A country guide for volume buyers VIENTIANE www.globalsources.com/MobileElectronicswww.developingcountrysourcing.com Sourcing from Laos CONTENTS EXECUTIVE SUMMARY 4 Getting oriented KEY EXPORT STATISTICS 5 Products and exports Foreign direct investments Top 10 trading partners Top 10 exports MANUFACTURING CENTERS 7 Growth corridors Special economic zones Main production centers TRADE SERVICES 9 Laos National Chamber of Commerce and Industry Trade and Product Promotion Department Department of Planning and Cooperation Department of Industrial Property, Standardization and Metrology More information on doing business in Laos BANKING & PAYMENT SERVICES 10 State-owned banks Joint venture banks Foreign banks and branches Payment services EXPORT DOCUMENTATION 13 Sanitary and phytosanitary requirements Technical requirements Export inspection Export declaration Certificate of origin Customs broker Payment of duties Temporary export Duty exemption for exports Step-by-step export procedure Prohibited exports www.developingcountrysourcing.com 2 Sourcing from Laos CONTENTS SETTLING TRADE DISPUTES 14 Commercial courts Administrative procedure Conflict resolution Ministry of Planning and Investment Resolving intellectual property disputes PRODUCT GALLERY 15 A gallery of products representing a range of Laos-made home products, furniture and gifts www.developingcountrysourcing.com 3 Sourcing from Laos Executive summary The Hinrich Foundation Export Trade Assistance program presents Sourcing from Laos, a guide to assist buyers new to exporting from the country. Getting oriented Some helpful information that may be of use if From searching for suppliers to having products shipped, buyers you are visiting Laos for the first time. looking to diversify their sourcing with the Laos can find step by step support in this text. Getting oriented highlights international airports, central business districts and common office hours in Laos for readers. Wattay Vientiane Capital City International The key export statistics section provides the latest Airport information on Laos’s economic world standing and labor force. It also details the country’s major finished export goods Vientiane and key trading partners. In the manufacturing centers section, readers can learn about the major production centers of Laos as well as its sources for raw materials. The section also describes the location of Special Economic Zones and its growth corridors International airport Within trade services, readers can learn about organizations offering buyer support. Buyers can learn how to utilize help and Wattay International Airport is located 3 kilometers from the center of Vientiane, resources for finding suppliers, contacting government agencies Sikhottabong District, Vientiane Capital and importing products. City. It is a single terminal building that houses arrivals and departures. In banking & payment services, buyers can discover local and It services regular scheduled flights for foreign banking options, and financial and insurance institutions. Lao Airlines, Thai Airways International, Bangkok Air, Air Asian, China Southern It also illustrates the payment options available in the Laos, Airlines, China Eastern Airlines, and through a number of commercial banks. Vietnam Airlines. An arrival passenger should head straight The export documentation section guides readers through for the passport control desks inside the the export process and the key documentation necessary for terminal building. the procedure. To apply a visa-on-arrival, passengers should submit an application form (it Settling trade disputes provides readers advice on avoiding can be downloaded prior to travel), their disputes with suppliers. It also gives methods and resources for passport, two passport photos and $20- addressing disputes if they should occur. $45 fee, depending on nationality. Central business district • Vientiane Capital City Office hours • Monday - Friday from 8:30 a.m. - 12 p.m.; 1:00p.m. - 4:00 p.m. for all offices and banks. www.developingcountrysourcing.com 4 Sourcing from Laos Key export statistics After the government of the Lao People’s Democratic Republic Laos' top 10 trading partners announced the New Economic Mechanism in 1986, the private sector’s efficiency and profitability improved compared to 2014 – 2015 previous state-centered industries. The program implemented reforms such as a pricing system dictated by market forces instead of the national administration. Farmers were allowed to Trading partners US$ (mn) % share own land and sell crops. Exchange rates were patterned after market levels and trade barriers were lifted. China 1,067.0 45% The number of private enterprises slowly increased as Thailand 834.0 22% management became decentralized and most key services prices, except of basic utilities, air transport, postal service and Vietnam 604.0 16% telecommunications, became free of government control. Japan 113.0 3% To further facilitate international trade, the local government, Germany 90.9 2% in partnership with the Australian administration, built a bridge across the Mekong River going to Thailand. Upon UK 64.5 2% completion, however, getting a permit to cross the bridge was difficult and release of approvals was delayed. Even with the India 53.2 1% construction of buildings and roads as well as the abundance of rivers and waterways, infrastructure in Laos remains generally Indonesia 51.2 1% underdeveloped. Netherlands 40.5 1% Products and exports US 31.9 1% Mining (mainly copper, tin, gold and gypsum), timber, electric power, agricultural processing, rubber, construction, garments, Others 186.8 5% cement and tourism are the major industries of Laos. Its agricultural sector, which comprised 23.1 percent of the country’s Source: The Observatory of Economic Complexity 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. The government acknowledges the energy sector as one of In 2015, Laos’ industrial production growth rate was at 10 percent the significant drivers of social and economic growth. It has and its GDP (purchasing power parity) reached $37.2 billion – an approved the promulgation of the “Policy on Sustainable increase of 7 percent from the previous year. Hydropower Development in Lao PDR.” Foreign direct investments The country aims to be the net exporter of electricity generation Energy generation had the highest rate of foreign direct from hydropower using abundant water resource from the investments in 2015 with 44.8 percent, followed by agriculture Mekong River and tributaries. (36.8 percent), mining (14.5 percent), and industry and handicrafts (2.9 percent), according to the Ministry of Planning The agricuture sector contributed 23.1 percent to the GDP and and Investment. employs approximately 2.6 million workers or 73.1 percent of the total 3.5 million (2015 est.) labor force, according to 2015 Hydropower is the main source of energy in Laos, comprising estimates of the World Bank. It shared 36.8 percent of foreign 56 percent of renewable energy sources, which also include 22 direct investments in 2015. percent biogas, 11 percent each of solar and biomass. Electricity demand is met by 80 percent renewable and 20 percent Mining attracted about 14.5 percent of foreign direct investment. nonrenewable energy sources. In the first six months of 2013, the government reported that www.developingcountrysourcing.com 5 Sourcing from Laos mining has become the main contributor to exports at 47 Aside from accounting for most of the foreign revenue, mining percent, followed by electricity and industrial goods and services. provides 12 percent to government income. Laos' major exports January - December 2014 US$ (mn) Rough wood $735 Sawn wood $684 Refined copper $624 Copper ore $414 Broadcasting accessories $141 Rubber $109 Non-knit men's suits $105 Coffee $97.8 Iron ore $68.1 Potassic fertilizers $58 Source: The Observatory of Economic Complexity Foreign direct investments in Laos Malaysia Industries & Service Netherlands 2% Norway handicrafts 1.0% 2% 3% UK 2.9% Garments Japan 1% 0.1% 3% France Mining 3% China 14.5% 33% R. Korea Electricity 5% generation By country By sector 44.8% Vietnam 21% Thailand Agriculture 27% 36.8% Source: Ministry of Planning and Investment, 2015 www.developingcountrysourcing.com 6 Sourcing from Laos Manufacturing centers Laos is landlocked by Myanmar, Thailand, Vietnam, Cambodia Special economic zones and China. This makes Laos largely dependent on the Greater The National Committee for Special Economic Zone (NCSEZ) Mekong Subregion (GMS) countries for trade. was established to assist the government in managing special economic zones or SEZs in Laos. The institution is also the main The manufacturing center of Laos is concentrated in the coordinator between local and foreign parties to ensure the Vientiane capital city, particularly for the garment factories and implementation of state policies. furniture sectors. The NCSEZ also identifies economic opportunities that will Most of raw materials are produced in Vientiane and nearby attract both domestic and foreign investors by offering tax districts that can be accessed by road. and duty incentives to promote service, skill and infrastructure development. Local transportation is mostly by road but are not well connected and are in poor condition. Road links between the capital There are currently 10 SEZs in Laos.
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