RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/LAO/3
28 March 2001
(01-1534)
Working Party on the
Accession of the Lao PDROriginal:  English
ACCESSION OF THE LAO PEOPLE'S DEMOCRATIC REPUBLIC
Memorandum on the Foreign Trade Regime
In a communication received on 16 July 1997, the Government of the Lao People's
Democratic Republic (hereafter referred to as the "Lao PDR") applied for accession under Article XII
of the Agreement Establishing the World Trade Organization (WTO).
At its meeting on 19 February 1998, the General Council established a Working Party
(WT/ACC/LAO/2) with the following terms of reference "To examine the application of the
Government of the Lao People's Democratic Republic to accede to the World Trade Organization
under Article XII and to submit to the General Council recommendations which may include a draftProtocol of Accession."  The membership is open to all WTO Members indicating their wish to serve
on the Working Party.
In accordance with the established procedures (WT/ACC/1), the Secretariat is circulating the
attached Memorandum on the Foreign Trade Regime received from the Government of the LaoPeople's Democratic Republic.  WTO Members wishing to submit questions on the Memorandum are
invited to do so by 30 April 2001 for transmission to the Lao PDR authorities.
_______________WT/ACC/LAO/3
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CONTENTS PAGE
Page Number
I. INTRODUCTION 1
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
1. Economy
(a) General description (territory, po pulation, economic specialization,
main economic indicators)1
2. Economic Policies
(a) Main directions of the ongoing economic policies, tactical and
strategical goals of the economic policies, pricing policy, economic
development plans, privatization plans, sectoral priorities, regional
development plans, etc4
(b) Monetary and fiscal policies 7
(c) Foreign exchange and payments sy stem, relations with International
Monetary Fund, application of foreign exchange controls if any9
(d) Foreign and domestic investment policies 10
(e) Competition policies 11
3. Foreign trade in goods and services 11
4. Domestic trade in services including value and composition of foreign
direct investment12
5. Information on financial moveme nts related to nationals working
abroad, remittances, etc.12
III. FRAMEWORK FOR MAKING  AND ENFORCING POLICIES
AFFECTING FOREIGN TRADE IN GOODS AND TRADE IN
SERVICES
1. Powers of executive, legislative and judicial branches of government 12
2. Government entities responsible for making and implementing
policies affecting foreign trade14
3. Division of authority between central and sub-central governments 15
4. Any legislative programmes or plan s to change the regulatory regime 15
5. Laws and Legal Acts (Annex 2 refers) 15
6. Description of judicial, arbitral or administrative tribunals or
procedures, if any15WT/ACC/LAO/3
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Page Number
IV. POLICIES AFFECTING TRADE IN GOODS
1. Import Regulation
(a) Registration requirements for engaging in importing 16
(b) Characteristics of national tariff , customs tariff nomenclature (HS),
types of duties, general description of the customs tariff structure,
weighted average level of duties on main customs tariff groupings;
application of m.f.n. tariff rates, tariff preferences18
(c) Tariff quotas, tariff exemptions 19
(d) Other duties and charges, speci fying any charges for services
rendered19
(e) Quantitative import restrictions, including prohibitions, quotas and
licensing systems19
(f) Import licensing procedures 20
(g) Other border measures, e.g. any other schemes that have border
effects similar to those of th e measures listed under (e) above20
(h) Customs valuation (WTO Customs Valuation Agreement (Annex 4
refers), the Brussels Definition of Value, or any other system) whether
used only for purposes of levying ad valorem rates of duty or for
other purposes20
(i) Other customs formalities 20
(j) Pre-shipment inspection 20
(k) Application of internal taxes on imports 20
(l) Rules of origin 21
(m) Anti-dumping regime 21
(n) Countervailing duty regime 21
(o) Safeguard regime 21
2. Export Regulation
(a) Registration requirements for engaging in exporting 21
(b) Customs tariff nomenclature, type s of duties, duty rates, weighted
averages of rates21
(c) Quantitative export restrictions, including prohibitions, quotas and
licensing systems22
(d) Export licensing procedures 22
(e) Other measures, e.g. minimum export prices, voluntary export
restrictions, orderly marketing arrangements22
(f) Export financing, subsidy and promotion policies 22
(g) Export performance requirements 22
(h) Import duty drawback schemes 22
3. Internal policies affect ing foreign trade in goods
(a) Industrial policy, including subsidy policies 23
(b) Technical regulations and standards, including measures taken at the
border with respect to imports24
(c) Sanitary and phytosanitary measures, including measures taken with
respect to imports24
(d) Trade-related investment measures (TRIMS) 25
(e) State-trading practices 26
(f) Free zones 26WT/ACC/LAO/3
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(g) Free economic zones 26
(h) Trade-related environmental policies 26
(i) Mixing regulations 26
(j) Government-mandated counter-trade and barter 26
(k) Trade agreements leading to country-specific quotas allocation 26
(l) Government procurement practice s, including general legal regime
and procedures for tendering, dealing with tenders and award of
contracts26
(m) Regulation of trade in transit 28
4. Policies affecting foreign trade in agricultural products
(a) Imports -  i.e. comprehensive description of the types of border
protection maintained:  customs duties and/or any other border
measures28
(b) Exports - i.e. description of, and the budgetary expenditure and any
revenue foregone involved in each of  the export subsidy measures in
place28
(c) Export prohibitions and restrictions 28
(d) Export credits, export credit gu arantees or insurance programs 28
(e) Internal policies - i.e. description of, and the budgetary expenditure
and any revenue foregone involved in each of the domestic support
measures in place28
5. Policies affecting foreign trade in other sectors
(a) Textiles regime 29
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME
1. General
(a) Intellectual property policy 29
(b) Responsible agencies for policy formulation and implementation 30
(c) Membership of international inte llectual property conventions and of
regional or bilateral agreements30
(d) Application of national and m.f.n. treatment to foreign nationals 31
(e) Fees and taxes 31
2. Substantive standards of protection, including procedures for the
acquisition and maintenance of intellectual property rights
(a) Copyright and related rights, including rights of performers,
producers of phonograms and broadcasting organizations31
(b) Trademarks, including service marks 31
(e) Patents 33
(f) Plant variety protection 34
(g) Layout designs of integrated circuits 34
(h) Requirements on undisclosed information, including trade secrets and
test data34
(i) Any other categories of intellectual property 34
3. Measures to control abuse of  intellectual property rights 34
4. EnforcementWT/ACC/LAO/3
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(a) Civil judicial procedures and remedies 34
(b) Provisional measures 34
(c) Any administrative procedures and remedies 34
(d) Any special border measures 34
(e) Criminal procedures 35
5. Laws, decrees, regulations and other legal acts relating to the above 35
6. Statistical data on applications for and grants of intellectual property
rights, as well as any statistical data on their enforcement35
VI. TRADE-RELATED SERVICES REGIME
1. General 35
2. Policies affecting Trade in Services
(a) Government departments, agencies, professional associations or other
bodies with authority or a role relevant to the conduct of serviceactivities44
(b) Judicial, arbitral or administrative tribunals or procedures providing
for the review of, or remedies in relation to, administrative decisions
affecting trade in services46
(c) Provisions, including those in international agree ments, concerning
qualification requirements and procedures, technical standards and
licensing and/or registration requirements for the supply of services46
(d) Provisions governing the existenc e and operation of monopolies or
exclusive service suppliers46
(e) Provisions relating to safeguard me asures as they apply to trade in
services47
(f) Provisions relating to internat ional transfers and payments for
current transactions of services47
(g) Provisions relating to capital transactions affecting the supply of
services47
(h) Provisions governing the procurement by governmental agencies of
services47
(i) Provisions concerning any form of aid, grant, domestic subsidy, tax
incentive or promotion scheme affecting trade in services47
3. Market Access and National Treatment
(a) Limitations on the number of service suppliers 47
(b) Limitations on the total value of service transactions or assets 47
(c) Limitations on the total number of service operations or on the total
quantity of service output47
(d) Limitations on the total number of natural persons that may be
employed in a particular service sector48
(e) Restrictions on, or requirements of specific types of legal entity
through which a service may be supplied48
(f) Limitations on the partic ipation of foreign capital 48WT/ACC/LAO/3
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Page Number
(g) Measures providing for less than the treatment accorded to national
services or service suppliers48
4. Most-Favoured-Nation Treatment 49
VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC
RELATIONS WITH THIRD COUNTRIES
1. Bilateral or plurilateral agreement s relating to foreign trade in goods
and trade in services49
2. Economic integration, customs uni on and free-trade area agreements 49
3. Labour markets integration agreements 50
4. Multilateral economic cooperation , membership in the multilateral
economic organizations, trade-related programmes of other
multilateral organizations50
ANNEX 1 STATISTICS AND PUBLICATIONS 52
ANNEX 2 LIST OF LAWS AND LEGAL ACTS 68
ANNEX 3 INFORMATION ON IMPORT LICENSING PROCEDURES 73
ANNEX 4 INFORMATION ON IMPLEMENTATION AND
ADMINISTRATION OF THE AGREEMENT ON CUSTOMS
VALUATION76
ANNEX 5 INFORMATION ON TECHNICAL BARRIERS TO TRADE 79
ANNEX 6 INFORMATION ON STATE-TRADING ENTERPRISES 81
ANNEX 7 FOREIGN TRADE AGREEMENTS 82
ANNEX 8 SUMMARY OF THE TAX SYSTEM AS OF MAY 1999 84WT/ACC/LAO/3
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I. INTRODUCTION
GDP per capita income of the Lao People's Democratic Republic (Lao PDR) was US$400 in
1997.  The Lao PDR is among 48 Least-Developed Countri es (LDC).  It is also a landlocked country.
Eighty five per cent of the labour force are employ ed in agriculture, most of whom are subsistence
agricultural cultivators.  Educational and health standards are lower than in most developingcountries.  Infrastructure in the Lao PDR is severely underdeveloped.  Most of the population operate
in the part of the economy which is not monetised.  Lack of infrastructure and low levels of skill and
education in the community are the principal impediments to development in the Lao PDR.
In 1986, the Government of the Lao PDR adopted the New Economic Mechanism.  This
initiated a program of economic reform with the goal of stabilizing the economy and increasing
growth by shifting from a centrally planned economy to a market oriented economy.  The process of
market reform is well advanced.  The aim of the trade policy regime of the Lao PDR is to secure theeconomic benefits potentially available from integrating the market economy of the Lao PDR into the
global market economy and international trade based on the multilateral trading system.
The strategy of market reform produced early economic benefits for the Lao PDR.  Inflation
was quickly brought down to single digit levels, the exchange rate stabilized and foreign direct
investment and exports expanded.  Growth since then has averaged seven per cent per annum.  Whileconsiderable progress has been made with economic reforms, the institutional base of the market
economy in the Lao PDR remains weak.  There is a severe shortage of trained personnel and the
physical and socio-economic infrastructure is inadequate.  The fragility of the economy was
illustrated by the impact of the Asian economic crisis since 1997.  Inflation has increased and the
currency has devalued considerably.
 The foreign trade regime of the Lao PDR has been liberalized and made more transparent.
The trade policy of the Lao PDR already closely accords with the principles which underpin the
WTO.  The principal instrument for regulation of imports is the customs tariff.
The Government of the Lao PDR has committed to accede to the World Trade Organization
(WTO) to increase the integration of the Lao PDR into the multilateral trading system.  All of the LaoPDR’s major trading partners are either members of the WTO or are in the process of acceding to the
WTO.  The Government of the Lao PDR also expects that membership in the WTO will support the
social economic development and the process of market-based reforms in the country.
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
1. Economy
(a) General description (territory, population, economic specialization, main economic
indicators)
- Geography
The Lao PDR has an area of 236,800 square kilometres, stretching 1,700 km from north to
south and between 100 and 400 km from east to west.  The Lao PDR borders the Socialist Republic of
Vietnam, the Kingdom of Thailand, the Kingdom of  Cambodia, the People’s Republic of China and
the Union of Myanmar.
The Republic has a tropical climate.  It is a landlocked country.  Key trading partners are
Thailand and Vietnam.  Two thirds of the country is mountainous, ranging from 200 to 2,800 meters.
This creates difficulties for communications and development.  The Lao PDR also has an abundanceWT/ACC/LAO/3
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of rivers, including a 1,800 km stretch of the Mekong River.  The combination of mountains and
rivers creates great potential for development of hydropower.
The population of the Lao PDR is 4.6 million (1996).  Population growth is projected at 2.6
per cent per annum.  Population density is low, with 19 persons per square kilometre.  Eighty-five per
cent of the work force is employed in agriculture.  The average household is 6.7 members.  Vientiane
City is the capital with a population of 300,000.  The next largest urban centers are Savannakhet
(109,000), Luang Prabang (69,000) and Pakse (55,000).
The population of the Lao PDR is ethnically diverse.  Up to 53 ethnic groups have been
identified.  The population is generally categorized into three groups: the Lao Loum occupy the
lowland plains, constituting 67 per cent of the population; the Lao Theung occupy the mountain
slopes, constituting 22 per cent of the population; the Lao Soung live at over 1,000 meters,
constituting 10 per cent of the population.  The national language is Lao which is derived from Paliand Sanskrit.
- Economic specialization
Agriculture is the dominant source of production in the economy of the Lao PDR.  It
accounted for 52.02 per cent of Gross Domestic Product (GDP) in 1997.  Industry contributed just
over 20 per cent and Services nearly 25 per cent.  There is a trend for the industrial sector to expand.Since 1992, the contribution of agriculture to GDP has fallen from 58 per cent to 52 per cent and the
share of industry has risen from nearly 17 per cent to nearly 22 per cent.  (See Table 1).
- Main economic indicators
Table 1
Lao PDR - Share of Gross Domestic Product By Sector
(In billions of kip and per cent of total)
1994 1995 1996 1997 1998 est.
Agriculture 439,980
56.36453,683.80
54.29466,205.00
52.19498,683.00
52.22517,067.00
52.08
Industry 138,664
17.76156,829.00
18.77183,997.00
20.60198,848.00
20.82215,739.00
21.73
Services 185,376
23.75204,345.10
24.45221,615.00
24.81238,296.00
24.95249,708.00
25.15
Import duties 16,668
2.1320,831.80
2.4921,439.00
2.4019,183.00
2.0110,412.00
1.05
GDP at market price 780,657
100.00835,689.70
100.00893,265.00
100.00955,009.00
100.00992,925.00
100.00
(Source: Bank of Lao PDR)
The overwhelming majority of the population lives in rural areas.  The agriculture sector
employs 85 per cent of the workforce and generates just over half of the income of the Lao economy.
The agriculture sector is based both on subsistence agriculture and commercial production, with
subsistence agriculture providing the livelihood for the majority of farmers.  Rice is the predominantcrop, followed by other grains and pulses, vegetables, fruits, tobacco, and coffee, the latter mainly for
export.  In 1997, crops accounted for 50 per cent of agricultural production, livestock and fishery 38
per cent and forestry 11 per cent.
Rice is a predominant staple in the traditional diet of the Lao PDR, within the meaning given
to that term in Annex 5, Section B of the Agreement on Agriculture.  The Lao PDR is basically self-sufficient in rice in recent years, but its annual production of rice is subject to sharp reductions due toWT/ACC/LAO/3
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drought and/or floods.  The issue of food security remains a priority for the Government because of
significant fluctuations in farmers’ welfare and national economic performance.
Industry in the Lao PDR is dominated by small scale manufacturing, processing, construction
and assembly plants, catering mainly for domestic consumption.  There is virtually no heavy industry.
Manufacturing contributes 75 per cent of industrial output, construction 16 per cent and mining andelectricity and gas 8 per cent.
The share of the services sector has grown somewhat in recent years, corresponding with a
significant shift of activity from the public sector to the private sector since 1988.
The natural geographic endowments of the Lao PDR is reflected in the composition of trade.
Forest products, agriculture and electricity derived from hydropower are major export items.  The
major export from the industrial sector is garments.  This industry developed after the transition to the
market economy, drawing on the advantage of low costs.  Most consumer and capital goods areimported, reflecting the low level of development and industrialization.
Nominal GDP in 1998 was estimated at 4,260 billion kip (US$960 million).  Growth in GDP
has averaged 7.1 per cent between 1994 and 1997.  (See Table 2).
Table 2
Lao PDR: GDP by Industrial Origin, 1994-98
(in billions of Kip, at 1990 constant market prices)
1994 1995 1996 1997 1998 est.
Agriculture 439.2 453.7 466.2 498.7 517.1
Crops 221.6 216.0 222.3 253.4 269.6
Livestock and fishery 172.6 179.0 183.9 188.3 193
Forestry 45.8 59.0 59.8 56.9 54.4
Industry 138.6 156.8 183.9 198.8 215.7
Mining and quarrying 1.7 1.7 2.7 3.6 4.1
Manufacturing 98.8 116.2 137.2 150.0 164.5
Construction 25.9 27.7 31.1 32.6 26.7
Electricity, gas, water 12.3 11.2 12.8 12.6 20.5
Services 185.4 204.3 221.6 238.3 249.7
Transportation, storage and communication 36.9 43.6 48.0 52.9 56.8
Wholesale and retail trade 63.2 69.0 76.7 85.0 102.3
Banking, insurance and real estate 8.5 12.0 11.7 12.7 1.6
Ownership of dwellings 27.5 28.4 30.1 30.9 28.1
Public wage bill 28.9 27.6 27.7 28.0 29.3
Nonprofit institutions 10.1 9.9 10.6 10.5 12.4
Hotels and restaurants 9.2 12.4 15.0 16.5 17.6
Other 1.1 1.3 1.4 1.5 1.5
GDP at factor cost (source: IMF) 764.0 814.9 869.6 935.8 982.5
Import duties 16.7 20.8 21.4 19.1 10.4
GDP at market prices 780.7 835.7 893.2 955.0 992.9
Change in GDP growth at constant marketprices8.1 7.0 6.9 7.2 4.0
GDP at current market prices 1,108 1,419 1,726 2,200 4,260
(Source:  Bank of Lao PDR)
Over that period, the basic economic indicators in the Lao PDR remained relatively stable
until towards the end of the period.  Trends in ke y indicators are set out in Annex 1, Table II.3 and
key financial and economic indicators are set out in Annex 1, Table II.4.WT/ACC/LAO/3
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Fiscal policy was relatively stable.  Government revenue as a share of GDP averaged 12 per
cent and the average share of expenditure was just over 24 per cent.  In most years, the Lao PDR had
a deficit on the trade account.  In 1997 and 1998, there was also deficit of the balance of payment (See
Annex 1, Table II.4).  Gross foreign reserves have held at levels between 1994 and 1997 which
provide an average equivalent of two months of total imports.  The ratio of external debt to GDP ishigh, reaching 55 per cent in 1997, running at an average of 42 per cent.  In 1998 the debt-servicing
ratio was estimated to be 8.4 per cent.
Growth in output in 1997 remained substantial at 6.5 per cent.  But inflation accelerated to 26
per cent.  The Bank of the Lao PDR reported that it further accelerated in 1998 to over 40 per cent.
This was caused by the impact of the Asian currency crisis (Thailand is the Lao PDR’s major trading
partner).  Growth in the economy was 4.0 per cent in 1998.  A good rice crop resulted in higher
growth in the agriculture sector in 1997 - up to 7 per cent from 2.8 per cent in 1996 - returning to 3.7
per cent in 1998.  Growth in the industrial sector in 1998 was 8.5 per cent.
2. Economic Policies
(a) Main directions of the ongoing economic policies, tactical and strategical goals of the
economic policies, pricing policy, economic development plans, privatization plans,
sectoral priorities, regional development plans, etc.
- Development objectives
The 1996-2000 Socio-Development Plan lays down the Government’s objectives for the
period.  The development strategy set out five general guidelines:
(i) Continued promotion of the market-oriented economy.  The aim is to create a multi-
sectoral economy with varied forms of ownership and production, services anddistribution on market principles.
(ii) Development of the agricultural, industrial and service sectors.  Production in all
sectors is to be fostered, services being developed to promote the regional role of the
Lao PDR in this sector.  Seven main activities were set as the focus of the Plan:
- Agriculture and forestry.  There are six main programs.  The first is food
production.  The aim is to increase production of rice.  In 1997 and 1998, a
major program was undertaken to expand irrigation and infrastructure to
expand the production of rice in the Lao PDR.  A second program is to
stabilize and reduce the incidence of shifting cultivation.  The third program
is to enhance commercial production.
Of particular interest is promotion of f ood products for export, including vegetables,
livestock and commercial crops such as coffee.  The fourth program is related to thedevelopment of irrigation systems.  The fifth program concerns agriculture and
forestry research.  The sixth program is aimed at human resource development in this
area.
- Industry-Handicraft.  The aim is to increase the share of industrial production
of national product.  Several areas have been identified for development:including food processing, consumer goods, apparel, household utensils and
furniture.  Some sub-sectors have been identified as prospective for increased
domestic consumption and exports such as power, mining and wood
processing.WT/ACC/LAO/3
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- Communication, Transport, Post a nd Construction.  Improvement of
communications is a key objective.  Land transport is to be improved and
international facilities and services for aviation are to be upgraded.
- Other services.  Tourism is to be promoted and foreign investment is to be
encouraged.  Tax reform would be promoted and financial administration isto be improved.  The banking sector is to be developed to promote stability.
In particular, it is to be reformed to rely on the market mechanism.
- Rural development.  Improved conditions in rural areas is a leading priority,
following the strategies set out in strategy (iv).
- Human resource development Strategies are to be developed to meet the
urgent need for skilled personnel to meet the requirements of the Plan.  This
includes targets to achieve 70 per cent literacy for school age children andimproved educational infrastructure and strategies to improve public
administration.
- Foreign relations.  The integration of the Lao economy into the global
economy is a key strategy.
(iii) Development of regional economic structures.  Development will be based on the
principle that the economically stronger provinces will be able to assist less well-
endowed provinces.  Regional economic structures will be based on four areas.  The
north, where the strategy is to achieve food self-sufficiency and create a complete
communication network and growing service sectors; the center, where the strategy is
to make it the economic and political center of the country; the Savannakhet region inwhich all sectors are to be developed; and the south, where agriculture and forestry
processing industries, as well as services, are to be developed.
(iv) Concentration on rural development.  The strategy is to reduce revenue inequalities
between the urban and rural population for equality and social justice; to eradicate
poverty in rural areas; and to help rural and mountain populations attain conditionsfor self-sufficient and market-oriented production, while strengthening village
administration and preserving security and order in rural areas.
(v) Expansion of external economic co-operation.  Closer economic integration with the
Southeast Asian nations as well as the multilateral trading system to develop national
advantages and potential are highlighted.
This Plan has generally been followed.  In the agriculture and forest sectors, major
expenditure has been undertaken to expand irrigation to improve rice production, with the strategy ofachieving self-sufficiency in rice production by 2000.  Output of cash crops (coffee, sesame seeds,
and tobacco) has continued to increase.  However in the case of timber, the leading export product,
returns fell in 1997 as a result of recession in Thailand and then a fall in the world price for timber
following reduction of prices in Indonesia, a major supplier to world markets.
The timber sector is being reformed.  Sustainable management policies have been introduced
which include bans on exports of logs.  The timber processing industry has been opened to private
operators.
While the industrial sector expanded during most of the period of the plan, growth in the
industrial sector slowed in 1997.  Garment production, a major export industry, slumped in 1996WT/ACC/LAO/3
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when the EC denied GSP access by the Lao PDR ga rment export producers following concerns about
compliance with EC rules of origin.  A number of factories, major employers in Vientiane, closed.  A
cloud remained over production until 1997, when the EC restored access on a year-by-year basis.
Production of timber, the major export, also slow ed.  Drought also lowered electricity production,
although a new hydro-power plant came on stream in 1998, doubling the country’s electricityproduction.
Growth has been consistent in the service sectors in recent years, with wholesale and retail
trade, transportation and communication growing at  about 10 per cent in 1997.  Growth slowed in
1998, due principally to difficulties in the banking sector.
- Transition issues
The transition process for the Lao PDR to a market economy has generally been easier than
for other transition economies.  Laos had a shorter period of central planning than most other centrallyplanned economies.  The share of the economy that had been modernized and which had a direct
economic stake in the centrally planned economic system was smaller than in others, so reform of the
modern sector caused less disruption.  The percentage of labour working in state-owned enterprises
was smaller, so there was less reduction of employment.  Finally, the economy of the Lao PDR
remained relatively open during the period of central planning, particularly through agricultural tradewith neighbouring countries.
- Privatization
By 1997, most of the state-owned enterprises of  the Lao PDR had been privatized.  Between
1989 and 1997, 132 state-owned enterprises had been privatized, with most small and medium sized
enterprises having been privatized by 1996.  The process of disposal was fairly evenly split betweenleasing and sale; sale being more common in recent years.  In 1998, another 32 enterprises were
scheduled for privatization.  These were most small enterprises.  They employed in total about 1100
workers and had a collective asset value of about US$3 million.  The program of privatization is
shown in the Annex 1, Tables II.5 and II.6.
A pilot program was begun in 1996 to commercialize five companies - Electricite du Laos
(EDL), Nam Papa Lao (NPL), Postes du Lao, Industrie Pharmaceutique No 2, and Imprimerie
Nationale.  The strategy was to convert and register  the businesses as joint stock companies, appoint
Boards of Directors, and agree on performance plans which set out commercial and financial
objectives.  Significant progress was made.  EDL was restructured.  Boards have been appointed for
three companies, and plans were established to move the non-bank businesses to similar status by the
middle of 1998.  Restructuring of some companies will  be necessary.  Financial audits of the three
holding companies engaged in logging have been undertaken, anticipating reorganization of them.
By 1999, of the 777 registered companies in the Lao PDR, 55, (7 per cent), were state-owned.
The economic significance of the state-owned sector in the Lao PDR is now similar to that in many
market economies.
- Pricing policy
The market sets the prices for most products in the Lao PDR.  The Government maintains
price surveillance of some strategic products, such as food staples and fuel.  Pricing policy is neutral
as regards to imported products compared to domestically produced products.
In accordance with the Notification 1051 of 4 November 1999, the Government may regulate
prices of 20 products.  Enterprises are required to report the prices of these products.  The productsWT/ACC/LAO/3
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are: rice; sugar; monosodium glutamate; soy sauce, fish sauce, vegetable oil; salt; cement; steel bar;
gasoline; diesel; kerosene; fertilizer; animal feed; water pump; tractor; threshing machine; medicine;
detergent; gas; raw material for factories and rice mill.
(b) Monetary and fiscal policies
- Monetary policy
The principal aims of monetary policy in the Lao PDR are to limit inflation and to stabilize
the exchange rate of the Kip relative to the US do llar.  In general, the Bank of the Lao PDR (BOL)
had been reasonably successful in achieving monetary stability.
Inflation has come down from its peak level of almost 90 per cent in August 1989, to single
digit levels in the most years of the present decade.
The development of indirect policy instruments has been an ongoing process during the
1990s.  Initially, the BOL relied on direct instruments,  including instruction to reduce credit to state-
owned enterprises and moral suasion to limit and target credit expansion.  An important step in the
development of indirect instruments was the introduction in 1990 of a 5 per cent reserve requirement.
A credit window was opened at the BOL in 1992 and was replaced by a discount window in 1995.
Several innovations were introduced in 1994 in an attempt to give new impetus to indirect monetary
policy: the reserve requirement was double to 10 per cent in March 1994; the BOL started the regularauctioning of transferable six-month treasury bills but has been stopped since April 1998 due to
adverse macroeconomic developments.
The successful control of monetary expansion and the gradual move to indirect policy
instruments was interrupted in late 1994 and 1995.  Excessive money growth in the second half of
1994 was reflected in rising inflation in 1995 of more than 20 per cent on an annual basis in thesecond half of the year.  The resulting decline in competitiveness triggered an exchange rate crisis; the
Kip was depreciated and the official exchange rate was abolished in September 1995.  Monetary
policy was tightened in response to these developments.  In June 1995, reserve requirements were
raised to 12 per cent and to 15 per cent in 1997.  The overdraft rate was increased and the BOL started
issuing central bank bills.  Temporary direct control complemented these indirect measures: the BOLimposed bank by bank-specific credit ceilings and enforced compliance with the existing credit/
deposit ratios (minimum of 60 per cent, maximum of 80 per cent).
Currently, indirect monetary policy is based on the following set of instruments:
- 12 per cent reserve requirement on both domestic and foreign currency deposits;
- The sale of six-month BOL bills and treasury bills to the non-bank public through the
commercial banks;
- An overdraft facility for commercial bank borrowing, at 35 per cent interest rate; and
- A discount facility for borrowing secured against treasury bills.
In order to enhance monetary policy, the BOL introduced a reserve money-programming
framework in mid-1996.  For the short-term management of the banking system’s liquidity, the
framework focuses on the commercial banks clearing accounts at the BOL.  The required intervention
is determined by comparing this projection of base money to a target level that is derived from theofficial targets for inflation and growth.
The effectiveness of monetary policy also depends on stable and predictable relationships
between several key variables.  Crucial for reserve money programming is the relationship between
base money and the target monetary aggregate, money multiplier.  Also important is the relationshipWT/ACC/LAO/3
Page 8
between broad money, economic activity, prices, and interest rates (the money demand function).  In
the Lao PDR, these relationships are affected by three related processes: the gradual monetization of
the economy, financial sector reform and dollarization and currency substitution.  The Government
does not use exchange rate as a trade policy instrument.
- Relations with the IMF
The Lao PDR had two program loans with the IMF: SAF (1989-1992, 28 million US$) and
ESAF (1993-1997, 48 million US$).  Since 1997, the negotiations have been underway on a new
program with the IMF.
The Lao PDR has not yet accepted the conditions of Article VIII of the Articles of Agreement
of the IMF due to the economic situation in the country.  This issue is under discussion with the IMF.
- Banking sector
The banking sector comprises the Bank of the Lao PDR as central bank, three state-owned
commercial banks, the state-owned Agricultural  Promotion Bank, three joint venture commercial
banks and several foreign private branches.  A program to bring the state-owned commercial banks to
international standard has been underway for several years.  In 1994, the Asian Development Bank
financed a re-capitalization of the banks, but because of poor management, the level of non-
performing loans has returned to unsustainable levels.  The economic problems created by the Asianeconomic crisis compounded the problem.  Under a second program loan, six of the state-owned
banks were consolidated into two bigger banks in 1999.
- Public Finance
Since 1988, the public finances of the Lao PDR have been dramatically changed.  The general
budget was unified in 1992, the tax system has undergone substantial innovation, the expenditurescontrol system has been centralized and discipline on expenditure was enhanced.  The changes created
a framework for securing fiscal sustainability.
Budget policy through the nineties had been for a surplus and to restrain expenditure.  This
strategy contributed to stability.  Specific goals were to augment budgetary savings and reduce net
domestic bank credit.  There is also a pressing need to augment basic infrastructure and improvehealth and education standards.  The standing challenge for the Government of the Lao PDR is to
balance the competing demands to increase savings and increase expenditure which these broad
requirements generate.
Improving the tax system has been critical to management of public finance.  In 1996, the tax
system was overhauled.  The broad strategy has been to broaden the tax base, increase the efficiency
of taxation and increase the share of revenue from domestic taxes compared to trade taxes.  The new
Tax Law was enacted by the National Assembly on 14 October 1995 and amended on 28 September1998 by the Presidential Decree No.  01.  Key features were reduction of profit tax from 45 per cent to
35 per cent, introduction of ad valorem tariff duties, a broadening of the income tax base, along with
an adjustment of rates and wider application of excise taxes.  Further minor adjustments were made to
the tax system in 1998.  The sources of revenue are well spread across a number of taxes.
In 1997/98, turnover taxes on domestic products were the largest source of revenue,
generating 23.8 per cent of total tax revenue.  Turnover tax on foreign trade generated 22.4 per cent of
revenue, and excise tax generated 19.8 per cent.  The share of taxes to revenue is set out in Annex 1,
Table II.7.  There is a general trend to reduce dependence on customs duties.  The question of
introducing a value-added tax is under review.WT/ACC/LAO/3
Page 9
Revenue fell below expectations in 1997/98.  The increased revenues anticipated from the
new system have not been fully realized.  The principle reason is that it took longer than anticipated to
get the administrative machinery for the new system  operational.  The Government also significantly
increased capital expenditure to increase irrigation to expand rice production and crop diversification,
while also increasing expenditures for commodity production in order to increase employment andgenerate income.  Other areas of government expenditure that increased were education, as well as
communication, transportation, and post  (See Annex 1, Table II.8).  This constrained other options for
capital expenditure.  The result was that the fiscal deficit in 1997/98 increased to 12.8 per cent of
GDP.
At present, the Government is preparing the draft legislation to introduce VAT which will
replace turnover tax.
(c) Foreign exchange and payment system, relations with International Monetary Fund,
application of foreign exchange controls, if any
Foreign Exchange Decree No. 53/PCM of the Council of Ministers of 7 September 1990
prohibits the use of foreign exchange except for those banks and dealers which have authorization
from the Bank of the Lao PDR.  Holders of foreign exchange are obliged to present their foreign
exchange holdings to a bank or authorized dealer for exchange into kip when needed for payments or
transactions in domestic currency, or may open foreign exchange accounts with authorized banks.
Foreign exchange purchase and sale by individuals and entities must be conducted through the
commercial banks or other organizations authorized by the Bank of the Lao PDR.
Only those commercial banks which are authorized to deal in foreign exchange may both buy
and sell: (i) bank notes, coins, traveller cheques denominated in foreign currency; and (ii) forms ofpayment orders, promissory notes, letters of credit and other instruments having a value in foreign
exchange which are negotiable or otherwise used for settlement of foreign debt.  Foreign exchange
bureaus are authorized to deal in foreign exchange, but they may buy only notes, coins and traveller
cheques from the public.
These foreign exchange bureaus may sell th eir foreign currencies to the authorized
commercial banks or to the Bank of the Lao PDR at  the daily rates announced by the Bank of the Lao
PDR, or may sell such currencies to the general public subject to the authorization of the Bank of the
Lao PDR.  Commercial banks and foreign exchange bureaus set their own selling and buying rates
daily applied to their customers with a spread not exceeding 2 per cent of the buying rates.
Commercial banks maintain foreign exchange positio ns according to the regulations of the Central
Bank.
Commercial banks and foreign exchange bureaus may sell their foreign currencies to the
general public for the following purposes: (1) to pay for goods imported; (2) payment for
import/export related services, including transport, insurance, and warehousing charges; (3) payment
of foreign debt incurred with the approval of the relevant authorities; (4) repatriation of capital, and
the transfer of profit and interest on foreign investments made in the Lao PDR under the Investment
Law of the Lao PDR; (5) for capital investment abro ad with the approval of the Government; (6) to
pay for the budgetary expenses of a Lao embassy abroad or other Lao PDR representative abroad or
other resident in the Lao PDR authorized by the Government to operate abroad; (7) overseas travel on
official business, for commercial purposes, for medical reasons, for visit and tourism for persons
having a visa from the Ministry of Foreign Affairs or the Ministry of Interior, or other relevant
authorities with right to grant exit visa or other permits, within limits expressed by the Bank of the
Lao PDR, or other relevant authorities; (8) for subsistence costs of Lao students and academics
overseas who are duly authorized by the Ministry of Education, within the limits expressed by theWT/ACC/LAO/3
Page 10
Bank of the Lao PDR; and (9) travel expenses and to authorize the export of capital of resident
emigrating to other countries within the limits expressed by the Bank of the Lao PDR;
(d)  Foreign and domestic investment policies
With the switch to a market oriented economy in 1988, foreign investment increased.  By
1998, there were 749 foreign investment projects to a total value of US$6.954 billion.  Details aresummarized in Table 3.  Details of Investment by Sector are in Annex 1, (table Annex 1.7).
In 1988, the Foreign Investment Law was adopted.  Its purpose was to encourage foreign
investment and to establish the Foreign Investment Management Cabinet (FIMC) to facilitate
investment.  In 1994, the Law on the Promotion and Management of Foreign Investment was adopted
by the National Assembly and issued as a Presidential Decree.
Table 3
Lao PDR Private Foreign Investment 1988-1998
1988-93 1994 1995 1996 1997 1998 Total
Number of Projects 368 112 55 63 66 67 749
Value US$ million 1,995 2,597 804 1,293 142 123 6,954
Source:  Foreign Investment 1988-1998
The purpose of the Law was to set the conditions for foreign investment.  All sectors are open
to investment unless the enterprise is detrimenta l to national security, natural environment, public
health or the national culture or it violates the laws and regulations of the Lao PDR.
Foreigners can invest in the Lao PDR either in a joint venture or as a wholly owned
enterprise.  To qualify as a joint venture foreign investor, the foreign component must be at least 30
per cent of the value of the project.
The Lao PDR law precludes differentiation in treatment of foreign investors by race or
nationality.
When approved as a foreign investor by the FIMC, the enterprise is entitled:
− to have its investment and property prot ected by the Government of the Lao PDR
under the Lao PDR Laws, including a guarantee that it will not be requisitioned or
nationalized;
− to lease land and transfer leasehold interests and own improvements and transfer
those ownership interests;
− to repatriate earnings and capital in conformity with the law and regulations which
govern foreign exchange;
− to tax concessions, including:
− personal income tax at 10 per cent
− profit tax at 20 per cent (the domestic rate is 35 per cent)
− provisions to carry forward losses for three years
− import tax of only 1 per cent on imports
There are some obligations on foreign investors.  They are to give priority to Lao citizens in
employment.  Where necessary and following approval of the FIMC, foreign investors can employ
skilled and expert foreign personnel.  Foreign investors are obliged to upgrade the skill of Laoemployees.  Foreign investors are obliged to open accounts in local and convertible currency withWT/ACC/LAO/3
Page 11
banks based in the Lao PDR.  Company accounts have to follow the Lao PDR national system of
accounting.
Foreign investment has occurred in all sector s, but it has been concentrated in the power
sector with most investment coming from the United States and Thailand.  Details of source and
distribution of foreign investment are set out in Annex 1, (table annex 1.8).
There is no requirement for investments by Lao nationals to be approved.  The Domestic
Investment Promotion Law provides for the same incentives under the Foreign Investment Promotion
Law to be available to approved domestic investors.  The Domestic Investment Promotion Law lists
priority sectors for investment.  They are industries identified in the socio-economic development
plan, enterprises which will promote exports as well as diversification of domestic production and
enterprises located in priority regions.
There is provision in the Law for grants to be made to domestic investors, but no budget has
ever been provided for this purpose.  For details see Section IV.3 (a).
(e) Competition policies
The process of reforms of the Lao PDR economy  has been undertaken in recognition of the
benefits of competition in a market-oriented economy.
3. Foreign trade in goods and services
Trade is important to the Lao PDR.  In 1998, the ratio of exports to GDP was 26.7 per cent
and the ratio of imports was 43.8 per cent.  The Lao PDR has a traditional deficit in the trade balance;
in 1998 it was US$216 million.  For details of the balance of payments, see Annex 1, (table annex
1.1).  The composition of trade reflects the natural endowments and the level of economic
development of the Lao PDR.  Most consumer and capital goods are imported.  Fuel and automobiles
are significant import items.  Textile raw materials for the garment industry are also imported.  See
Annex 1, Table II.10.
- Trade in goods
Among exports, the largest item is lumber and timber products.  Exports of logs are controlled
to protect the sustainability of the industry.  It also fluctuates according to world prices, exportsslumping to US$89.7 million in 1997 from US$124.6 million in 1996 because of a fall in the price on
world markets of Indonesian timber.  The most signif icant feature of exports over the last five years
has been the increase in exports of garments.  Following the opening of the economy in the late
eighties, there was investment to develop a garment industry as an export industry.  In 1993, garments
represented 20 per cent of exports, rising to 28 per cent (US$90.5 million) in 1997.  Export
opportunities in garments are constrained by global trade barriers.  The European Community is a
large market, but garments are exported there under a concession in the GSP scheme.  See Annex 1,Table II.9.
Another important export is electricity almost all of which is sold to Thailand.  Exports fell in
1997 to US$20.8 million from US$29.7 million the year before as demand in Thailand fell as a result
of the impact of the Asian economic crisis.  It rose again in 1998 as new capacity came on stream.
There is considerable potential to increase exports of electricity in the long term, but this depends
on expansion of demand for electricity among the neighbours of the Lao PDR.WT/ACC/LAO/3
Page 12
Agriculture is an important source of export revenue.  Coffee, the leading export commodity,
earned US$48 million in 1998.  Expansion of ag ricultural exports depends upon expansion of
production and its increased  commercialization  by Lao farmers.
Thailand is the largest trading partner of the Lao PDR, followed by Vietnam.  In 1997, 20.1
per cent of the Lao PDR exports went to Thailand and it contributed 51.9 per cent of imports.  Realexports and imports to Thailand may be lower.  It is likely that a significant percentage of this trade
transits Thailand to and from third countries.  Electricity, agricultural products and timber dominate in
exports to Thailand.
Vietnam is the largest export market for exports from the Lao PDR, taking 47.1 per cent of all
export in 1998, followed by Thailand (22.1 per cent), and France with 6.3 per cent.
Vietnam is an increasingly important trading partner.  Its share of the Lao PDR exports rose
from 9.6 per cent to 42.7 per cent in 1997.  Timber and timber products are the most importantexports to Vietnam.  Motorcycles are significant exports to Vietnam (US$17.1 million in 1997), but
these are virtually re-exports following minimal asse mbly of the product in the Lao PDR.  See Annex
1, Tables II.11 and 12.
- Trade in Services
The most important source of export revenue from services is tourism.  Tourists increased to
500,200 in 1998, up from 463,200.  Thailand was the largest source (273,095 in 1998), followed by
Vietnam (78,216), the United States (20,174), France (17,863) China (15,802) and Japan (12,936).
The tourist industry has important growth prospects, but growth is constrained by underdeveloped
tourist infrastructure.  Given its geographic location, transport is likely to be an important source of
export revenue in the long term.  This will have  to await growth among the neighbours of the Lao
PDR and increased bilateral trade among them.
Annex 1, Table II.13 shows how the importance of tourism can be seen from the contribution
of travel to services exports.  It has been the la rgest earner for the last five years, contributing the
equivalent of US$80 million of total non-factor services receipts of US$129.7 million in 1998.
4. Domestic trade in services including value and composition of foreign direct investment
The service sector of the Lao PDR economy cont ributes about 25 per cent of Gross Domestic
Product, of which 41 per cent is generated by wholesale and retail trade with transport and distribution
accounting for 23 per cent.  For details of shares of services industries to GDP by percentage see
Annex 1, Table II.2.  Foreign investment is important in the service sector in the Lao PDR.
5. Information on financial movements relate d to nationals working abroad, remittances,
etc.
Few Lao PDR nationals work abroad, so remittance from work abroad is not significant.
III. FRAMEWORK FOR MAKI NG AND ENFORCING POLICIES AFFECTING
FOREIGN TRADE IN GOODS AND TRADE IN SERVICES
1. Powers of executive, legislative and judicial branches of government
The Lao PDR was proclaimed on 2 December 1975.  On 15 August 1991, the 85-member
Supreme People’s Assembly (which was renamed the National Assembly in 1992) promulgated thefirst Constitution of the Lao PDR.  According to Chapter IV of the Constitution, the NationalWT/ACC/LAO/3
Page 13
Assembly has the power to make decisions on issues fundamental to the country, and to supervise and
oversee the activities of the executive and judiciary.
National Assembly: The National Assembly has extensive powers including the power: to
enact and amend laws, including the Constitution; to establish or abolish taxes; to elect and remove
the President, the Vice-President, the President of the People’s Supreme Court and the PublicProsecutor-General; to appoint and remove members of the Government on the recommendation of
the President; to create or dissolve Ministries; to grant amnesties; to ratify or denounce international
treaties; to decide on matters of war and peace; and to exercise other rights and duties as prescribed by
law.
Executive: The Executive consists of the President, the Prime Minister and the Government
and local authorities (the Governors of Provinces, the Chiefs of Districts and the Heads of Villages).
The President is appointed by majority vote of two thirds of the National Assembly for five years andis the Head of State and the Chief of the Armed Forces of the Lao PDR.  The President exercises
various powers, including the issuing of decrees, normally with the approval of the National
Assembly.  The Prime Minister is appointed by the President, with the approval of the National
Assembly, for a five-year term.  One of the Prime Minister’s principal tasks is to supervise the work
of the ministries and other government organizations.
The Government is described in the Constitution as the “administrative body” of the Lao
PDR.  It consists of the Prime Minister, Deputy Prime Ministers, Ministers and chairmen of the
ministry-equivalent committees.  Its functions include: to implement the Constitution, laws and
resolutions adopted by the National Assembly, and decrees of the President; to create and submit to
the National Assembly strategic plans on socio-economic development and annual state budgets; toorganize and supervise the function of all branches of the Government and of the local
administrations; to sign treaties with foreign States and supervise their implementation; and to
suspend and revoke decisions and instructions of the ministries, other government organizations and
local administrations if they are contrary to existing laws.
Judiciary:  the judicial system is divided into three tiers: the lowest tier consists of District
Courts; the second tier embraces Provincial Courts and the Vientiane People’s Court of First Instance;
and the third, and highest, tier is the Supreme Court, which sits as a conventional appellate court.  The
main difference between the District and Provincial Courts relates to the amount of a claim that can be
brought in civil proceedings and the maximum sanctions stipulated in the law for the offence
committed and brought before the court.  There are proposals to set up the Courts of Appeal between
the Provincial Courts and the Supreme Court along the French model in order to relieve the pressure
on the Supreme Court, where appeal cases grow year by year.
The hierarchy of legislation in the Lao PDR is as follows:
a) Constitution;
b) Laws – regulations which establish the rights, obligations and relationships of natural
and juridical persons.  Only the National Assembly has the right to consider, adopt
and amend or repeal laws.
c) Edicts – regulations similar to laws in that they establish the rights, duties and
relationships.  Edicts are submitted by the Standing Committee of the National
Assembly to the President for promulgation.WT/ACC/LAO/3
Page 14
d) Presidential Decrees or Presidential Orders – regulations to promulgate laws based on
the proposal from the Prime Minister and the Standing Committee of the National
Assembly.
e) Prime Minister’s Decrees – have the effect of regulations establishing rights and
duties.
f) Resolutions by the Government, instructions and decisions by Prime Minister or
ministries – are adopted to implement laws and decrees.
The constitution and laws of the Lao PDR are subject to a process of ongoing reform.
2. Government entities responsible for making and implementing policies affecting foreign
trade
The Ministry of Commerce and Tourism is responsible for trade policy in the Government of
the Lao PDR.  It is responsible for management of  bilateral and international trade policy.  It is
responsible for the Lao PDR interests in the WTO.  It advises on levels of tariffs, quotas and licences for
imports and exports.  It administers import and export licences and quotas, if applicable.
On questions of levels of tariffs, the following  Ministries provide advi ce: the Prime Minister’s
Office, the Ministry of Foreign Affairs, the Mini stry of Finance, the Ministry of Commerce and
Tourism, the Ministry of Agriculture and Forestry, and the Ministry of Industry and Handicraft.  The
Foreign Investment Management Cabinet advises on exemptions and reductions on customs duties for
products imported under approved foreign investme nts (please refer to IV.1 Import regulation).
Management of obligations arising from memb ership of the ASEAN Free Trade Area is the
responsibility of the AFTA unit which is headed by the Deputy Director General of the Customs
Department of the Mi nistry of Finance.
Administration of customs, incl uding classification, is also the responsibility of the Customs
Department of the Mi nistry of Finance.
The Science, Technology and Environment Ag ency in the Prime Minister’s Office is
responsible for standards and technical barriers to trade.
The Ministry of Health is responsible for standards relating to food and drugs.The Ministry of Finance is responsible for government procurement.
The Ministry of Commerce and Tourism has overall responsibility for trade-in-service issues as
they arise in the WTO and the Ministry of Foreign Affairs is responsible for trade-in-service issues as
they arise in the ASEAN Free Trade Agreement.
Responsibility for issues concerning trade in fina ncial services rests with the Bank of the Lao
PDR, those for communication, transport, cons truction and post rest with the Ministry of
Communication, Transport, Post and Construction.  Res ponsibilities for other service areas rest with the
relevant line agencies - Ministry of Education, Mi nistry of Health and the Science, Technology and
Environment Agency in the Prime Minister’s Office.
Responsibility for intellectual property rests with the Science, Technology and Environment
Agency in the Prime Minister’s Office.WT/ACC/LAO/3
Page 15
The FIMC in the Prime Minister's Office is re sponsible for issuance of foreign investment
licence.
The Ministry of Agriculture and Forestry is responsible for determining and administering
sanitary and phytosanitary measures.
3. Division of authority between central and sub-central governments
For administrative purposes, the Lao PDR is divided into 16 provinces, one prefecture
(Vientiane) and the Saysomboun Zone (Zone is equal to province).  A Governor administers each.
There is a provincial administrative service in each province, usually comprising representatives of the
ministries of the Government based in Vientiane.   These officials administer policies which are
determined by the Government .
Revenue is raised by the Government which makes payments to the provincial authorities.
Policies affecting the traded sector of the economy are set by the government agencies.
4. Any legislative programmes or plans to change the regulatory regime
Over the past ten years the Government of the Lao PDR has pursued a program to transform
the legal framework from one based on decrees to one based substantially on the laws that have been
adopted by the National Assembly.  In the 1990’s, more than 38 laws were promulgated to support the
development of market economy of the Lao PDR.  These include: the Constitution (1991), theContract Law (1990), Accounting Law (1990), Busi ness Law (1994), Foreign Investment Promotion
and Management Law (1994), Labour Law (1994), Trademark Decree (1995), Customs Law (1994),
Transaction Law (1994), Exchange Control Decree  (1990), Tax Law (1995),  Bankruptcy Law (1994),
Civil Procedure Law (1990), Criminal Procedure Law (1990), Decree of the Management of the
Standard and Quality of Goods and Services (1 995), Penal Code (1990), Land Law (1992), and
Labour Law (1990).
5. Laws and Legal Acts
A list of principal laws and regulations is provided in Annex 2.
6. Description of judicial, arbitral or administrative tribunals or procedures, if any
The court system is comprised of:
a) The Supreme Court which is the court of appeal for courts at the provincial level.
b) The provincial courts, the court of Vientiane Prefecture, and the court of Saysomboun
Zone are courts of the first instance for criminal cases when the law stipulates the
imprisonment not more than two years and for civil cases when the amount of claim
is more than five hundred thousand Kip.  They also deal with civil cases concerning
civil status such as divorce and paternity.  These courts are also courts of appeal for
the district courts.
c) The district courts are the lowest courts.  They deal with small civil and criminal
cases when the amount of claim is less than five hundred thousand Kip or when the
law stipulates imprisonment of not more than two years.WT/ACC/LAO/3
Page 16
There are no administrative tribunals.  A certain number of cases concerning the civil
responsibility of the State are dealt with by the Courts.  Arbitration was created recently under the
Ministry of Justice, with two sub-centers in Luang Prabang and Savannakhet.
At present, the Lao PDR does not have legislation which provides specific rights of appeal on
actions by government bodies in the area of trade.  However, the right of appeal is implementedthrough administrative procedure by lodging compla ints to the Prime Minister’s Office, and in a
number of areas, procedures establish official rights.
The Decree on the Resolution of Economic Di sputes promulgated in 1994 provides a
mechanism for the resolution of economic disputes (disputes arising from business operations,
agricultural production, commercial transactions and other economic activities) and has established
the Office of Economic Disputes Resolution (OED).   Economic disputes may be brought into OED
within three years of the date from which the disputes arose.  The Decree provides detailed proceduresfor dispute resolution including mediation and arbitration.
It is acknowledged that the administrative structure which supports enforcement procedures in
the judicial system, needs strengthening.  There ar e plans to strengthen the judicial system and to
provide better training for those associated with it.
- Relation with WTO Agreements
The Constitution provides for National Assembly to ratify international agreements.  Some
international treaties which need amendment or new enactment of domestic laws require ratification.
In the case of the Marrakech Agreement Establishing the WTO, it would be necessary to submit it to
the National Assembly for ratification.  After the ratification, the Prime Minister’s office will notify
line Ministries and publicize the ratification.  In the event of conflict with domestic regulations, theWTO Agreements will prevail.
IV. POLICIES AFFECTING TRADE IN GOODS
1. Import Regulation
(a) Registration requirements for engaging in importing
In the Lao PDR, businesses which trade are required to register as import and export
companies.  The registration of entities wishing to import and export is covered by Ministerial Decree
“Authorization of Import and Export Business” No 462/MOC of 8 December 1993, complemented by
the Business Law (Law No. 3/NA of 18 July 1994) and regulations in Notification 750/MOC of
6 August 1996  pursuant to the Business Law.  Entities wishing to engage in importing are required to
apply for registration at Department of Internal Trade in the Ministry of Commerce and Tourism
(MOCT).  The first consideration in the process of approval is the relationship between the proposed
business and the industrial development priorities set out in the Socio-Economic Plan current at thetime of application which presently covers the period 1995-2000.
Applicants for import/export registration have  to meet following eight (8) criteria:
(i) Authorized capitalization according to the category of import or export goods the
applicant wishes to trade plus a warehouse.  There are nine categories of goods in the
import sector and ten categories in the export sector which are set out below.
(ii) As the applicant will act as a wholesaler, the application must be accompanied by a
list of retail outlets which will be used to market the imports.WT/ACC/LAO/3
Page 17
(iii) The applicant must always import for his own business and not as a commission
agent on behalf of another enterprise.
(iv) Applicants must ensure that their imported goods bear the importer’s name on the
label as a precaution against smuggling.
(v) Applicants who wish to import fuel and me dicines must demonstrate that they have
the expertise and technical infrastructure to market the goods.
(vi) Import/export businesses must abide by the Accounting Law (No. 12/90PSA of 29
December 1990).
(vii) Import/export businesses must abide by the Tax Law and Customs Law (No. 95/NA
of 14 October 1995) and (No. 4/94/NA of 18 July 1994).
(viii) All import and export transactions must be enacted through a registered bank.
Registration is without time limits.As noted in sub-paragraph (i) above, for the purposes of judging whether the proposed
importing activity of an applicant is consistent with the Socio-economic development Plan, imports
have been divided into nine (9) categories and have been allocated a level of capitalization which the
applicant must demonstrate he has assets and/or liquidity to cover.  In the case where an applicant
nominates more than one item, whether in the import or export categories, the capitalization isaggregated.  The capitalization figures area a minimum of 500 million Kip.
Import Categories
(i) Foodstuffs;
(ii) Textiles, clothing and consumer goods;
(iii) Office supplies, educational and cultural goods and sporting goods;
(iv) Agricultural machinery, industrial tools, products used in fishery, agriculture, animal
husbandry and handicrafts;
(v) Luxury goods e.g.  alcohol, cigarettes and perfumes;
(vi) Building materials, electrical appliances and electrical equipment;
(vii) Motor vehicles and spare parts including engines;
(viii) Medicine, medical equipment and chemical products for the production of
pharmaceuticals;
(ix) Fuel, lubricants and gas.
Export Categories
(i) Logs, timber and wood products, including roots and branches;
(ii) Rattan and bamboo products;
(iii) Coffee and tea;
(iv) Minerals;
(v) Traditional medicinal herbs (No amount specified for categories (v) to (x));
(vi) Forestry products, including resins;
(vii) Agricultural and animal products;
(viii) Industrial product;
(ix) Handicrafts;
(x) Miscellaneous products.WT/ACC/LAO/3
Page 18
The fee for registration is Kip 34,000, which reflects the cost of services related to the
processing of forms.
In the case of a wholly foreign-owned entity and a joint venture, the procedures which apply
to approval of all foreign investments are followed.  The application must firstly be lodged with the
Foreign Investment Management Cabinet (FIMC).  Appl ication form filling will be assisted with the
service of FIMC's Investment Service Division. The FIMC will decide whether the application should
be referred to one or other of the line Ministries, such as Ministry of Agriculture and Forestry or
Industry and Handicraft, to the Department of Construction in the Ministry of Communication,
Transport, Post and Construction for expert/technical comments.
The Ministry would then send its comments back to the FIMC.  It then forwards the proposal
to the Committee for Investment and Cooperation (CIC) for approval.  Once the foreign investment
proposal is approved, a fee is charged: US$500 for investments licence with capital investment up toone million and US$1,000 for bigger investments.  FIMC will assist investors to take the investment
licence to the Department of Internal Trade in the Ministry of Commerce and Tourism for registration.
Then the investment licence will be registered for tax purposes with the Ministry of Finance.  The fee
for that registration is 0.1 per cent of capital for both wholly foreign-owned or a joint venture
enterprise.
With respect to the registration of wholly-dom estically owned import-export enterprises, the
application is initially lodged with the Ministry of Commerce and Tourism which engages in the same
consultative process with line Ministries as occurs with the applicants with a foreign component.  A
decision on whether to grant company registration to the local entity is made by the Department of
Internal Trade in the Ministry of Commerce and Tourism.  Registrations of businesses asimport/export companies are not restrictive.  In January 2000, 149 businesses were registered as
import/export companies.
(b) Characteristics of national tariff, customs tariff nomenclature (HS), types of duties,
general description of the customs tariff structure, weighted average level of duties on
main customs tariff groupings; application of m.f.n. tariff rates, tariff preferences
The Lao PDR maintains a two-column tariff schedule which will be operating under HS 96
nomenclature within the year 2000.  The import tariff structure maintains six tariff rates, namely,
5,10,15,20,30 and 40 per cent.  Tariffs in the Lao PDR are ad valorem rates.  The philosophy behind
the tariff structure is to have low tariffs on investment goods and inputs for industry and higher tariffs
on non-essential luxury goods.  For example the tariff on most equipment and machinery is set at five
per cent while a twenty per cent tariff applies to electronic consumer goods and a forty per cent tariff
to automobiles.  (See Table 4 for a summary and Annex 1, table annex 1.5 for more details).  Inaccordance with Article 17 of Foreign Investment Promotion and Management Law, low tariffs of 1
per cent are applied to investment goods under FDI, while tariff exemption are applied with regard to
inputs for processing of exported goods.  All tariffs are exempted on imports of yarn and textiles used
for garment exports .
Table 4
Lao PDR – Distribution of Tariff Rates by Product Category
Sector Product Tariff Rate (%)
Agriculture Seeds 5
Fertilizer 5
Other 5 – 40
Fisheries 5 – 20
Stock Feed 5
Manufacturing Raw Materials 5 – 10WT/ACC/LAO/3
Page 19
Table 4
Lao PDR – Distribution of Tariff Rates by Product Category
Sector Product Tariff Rate (%)
Packaging 10 – 20
Energy 5 – 20
Machinery and Equipment 5 – 20
Trucks 5 – 30
Cars 40
Beer and Alcohol 30 – 40
Other Manufactures 10 – 20
Consumption Luxury - food 10 – 30
Goods Luxury - non-food 10 – 40
(Compiled for ADB.  Source:  World Bank and Lao PDR Customs)
The tariff currently follows the Harmonized System 92 nomenclature.  It is being transferred
to the HS 96 nomenclature.  The system of collection of statistics in the Lao PDR does not yet allowanalysis of trade according to individual tariff lines.  The Customs Department of the Ministry of
Finance has mounted an IMF sponsored program of technical assistance to support development of a
more comprehensive system of collection and collation of trade statistics.
The median tariff in the Lao PDR is 5 per cent.  The unweighted average of the tariff is 9.5
per cent, while the weighted average tariff is 14.7 per cent.
MFN applies except where, consistent with the terms of the Lao PDR’s membership of
ASEAN and the ASEAN Free Trade Area (AFTA), some preferential treatment is being applied to
fellow ASEAN members.  For details see Chapter VII and Annex 7.
(c) Tariff quotas, tariff exemptions
No tariff quota system operates.  Low tariffs of 1 per cent are applied to investment goods
under FDI, while tariff exemptions are applied with regard to inputs for processing of exported goods.
All tariffs are exempted on imports of yarn and textiles used for garment exports.
(d) Other duties and charges, specifying any charges for services rendered
No other duties and charges are levied.
(e) Quantitative import restrictions, including prohibitions, quotas, and licensing systems
Imports of weapons, right-hand-drive vehicles, animal parts, addictive drugs, certain
medicines, cultural items for instance (casino equipment, certain publications and audio-visualmaterial and other products that may offend the Lao culture or corrupt children (such as
pornography)), nominated agricultural products and dangerous goods are banned under Notification
No.  870/MOC of 19 September 1996 on national security, public health, cultural socio-economic and
environmental grounds.
Notification 870/MOC lists sectors and products which are strategic and potentially subject to
state control.  They are petroleum products, construction steel, cement, rice, vehicles, electricity,
minerals, tobacco, timber products.  Certain products are also designated as potentially subject to
special control.  (Special controls are those imposed for reasons of sanitary and phytosanitary
protection, the protection of human health and safety, as well as for security reasons).  They are food
products, live animals and plants, fertilizers, cultural goods, communication products, medicines,WT/ACC/LAO/3
Page 20
chemicals, minerals, sporting guns and sports products.  Images of Buddha and God may only be
imported with the authorization of the Ministry of Information and Culture.  Controls on imports of
motor cycles over 250cc are set out in Notification No. 1552/MCTPC of 8 July 1996 of the Ministry
of Communication, Transport, Post and Construction.
Under Regulation 462/MOC, quantitative controls have been applied to the importation of
fuel and lubricants, steel bars for construction, al l types of cement, all types of motor vehicles and
motorcycles.
With respect to the importation of rice, the righ t to apply quotas is reserved for food security
purposes, notably when necessary to support the minimum farm-gate price set by the Lao PDR in
order to maintain the country’s productive capacity of rice.
Licenses are required for most imports.
The Government is reviewing the measures an d their consistency with the provisions under
the GATT 1994.
(f) Import licensing procedures
See Annex 3
(g) Other border measures, e.g. any other schemes that have border effects similar to those
of the measures listed under (e) above
No other border measures apply that have similar effects to measures listed under (e) above.
(h) Customs valuation (WTO Customs Valuatio n Agreement (Annex  4 refers), the Brussels
Definition of Value, or any other system) whether used only for purposes of levying ad
valorem rates of duty or for other purposes
The Lao PDR has a customs law (No. 04/94 of 18 July 1994) which is used only for levying
ad valorem rates of duty on a CIF basis.  The law does not incorporate all of the provisions of the
WTO Customs Valuation Agreement (see Annex 4 for details).  As a member of the ASEAN, the Lao
PDR is committed to apply the decision that ASEAN countries will implement the WTO Agreement.
The Lao PDR requires a comprehensive technical assistance in implementation of the Agreement
from the international community, in particular fr om WTO members.  The Lao PDR would require a
transitional period to comply with the Customs Valuation Agreement upon its accession to the WTO,
in particular, for training of customs officials and trading  enterprises.
(i) Other customs formalities
Nil.
(j) Pre-shipment inspection
Pre-shipment inspection is not used.
(k) Application of internal taxes on imports
Turnover and excise taxes, in addition to import duties, are payable on imports.  Details are
set out in the Tax Law of 1995 administered by the Ministry of Finance.WT/ACC/LAO/3
Page 21
The turnover tax  is levied on the first sale of all goods and services (imported or produced
domestically) at rates of either 5 per cent or 10 per cent.
Exemptions apply to goods imported for further transformation; to purchases of raw
materials, production instruments, trucks and other production materials; and for transport vehicles
used to provide services and for the spare parts for such vehicles.
Excise tax applies to certain imported and domestically produced goods.  Such goods include
fuel, alcohol and alcoholic drinks, soft drinks and packaged and un-packaged cigarettes, and perfumes
and cosmetics.  See Annex 8.
Exemptions from excise tax apply to kerosene used by aeroplanes, some goods sold to
eligible members of the diplomatic corps, alcohol used for medicinal purposes, purchases for
externally funded projects and export of excisable goods.
Methods to determine the value of imported and domestic goods for tax purposes are as
follows; (a) for imported products, turnover tax is levied on following basis – CIF price plus import
duties plus excise tax (if applicable); (b) for domestically produced goods – ex-factory price plus
excise tax (if applicable).
(l) Rules of origin
With respect to imports under the ASEAN Free Trade Agreement, rules of origin apply to
preferential access to the Lao PDR market.  Compliance is administered by the Customs Department
in the Ministry of Finance who check the certificate of origin accompanying a customs import
documentation.
Certification of goods subject to rules of origin for preferential and non-preferential access to
the export markets, is carried out by the Department of Foreign Trade in the Ministry of Commerceand Tourism.  The Chamber of Commerce and Industry issues non-preferential certificate of origin for
other exports and Provincial Trade Offices issue preferential and non-preferential certificate of origin
for wood and wood products, agriculture and forestry products.
(m) Anti-dumping regime
(n) Countervailing duty regime(o) Safeguard regime
No requirements are in place.  The Lao PDR may implement AD, CVD and Safeguard
legislation in the future.
2. Export regulation
(a) Registration requirements for engaging in exporting
The procedures that apply to importers also apply to exporters.  See procedures for
registration for importing in 1(a) above.
(b) Customs tariff nomenclature, types of duties, duty rates, weighted averages of rates
Export duties are levied on electricity at 20 per cent.WT/ACC/LAO/3
Page 22
(c) Quantitative export restrictions, including prohibitions, quotas and licensing systems
Notification 870/MOC bans exports of certain products: guns, archaeological and cultural
artifacts, drugs and related products, logs and rough sawn timber and wild animals.  The restrictions
are imposed for reasons of national security, environment and health and safety.  Exports of logs are
prohibited on conservation grounds.
With respect to the export of rice, the right to apply regulation is reserved for food security
purposes.
(d) Export licensing procedures
With the exception of the export of garments and products on the AFTA Inclusion List of
other ASEAN trading partners, export licenses are requ ired for all exports.  In addition, the export of
live animals and animal skin products require the prior approval of the Ministry of Agriculture and
Forestry.  Licenses are issued by the Municipal and Provincial trade offices of MOCT in consultationwith line Ministries.  Two to three days are required for export licenses to be processed which is valid
for 90 days.
The Documents required for the export of above-mentioned goods are an export license, a
certificate of authorization for export from the Ministry of Agriculture and Forestry or the Prime
Minister’s Office in the case of logs, an invoice, packing list, sales contract and a certificate from abank confirming that payment has been received.
(e) Other measures, e.g. minimum export pric es, voluntary export restrictions, orderly
marketing arrangements
No such measures are applied.
(f) Export financing, subsidy and promotion policies
Export promotion is a responsibility of the Ministry of Commerce and Tourism.  The Export
Promotion and GSP Division in th e Department of Foreign Trade in the Ministry assists the Lao
National Chamber of Commerce and Industry in mounting internal and overseas promotion of the Lao
PDR.  The Government of the Lao PDR does not  have a specific government fund for export
promotion.  A new institute for promotion of handicrafts for exports has been established in theMinistry of Industry and Handicraft.
(g) Export performance requirements
There are no government programs which bind government assistance or trade measures to
export or import performance requirements.
(h) Import duty drawback schemes
No import duty drawback scheme is in place, but the duty exemption of raw materials for the
production of textiles and garments for exports may be said to have a similar effect.WT/ACC/LAO/3
Page 23
3. Internal policies affecting foreign trade in goods
(a) Industrial policy, including subsidy policies
The Lao PDR has formulated an Industry-Handi craft Development Plan for the period 1996-
2005 which covers the processing industry, cottage and handicraft industries, power generation,
mining, agro-forestry industry, textiles and construction materials industry.  Industry and handicraft isone of the important sectors of the national economy.  In the last few years, the sector has made a
significant contribution to production promotion and socio-economic development in both the urban
and remote rural areas.
The sector has grown in step with other sectors of the economy.  For example, in 1990 gross
industrial products accounted for 14.4 per cent of GDP and in 1997-98 was 21 per cent.  The vast
majority (95 per cent) was employed in the processing industry, 70 per cent of who were in food
processing.  Small factories with less than 10 workers account for 92 per cent of employment,medium and large factories account for 6 per cent and 2 per cent respectively.  Weaknesses in the
industry sector are the inability of handicraft production to compete with imports; inadequate
infrastructure to attract new industries; lack of appropriate technical and entrepreneurial skills; and the
absence of power outside the larger cities and towns.
The overall goal of the industry-handicraft sector is to seek to inject additional domestic and
foreign capital and improve production technology and working methods and to improve the
infrastructure of rural areas with available labour resources.
The Domestic Investment Promotion Law (No 03/95/NA of 14 October 1995) provides
general guidelines for provision of government assi stance for domestic investment.  Eligibility for
assistance is determined according to whether or not the businesses are operating in the priority areasdefined in the national Socio-economic development plan, or in regions designated for special
development or, in the case of manufacturing if the business will promote exports and import
substitution.  The Law provides for assistance to be provided in the form of funding from a
Development Fund administered by the Ministry of Finance, exemptions from tax and customs duties,
provision of information and marketing assistance, facilitation or provision of land and facilities.  Thelegislation does not mandate trade performance as a condition for assistance nor does it have
provisions which conflict with the principle of national treatment.
The form of assistance provided is decided on a case by case basis.  However, no payments
have been paid under the Development Fund provision as no budget has been provided for it.  Other
incentives mirror those provided to foreign investors.
In the mining sector, the objectives are to provide a favorable legal system within which
mineral prospecting, exploration and mining can expand; to enhance the qualifications of miningprofessionals and other mineworkers; and prom ote mining as a foreign investment target.
The emphasis in developing the power industry is to increase power supply for domestic
industries and consumption (especially in rural areas) and for export.  Power generation in 1997 was
218 MW and is expected to be 638 MW in 2000 and could rise to 5,036 MW.  Power volume which is
presently 1,900 million KW hours will increase to 3,313 million KW in 2000 and could reach 24,468million KW by 2006.  The Lao PDR envisages that the sources of this increased production will come
from new hydro power station and from fuel and solar generators.WT/ACC/LAO/3
Page 24
(b) Technical regulations and standards, including measures taken at the border with
respect to imports
Decree No.  85/PM issued by the Prime Minister of the Lao PDR effective 2 November 1995
sets out provisions for establishment, management and enforcement of the testing, standard and the
quality of products.  Details of the Decree and information related to TBT Agreement is provided inAnnex 5.
At present, a National Master Plan for Standa rds and Conformity Assessment in the Lao PDR
is under consideration, in connection with the decision of the ASEAN Economic Ministers Meeting,
to develop and improve standards and conformity assessment system in Laos with a view to
improving quality of products, by pursuing the following:
1. Reviewing existing and drafting new laws, rules and regulations on standards and
conformity assessment;
2. Strengthening or restructuring organizational structure of institutions responsible for
standards and conformity assessment;
3. Developing and improving product and quality system certifications;
4. Effective implementation of standards and conformity assessment by all enterprises;
5. Establishment of industrial and legal methodology facilities;
6. Establishing or upgrading testing facilities; and
7. Establishing documentation and information system standards and conformity
assessment.
The Government of the Lao PDR is considering joining ISO.
However, due to complexity and technicality of the issues, the Lao PDR urgently requires
comprehensive technical assistance in the TBT area from the international community, in particular
from WTO members.  In addition, the Lao PDR woul d require a transitional period to comply with
the TBT Agreement upon its accession to the WTO.
(c) Sanitary and Phytosanitary measures, including measures taken with respect to imports
The Lao PDR has established a Food and Medicine Control Committee (FMC) under Decree
No. 45/CCM of 3 June 1991.  Subsequently, the FMC issued Regulation No.  35/FMC of 26 October
1991 publicizing the provisions on the control of export-oriented and imported foodstuff.  The
intention of these provisions is to serve as a legal basis for relevant State officials in the maintenance
and control of the quality of food products and standards.
The Ministry of Agriculture and Forestry administers four regulations relating to Sanitary and
Phytosanitary measures.  These are:
− Decree No. 85/ PMO of 31 May 1993, which regulates the control of domesticated
animals in the Lao PDR;
− Decree No. 66/PM of 23 March 1993, which re lates to plant quarantine controls the
use of pesticides in the Lao PDR;
− Regulation No 0894/MOAF of 21 November 1992 which relates to management and
use of plant protection in the Lao PDR; and
− Regulation No. 0719/MOAF of 3 December 1997 which controls the importation and
use of plant species and breeding seed in the Lao PDR.
Lao SPS regulations and standards are based on the relevant international standards,
guidelines, or recommendations.WT/ACC/LAO/3
Page 25
The purpose of these regulations is to control the risk to human, animal and plant life from,
pests and diseases, disease-causing organisms and pesticide contamination.
These laws and regulations set out the conditions that importers and exporters of live animals,
plants and foodstuffs of plant and animal origin are required to meet.  For the import and export of
live animals and animal products appropriate certification is required.  In the case of imports of liveanimals, certification that appropriate vaccinations (depending on kind of animal and the origin of
imports) has been undertaken is required.
There is a similar requirement for the export of live animals.  The Ministry of Agriculture and
Forestry is in charge of the vaccination controls.
For import and export of plants and foodstuffs, depending on origins, a Phytosanitary
certificate is required.  Regulation No. 0719/MOAF also sets out a list of plant pest and diseases
whose presence in plants and plant products will not be given approval to be imported.
The Ministry of Agriculture and Forestry maintains six plant quarantine and 15 animal
quarantine stations at strategic locations around the country.  A lack of veterinarians and other trained
specialists and laboratory facilities creates problems in implementing effective Sanitary and
Phytosanitary controls.
The Lao PDR is a member of the Codex Alimentarius Commission, the International Office
of Epizootics and the International Plant Protection Commission in FAO.
Lao SPS regulations and standards are based on the relevant international standards,
guidelines, or recommendations.
As part of the accession process, the Lao PDR Government will review its sanitary and
phytosanitary measures to assess compliance with the provisions of the WTO Agreement on theApplication of Sanitary and Phytosanitary Measur es and will draw on the resources of the relevant
international agencies.
Due to complexity and technicality of the issues, the Lao PDR urgently requires
comprehensive technical assistance in the SPS area from the international community, in particular
from WTO members.  In addition, the Lao PDR as a LDC would require a transitional period tocomply with the SPS Agreement upon its accession to the WTO.
The Lao PDR is participating in the regional harmonization programs of ASEAN regarding
SPS measures.
(d) Trade-related investment measures (TRIMS)
Trade performance requirements are not set as conditions for investment.  The Conditions are
described in Section II.2 (d).
The Government of the Lao PDR provides concessions to foreign investors.  Under Article 17
of the Promotion and Management of Foreign In vestment (Law 01/94 of 14 March 1994), foreign
investments shall pay an import duty on equipment, means of production, spare parts and other
materials used in the operation of their investment projects or in their productive enterprises at a
uniform flat rate of only one per cent (1 per cent) of their imported value.  Also, raw materials and
intermediate components imported for the purpose of processing and then re-exporting shall beexempted from such import duties.  All finished products for export are also exempted from export
duties.WT/ACC/LAO/3
Page 26
At present, the Lao PDR does not apply trade related investment measures which could fall
under the scope of the TRIMs Agreement, including those subject to conditions related to export
performance, local content or trade balancing requirement.
(e) State-trading practices
After preliminary consideration on the issue related to state trading enterprises, the
Government of the Lao PDR would like to state that the Lao PDR does not have state trading
enterprises in the sense of Article XVII of the GATT 1994 and working definition of Understanding
on the Interpretation of Article XVII of the GATT 1994.
However, the Government will continue to co nsider these issues and report to the Working
Party, if necessary.
(f) Free zones
There are no free zones in the Lao PDR.
(g) Free economic zones
No free economic zones exist at time of reporting.
(h) Trade-related environmental policies
The Ministry of Agriculture and Forestry administers a system of control over the felling,
reforestation and licensing for export of defined species of trees for conserving the natural resourceand to limit long-term damage to natural forests.  Exports of logs are banned to support the domestic
conservation program, while (consistent with Article XX (g) of GATT 1994) the domestic production
of this exhaustible natural resource is restricted through quotas.  Restraints on the import of motor
vehicles and motorcycles have also been applied for environmental reasons.
(i) Mixing regulations
No mixing regulations apply.
(j) Government-mandated counter-trade and barter
Neither government-mandated counter-trade nor barter exists.
(k) Trade agreements leading to country-specific quota allocation
No trade agreement leading to country-specific quota allocation is in place.
(l) Government procurement policies, including general legal regime and procedures for
tendering, dealing with tenders and award of contracts
Government procurement policy and practices are administered nationally by the
Procurement Monitoring Office (ProMO), Department of Fiscal Policy, Ministry of Finance.
Government procurement is governed by Implementing Rules and Regulations on Government
Procurement of Goods, Construction, Repairs and Services (IRRs).  All Ministries, bodies equivalent
to Ministries, Provinces, Vientiane Prefecture to gether with all State-owned enterprises are bound to
adhere to these rules and regulations.  While international aid agencies are permitted to follow their
in-house procurement rules, they may use the IRRs of the Lao PDR, if they prefer.WT/ACC/LAO/3
Page 27
These rules and regulations originally came into effect in 1996 under the Procurement Decree
No. 95/CM of 5 December 1995.  Based on experi ence between 1996 and 1998, they were revised
and re-issued with effect from 22 December 1998.
The objectives of the IRRs are to clarify the provisions of the Procurement Decree (i) by
ensuring transparency; (ii) achieving regularity and uniformity; (iii) achieving economy andefficiency; and (iv) guaranteeing suppliers and contractors fair and equal access to the award of
contracts.  The IRRs envisages four methods of procurement: (i) limited bidding where the number of
bidders may be limited to 3 to 5 individuals or companies capable of meeting the terms of the
contract; (ii) local price comparison which allows the procuring entity to compare the prices from at
least three domestic suppliers; (iii) international comparison which allows the procuring entity to
compare the offers of at least three companies from at least two different countries; and (iv) direct
contracting which allows the procuring entity to ne gotiate terms and conditions directly with one or
more suppliers.  The IRRs set out precisely when each of these procedures may be used, for example,
in emergencies, for purchases below appropriate threshold values, no suitable bid, day-to-day
purchasing, for purchases of works or goods where the annual aggregate value of such works or goods
does not exceed the appropriate threshold values set out in the IRRs, where for technical reasons or
for the protection of industrial property rights the contract may be only executed by one supplier orfor additional supplies of additional works not exceeding 20 per cent of the original contract.
Invitations to bid are subject to clearly articulated notification requirements with respect to
advertisements in mass circulation newspapers whether in Lao or English and whether published in
the Lao PDR or internationally, simultaneous posting of bids under limited bidding and the need to
allow reasonable time for bids taking account of the nature of the goods, services or works to beprocured.  The following minimum time limits must be observed.  For normal procedure, these time
periods are 45 days for public bidding, 30 days for limited bidding and price comparison and 20 days
for direct contraction.  For an accelerated procedure, these periods become 30 days, 15-20 days
(domestic v international) and 10 days respectively.  The notification shall include the identity of the
procuring entity; a summary of the works, services or goods sought; address for the biddingdocuments, further information and submission of bids; cost of the bidding documents; procedural
requirements; and final date for the submission of bids.
The IRRs elaborate the criteria for the selection of bidders including general suitability,
financial capacity and technical ability as well as the creation and maintenance of a roster system
which is a system of formal pre-qualification allowing qualified bidders to participate in the
procurement procedure without further investigation.
The procurement procedures are executed through a permanent Procurement Committee
which has to ensure strict adherence to the IRRs.  If in doubt, the Procurement Committee may seek
the advice of the Director of the ProMo on the correct application of the relevant procurement
procedures.  Where the decision of the Committee is subject to Ministerial approval, as in the case of
high value contracts, such approval is to be withheld where the procurement is in breach of the IRRs.
The IRRs state that the criteria for awarding contracts includes an all-inclusive net price, as
well the date of completion of the contract; running costs and cost effectiveness; after-sales service
and technical assistance; commitments to spare parts, covering security of supply and price; and
quality and technical merit of the works or supplies.  The list of criteria is non-exhaustive.  However,
the procuring entity is obliged to specify in the bidding documents which criteria will be applied to
bids.  Finally, the IRRs defines the contract documents and explains the procedures for alteration ofthe contract, invocation of force majeure, compensation for delays in delivery or completion,
arbitration and dispute resolution.WT/ACC/LAO/3
Page 28
(m) Regulation of trade in transit
Trade in transit is covered by Articles 32 and 33 of the Lao PDR Customs Law.  It permits
locally produced goods and imported goods to be moved from one place to another within the Lao
PDR through foreign territory.  Such goods will be exempted from export duty and from exit and
entry restriction rules.  Goods transported from ab road under the transit regime through the Lao PDR
to a third country shall be accompanied by guaranteed transit goods permits issued by the customs at
the point of departure and will be exempted from customs duties.
4. Policies affecting foreign trade in agricultural products
(a) Imports - i.e. comprehensive description of the types of border protection maintained:
customs duties and/or any other border measures
Agricultural products are subject to the same import licensing requirements as other imported
products.  These requirements are set out in detail in Annex 3.
Notification No. 870/MOC bans imports of cert ain agricultural products, namely chillies,
aubergines, tomatoes, bananas, lemons and  other fruits .
The tariff duty on imports of agricultural products (HS 01-24) is between 5 and 40 per cent,
with the majority of tariff lines being 20 per cent or less.  The simple average of import tariffs on
products covered by the Agreement on Agriculture is 18.77 per cent.  No tariff-rate quotas areapplied.
With respect to the importation of rice, the righ t to apply quotas is reserved for food security
purposes, notably when necessary to support the minimum farm-gate price set by the Lao PDR in
order to maintain the country’s productive capacity of rice.  Quantitative restrictions may be applied
on a case by case for food security reasons.  However, there was no quota  applied in recent years.
The Ministry of Commerce and Tourism is in charge of administering the minimum farm-gate price
and the import-licensing regime.
(b) Exports - i.e. description of, and the budgetary expenditure and any revenue foregone
involved in each of the export subsidy measure in place
There are no export subsidies for agricultural products.
(c) Export prohibitions and restrictions
There are no prohibitions or restrictions on exports of agricultural products other than an
export tax of 5 per cent on coffee beans and livestock.  With respect to the export of rice, the right to
apply controls is reserved for food security purposes.
(d) Export credits, export credit guarantees or insurance programs
There are no export credits, export credit guarantees, or insurance programs for agricultural
products.
(e) Internal policies - i.e. description of, and the budgetary expenditure and any revenue
foregone involved in each of the domestic support measures in place
The majority of the population lives in rural areas and depends on agriculture, and especially
on rice production for their livelihood.  Because of the central role of agriculture and especially riceWT/ACC/LAO/3
Page 29
production in determining national welfare, the Government pursues a strategy designed to improve
food output and food security.  That strategy includes the following domestic support measures:
− provision of infrastructure services including electricity, roads and water reticulation
and management;
− provision of extension services;
− research; and
− local level programs aimed at increasing food production, the stabilization of shifting
cultivation (slash and burn), sustainable community based resource management and
diversification of farming systems.
These programs are funded through the regular budget process.  Many of these services are
the policy responsibility of the Ministry of Agriculture and Forestry, but in most cases they are
implemented by administrative authorities in the Provincial Governments.  These programs take up to
15 per cent of the Government’s total expenditure.  They are often carried out in conjunction with
foreign aid and other donor projects.  These programs are of the type which are classified as GreenBox domestic support under the WTO Agreement on Agriculture.
The Government has also introduced a scheme to increase rice production by enlarging the
irrigation growing area from 22,000 hectares in 1997 to100,000 hectares by the year 2000.  Initially,
the project was financed through the Bank of the Lao PDR but is now directly financed through the
Government budget.
The Agricultural Promotion Bank provides loans to farmers and processors of agricultural
products.  Some of these loans are made at concessional rates of interest.  The bank is wholly ownedby the Government.
The public account system in the Lao PDR is based predominantly on a line budgeting
system.  Because of this there is no precise way to calculate the Government’s expenditure on
individual domestic support programs for the agri cultural sector.  As noted above, an additional
difficulty in subscribing expenditure to individual programs is the close interrelationship between anumber of activities undertaken by the Government and programs carried out under foreign aid and
other externally funded projects.  The Government is progressively introducing into the government
financial system the concept of program budgeting, which will enable the notification to the WTO
Working Party on Accession of the Lao PDR regarding expenditure on individual categories of
domestic support.
5. Policies affecting foreign trade in other sectors
(a) Textiles regime
The simple average of import duties on textiles and clothing is 9.46 per cent.  Other general
measures applied to textiles trade is described in this Chapter above.
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME
1. General
(a) Intellectual property policy
Effective protection for intellectual property is considered by Lao officials to be essential for
the successful transition to a market economy.  The Ministries with the principal responsibility for
intellectual property in the Lao PDR are aware that more comprehensive intellectual property law isWT/ACC/LAO/3
Page 30
required in the Lao PDR and have prepared a comprehensive program of legal reform that will enable
the Lao PDR to meet existing and future obligations under various treaties - and in particular the
WTO Agreement on Trade-Related Property Rights (the “TRIPS Agreement”).
A Prime Ministerial Decree on Trademarks of 1995, is the only law that protects intellectual
property in the Lao PDR.  The Department of Inte llectual Property, Standardization and Metrology,
which is in the Science and Technology and Environment Agency (STEA) in the Prime Minister’s
Office, is in the process of putting the finishing touches on a comprehensive law that will protect
patents, utility models, industrial designs and other areas of intellectual property rights to enable the
Lao PDR to meet more fully its obligations under the 1979 Paris Convention for the Protection of
Industrial Property (the “Paris Convention”), to which the Lao PDR acceded in 1998.
The Lao PDR is also envisaging the eventual adoption of laws to protect copyright and related
rights to enable the Lao PDR to meet its obligat ions once it accedes to the 1979 Berne Convention for
the Protection of Literary and Artistic Works (the “Berne Convention”).  Lao officials are also
considering laws that will enable the Lao PDR to comply with the 1961 Rome Convention for the
Protection of Performers, Producers of Phonogra ms and Broadcasting Organizations and the 1989
Washington Treaty on Intellectual Property in Respect of Integrated Circuits.
Besides preparation of legislation, the Government of the Lao PDR is struggling to modernize
the intellectual property system, strengthen public awareness including preparing a homepage on
intellectual property rights, develop further coope ration with WIPO and other intellectual property
offices in the region particularly with ASEAN.
In this context, the Lao PDR urgently requi res comprehensive technical assistance in the
TRIPS area from the international communities, in particular from WTO members.  In addition, the
Lao PDR as a LDC would require a transitional period to comply with the TRIPS Agreement upon its
accession to the WTO.
(b) Responsible agencies for policy formulation and implementation
The Government of the Lao PDR and the National Assembly are the highest organs of State
which have the authority of formulating policies and preparing laws on intellectual property rights.
The Department of Intellectual Property, Standardization and Metrology has the overall
responsibility for coordinating the implementation of policy on intellectual property.  The Department
of Legislation in the Ministry of Justice also plays a major role in the preparation of legislation on
intellectual property.  Other Ministries - including the Ministry of Information and Culture and the
various Ministries responsible for agriculture, industry, commerce and the interior - also play a role in
the development of intellectual property policy and law in the areas that come within their
jurisdiction.
(c) Membership of international intellectual property conventions and of regional or
bilateral agreements
The Lao PDR became a Party to the World Intellectual Property Organization (WIPO) in
1995.  The Lao PDR is also a Party to the following multilateral and bilateral treaties:
− the Paris Convention, to which it acceded in 1998;
− a bilateral agreement with Thailand on Trademarks and other areas of intellectual
property right (1996);
− multilateral treaty with ASEAN on a common filing system for trade marks and
patents.WT/ACC/LAO/3
Page 31
Preparations are being made to enable the Lao PDR to accede to the Berne Convention and
the Lao PDR is virtually ready to accede to the Patent Cooperation Treaty.  The Lao PDR is
undertaking a long-term project with WIPO to increase awareness of intellectual property, to
modernize legislation and to train personnel.
(d) Application of national and m.f.n. treatment to foreign nationals
In the only law that covers aspects of intellectual property in the Lao PDR, foreign nationals
engaged in lawful production, commercial and service activities are entitled to register a trademark on
the same basis as Lao nationals (Article 4 of the 1995 Prime Ministerial Decree on Trademarks).  The
Lao PDR is aware of the importance of granting national and MFN treatment to foreign nationals and
there is an expectation that these principles will be honoured once the Lao PDR becomes bound by
the TRIPS Agreement.
(e) Fees and taxes
The fees for trademark registration are set out in the Guidance on Registration of Trademark
in the Lao PDR: They are as follows:
Trademark registration or trade mark renewal US$ 80 per mark
Each class US$   5 per class
Transmission US$ 20 per mark
Consultation for the registration US$   5 per mark
Search of Trademark US$ 10 per mark
Modification of items of the application US$ 10 per mark
Publication US$ 20 per mark
Application per form US$   2 per mark
The protection of other categories of intellectual property has not yet begun in the Lao PDR
and, consequently, fees and taxes related to these other areas have yet to be fixed.
2. Substantive standards of protection, incl uding procedures for the acquisition and
maintenance of intellectual property rights
(a) Copyright and related rights, including rights of performers, producers of phonograms
and broadcasting organizations
 There are no laws on copyright and related rights in the Lao PDR and there are no general
legal principles which grant and protect copyright.  As explained above, legislation is being prepared
to accede to the Berne Convention.
(b) Trademarks, including service marks
The legal framework for the registration and protection of trademarks is found in the
Trademark Decree issued by the Prime Minister of the Lao PDR in 1995.  The objectives of the
Trademark Decree are to:
− unify trademark protection throughout the Lao PDR;
− encourage commerce and foreign investments;
− stimulate production of quality goods;
− protect consumers; and
− suppress the infringement of protected goods and illegal commercial practicesWT/ACC/LAO/3
Page 32
The following is a summary of the more important provisions of the Decree.
General Principles
Under the Trademark Decree, a trademark is defined as any visible sign capable of
distinguishing the goods or services of an enterprise.  It may consist of letters, words, signs, pictures
or a combination thereof represented in one or more colours.  It may be registered in the Lao PDR byany individual or legal entity, whether a Lao or foreign national, who is engaged in a lawful
commercial or service activity.  Before using a trademark which has been registered in the Lao PDR
an individual or legal entity must receive the authority of the owner of the registered owner of the
trademark and is required to notify the Department of Intellectual Property, Standardization and
Metrology.
Registration of Trademarks
The application for registration of a trademark is to be in Lao, and for foreign applicants it
should be made in English.  If the applicant is not a Lao resident he must register his trademark
through a representative in the Lao PDR.  The description of the trademark in the application is to
fully reflect the intended purpose as well as the significance of each and every element of the mark.
The documentation required for registration includes:
− a duly completed standard application form provided by the Department of
Intellectual Property, Standardization and Metrology;
− ten specimens of the trademark;
− a list of the goods or services with the description of characteristics and quality that
are to bear the mark (in accordance with the Nice Agreement on InternationalClassification);
− documentation evidencing the legal owner;
− where priority is claimed, a certified copy of the application/certificate of registration
evidencing the filing date and country where the application for trademarkregistration is first filed;
− the power of attorney in situations where the application has had to be made through
a Lao representative (it appears that the representative must both be a resident in the
Lao PDR and also be approved by the Department of Intellectual Property,
Standardization and Metrology); and
− the receipts of the prescribed charges and fee paid.
The Department of Intellectual Property, Standardization and Metrology is expected to
consider the application within six months of lodging, and upon approval, it registers the trademark in
a national register and issues a trademark registration certificate.  The registered mark is thenpublished in a national gazette which is published quarterly and distributed free of charge to
applicants and to the public.  It takes within two months from the time of application to the grant of a
certificate.
Upon issuance of the registration certificate, the trademark will receive protection in the Lao
PDR for a period of ten years from the filing date of the application and can be renewed every tenyears without limitation.  If the owner does not file for the renewal application within six months of
the expiration of the protection, the filing of the application will be struck off.  The exclusive rights of
the owner of a trademark cease if the owner does not use the registered trademark himself, or it is not
used by another with the owner’s consent, during a continuous period of five years, unless it can be
demonstrated that special circumstances have prevented the use of the trademark.WT/ACC/LAO/3
Page 33
Priority of Trademarks Registered Abroad:
If a trademark has already been registered abroad, the owner of the trademark has the right to
demand priority dates for registration at the time the application for registration of such trademark is
submitted to the Department of Intellectual Property, Standardization and Metrology.  An application
claiming such priority must include a trademark registration certificate which conforms tointernational regulations and the laws and regulations of the country where the trademark has been
previously registered.
Trademarks that will not be registered in the Lao PDR include:
− trademarks which are not clear, and which do not identify any product or service;
− trademarks which conflict with the national culture and traditions, or which conflict
with the morals of society; trademarks wh ich may cause mistakes as to their meaning
or significance (specifically trademarks which relate to geographic origins,
genuineness or special features of products or services);
− trademarks which have been forged or copied;
− trademarks which comprise such symbols as national seals, national flags or
emblems, or other symbols closely identified with a national culture or heritage;
− trademarks which comprise the names of countries or governments, international
organizations, or organizations established by treaties;
− trademarks bearing official seals related to the inspection of or the guarantee of a
government or international organization (except if approved by such government or
international organization); and
− trademarks that are similar to trademar ks or commercial names of products or
services which have already been generally acknowledged.
Rights of Trademark Owners
Owners of registered trademarks have the exclusive rights: to use such trademarks themselves
or to authorize others to use their trademark; and to sue individuals or legal entities which forge or use
such trademarks without their approval.
Penalties
Individuals or legal entities who use trademarks in the Lao PDR without the approval of the
trademark owners, or who otherwise illegitimately pursue the use of trademarks, are deemed to be in
violation of the exclusive rights of the trademark owners, and are to be warned or judged in
accordance with the laws of the Lao PDR as follows.
− Warning is made by administrative procedure in which the Department of Intellectual
Property, Standardization and Metrology (DIPSM) is a focal point to invite parties
concerned to discuss the alleged violation of the registered trademark.  When theagreement is made between the parties, is should be agreed by the DIPSM.
− If the agreement is not reached, the petition could be referred to the Economic
Arbitration Committee under the Ministry of Justice or to the Court.
(e) Patents
The draft Decree by the Prime Minister on Industrial Design and Patents has been finalized
and is awaiting for approval by the Government.WT/ACC/LAO/3
Page 34
(f) Plant variety protection
(g) Layout designs of integrated circuits
(h) Requirements on undisclosed information, including trade secrets and test data
(i) Any other categories of intellectual property
There are no specific laws to protect any rights acquired under the above-mentioned subjects,
or any other category of intellectual property in the Lao PDR, and there are no general legal principles
which provide protection.  As already mentioned, legislation is being prepared to enable the Lao PDR
to meet all its obligations under the relevant conventions and under the TRIPS Agreement.
3. Measures to control abuse of intellectual property rights
The controls currently available against infringements of trademarks have already been
described (see 2 (b) above).  It appears that abuses which have been the subject of a complaint have
been dealt with at the administrative level (See 4 (c ) below) rather than channelled through the courts
in civil or criminal proceedings.
4. Enforcement
(a) Civil judicial procedures and remedies
There are formal procedures which provide for enforcement of civil judgements.  There have
been no cases where disputes involving intellectual property have been referred to courts for decision.It is acknowledged that the administrative structure which supports enforcement procedures needs
strengthening.  There are plans to strengthen the judicial system and to provide better training for
those associated with it.
(b) Provisional measures
The courts have never applied provisional measures in relation to intellectual property.  If a
dispute involving intellectual property were referred to the courts they would have the authority,
under the Civil Procedure Law, to issue “protective measures”, which may include seizing the
defendant’s assets or enjoining the defendant from pursuing certain activities.
(c) Any administrative procedures and remedies
There is a tradition in the Lao PDR of settli ng disputes through administrative channels.
There have been eight cases of disputes involving claims of trademark infringements so far, seven of
which were settled by the Department of Intellec tual Property Standardization and Metrology and one
by the Committee on Economic Arbitration, which has been established by the Ministry of Justice.
Decisions made by the Ministry or the Committee on Economic Arbitration are not in
themselves final, binding and enforceable.  They must be “certified” by a court before they become
enforceable.  This means that a party to a dispute who is dissatisfied with an arbitral award can take
the matter to a court, where they may initiate new proceedings.
Administrative decisions are usually delivered without delay.  They are in writing and set out
the reasons for the decision.
(d) Any special border measures
Decree on Trademarks deals with the importatio n of counterfeit goods relating to trademark.
An aggrieved person may lodge a complaint to the Department of Intellectual Property,WT/ACC/LAO/3
Page 35
Standardization and Metrology which will decide in cooperation with the customs authorities and
other concerned Ministries, whether the goods which are the subject to the complaint is in violation of
the trademark and thus it should be withheld or released.
The complainant is to be informed within a reasonable time whether the application for
interception of the goods was accepted and, if so, what action is being taken to protect his rights.  Atthe same time, the defendant in such an action has a right to put his case to the Department of
Intellectual Property, Standardization and Metrology before a decision is taken, and if the decision is
unfavourable, to appeal to the Committee on Economic Arbitration.
These administrative procedures have been applied effectively in relation to one case, in
1998, which involved the importation from Hong Kong of a counterfeit trademark of cigarettes.
(e) Criminal procedures
Criminal penalties, as well as civil procedures, for breaches of trademark are set out in the
Decree of the Prime Minister on Trademarks.  However, there are no such cases.  The emphasis is put
to solve any dispute amicably.
5. Laws, decrees, regulations and other legal acts relating to the above
The only law relating to intellectual property is the 1995 Prime Ministerial Decree on
Trademarks.  Other laws are under preparations.
6. Statistical data on applications for and grants of intellectual property rights, as well as
any statistical data on their enforcement
Statistical data on applications for and grants of intellectual property rights are not collected
but it can be assumed that applications and grants are low, compared to the Lao PDR’s neighbouring
countries.  As already mentioned, there have been eight disputes involving trademarks which havebeen resolved and, at the time of writing, another one is pending.
VI. TRADE-RELATED SERVICES REGIME
1. General
Until recently, the public sector was the most important supplier of services in the Lao PDR.
However, in line with the re-orientation towards a market-based economy, the Government haslaunched a process of broad-based privatization.  Though the lack of available statistics in the area of
services limits the detailed analysis of this sector, the breakdown of the major service sectors in the
Lao PDR is shown in Table 5. Services comprise about 26 per cent of the Lao PDR Gross Domestic
Product.  The most important sector is wholesale and retail trade which constitutes about 35 per cent
of the service sector.  Next in importance is the transportation, storage and communication sector
constituting about 22 per cent of the service sector.  Hotels and restaurants make up 7.6 per cent,
while banking, insurance and real estate constitute about 6 per cent.
Table 5
Structure of the Service Economy, 1993-1997
(in billions of kip at 1990 constant market prices)
Services 1993 1994 1995 19961997
(est.)
Transportation, storage and communication 35.4 36.9 43.6 48.0 52.9
Wholesale and retail trade 58.6 63.2 69.0 76.7 84.3WT/ACC/LAO/3
Page 36
Table 5
Structure of the Service Economy, 1993-1997
(in billions of kip at 1990 constant market prices)
Services 1993 1994 1995 19961997
(est.)
Banking, insurance, and real estate 7.8 8.5 12.0 11.7 15.3
Ownership of dwellings 25.3 27.5 28.4 30.1 30.6
Public wage bill 31.0 28.9 27.6 27.7 28.0
Nonprofit institutions 10.5 10.1 9.9 10.6 12.4
Hotel & Restaurants 6.0 9.2 12.4 15.0 18.6
Other 1.1 1.1 1.3 1.4 1.8
Total services 175.6 185.4 204.3 221.6 243.9
GDP at factor cost 707.1 764.0 814.9 871.8 932.9
Services as  per cent of GDP 24.8% 24.3% 25.4% 25.4% 26.1%
(Source:  Data provided by Lao PDR authorities and IMF staff estimates)
The economic development of the Lao PDR, as a least developed country, is hampered
because the infrastructure for services is underdeveloped.  Thus, the development strategy in services
attaches priority to improvement of transport, communication, and banking as well as education and
tourism services.  From the trade perspective, tourism-related services have so far been the mostprominent service sector in the export of services as indicated in Table 6.  Development of services
industries is viewed as one of the priority areas in developing the domestic economy.  Foreign
investment in services and foreign companies in general, are leading the development of the service
sector, especially, in the hotel industry, courier, environmental services, banking and education.
Table 6
Contribution of export and of tourism to GDP
Years 1994 1995 1996 19971998
(est.)
Share of exports in GDP 19.5% 17.5% 17.2% 20.5% 24.7%
Share of tourism-related services in totalexport of services76.5% 76.0% 78.7% 73.9% 82.2%
(Source:  Based on IMF Direction of Trade data)
The key features of policy on trade in services and the relevant aspects of market access and
national treatment are explained in parts 2 and 3 of this chapter.  The detailed discussion of the
investment policies concerning both goods and services is presented in Part II of the Memorandum in
the Section, "Economy: (d) Domestic and foreign investment".  As stated therein, the foreign
commercial presence is regulated at the economy-wide level through the provisions of the law on
Promotion and Management of Foreign Investme nt in the Lao PDR of 1988 and as amended by
Presidential Decree No. 23 of 21 April 1994.  At present, the law requires all foreign investors to
obtain licenses from the Foreign Investment Mana gement Cabinet (FIMC), in the Prime Minister’s
Office.  This is discussed in Section IV.1.(a).
I. BUSINESS SERVICES
1. Professional services(a) Legal services
The Ministry of Justice is the regulatory agency overseeing the legal profession.
Laotian lawyers are trained at the Law School and upon completion of their education are
obliged to undergo an internship between 12 a nd 18 months either at the Ministry of JusticeWT/ACC/LAO/3
Page 37
or at the State Prosecutor’s Office.  Foreign nationals can practice law as legal consultants but
may not represent clients directly in the court.  According to the Article 13 of the Prime
Minister’s Decree No. 64/PM of 21 February 1996 on the establishment and activity of the
Lao Bar Association, membership in the Associa tion is necessary to practice law in the court.
However, membership in the Lao Bar Association is limited to nationals.
Commercial presence in the Lao PDR is necessary to practice law.  No specific
limitations are applied on the form of establishment.  At present, legal consultancy services
may be also supplied by the foreign natural persons under the contract.
(b) Accounting and auditing services
The Ministry of Finance is responsible for overseeing the accounting services, whilst
the National Audit Office is responsible for overseeing auditing services.
The relevant legislation includes: (i) the Law No.  12/90/PSA of 29 November 1990
on Enterprise Accounting; (ii) Prime Minister’s Decree No. 05/PM of 24 January 1992 on the
Implementation of the Enterprise Accounting Law; (iii) Prime Minister’s Decree No. 161/PM
of 26 August 1996 on the Establishment of the Accounting Board and the  Accountant
Professional Body, (iv) Prime Minister’s Decree No. 159/PMO of 26 August 1996 on
Auditing, (v) Prime Minister’s Decree No. 174/PM of 5 August 1998 on the Establishment ofthe National Audit Office.
Law No. 12/90/SPA on enterprise accounting was promulgated in order to expand the
use of accounting in all economic and social activities of enterprises in order to establish a
coherent national accounting standard and thereby establishes a consistent basis of accounting
under the market oriented conditions.  As a follow-up to the Accounting Law, the PrimeMinister’s Decree No. 05/PM of 24 January 1992 puts in place the implementing rule for the
law on accounting.  Decree No. 161/PM of 26 August 1996 moves the regulatory regime
further towards organizing the accounting profession.
The Prime Minister’s Decree No. 161/PM stipulates two ways of obtaining licence
for temporary presence of foreign service providers.  A foreign national may acquire licenceto practice as a certified public accountant or accounting consultant provided that there is a
bilateral agreement or contract with the country of origin.  Otherwise, the Professional
Accounting Body can authorize a foreign expert to practice as a certified public accountant or
accounting consultant, if he or she is from a country which is a member of the International
Accounting Standards Committee and if the following requirements are fulfilled:
− possession of a diploma equivalent to the standards of the Lao professional
accountants and approval has been obtained from the EquivalenceQualification Committee;
− employment of Lao nationals in proportion with the current practice of the
professional sector;
− provision of continuous and necessary training;
− be of good moral standard; and
− be financially certified by the appropriate Lao authority.
Foreigners so licensed, must accept the obligations of members of the Professional
Accountants Body but are not entitled to membership of the Body.WT/ACC/LAO/3
Page 38
2. Computer and related services
This is an open sector to trade.  Expertise is highly sought and no sector specific
regulations have been yet developed or are considered as necessary at the present.
3. Research and development services
No specific measures have so far been developed that affect provision of services by
a foreign service provider in the services other than general requirements governing
establishment of businesses by foreign nationals in the Lao PDR.
II. COMMUNICATION SERVICES
1. Postal services
The postal service was separated from telecommunication on 1 March 1995 with the
state-owned Entreprise des Postes Lao (EPL) established to provide universal postal service.
EPL is an exclusive provider of this service at the present.  Market access for natural personsin postal service is limited to the supply of services by nationals of the Lao PDR.  The
Department of Posts and Telecommunicati on within the Ministry of Communication,
Transport, Post and Construction (MCTPC) acts as the supervisory authority in the area of
postal service.  The postal network comprises a total staff of 450 operating one Mail Center in
Vientiane, 17 post offices, 16 EPL provincial branch post offices, 70 District post offices and27 rural post offices.  About 134 postal agencies also operate in areas where there is no post
office.  In terms of the commercial aspect of its operations, EPL is just able to cover its
operating expenditure from its revenues.
The volume of mail is not high but is increasing.  Table 7 indicates the mail items
handled by the postal system in 1997 and 1998.  As the table shows, the volume ofinternational mail is substantially more than domestic mail.
Table 7
Lao PDR - Mail Volume in 1997 and 1998
InternationalMail Categories DomesticOutgoing Incoming
1997 1998 1997 1998 1997 1998
Letter mail 358,118 306,084 829,551 919,348 506,708 505,760
Small packets 2,248 1,654 21, 965 37,305 16,175 19,113
Printed matter
including books13,909 11,056 20,586 36,634 139,425 128,077
Newspapers 2,873,817 3,393,316 --- --- --- ---
Parcels 297 633 3,963 6,065 9,789 9,712
EMS 16,039 31,740 4,055 4,280 20,589 22,410
(Source:  Entreprise des Postes Lao (EPL)
2. Courier services
A number of foreign companies, such as DHL, TNT, EMS, OCS and FedEx, provide courier
services in the Lao PDR, established under the general rules and economy-wide regulations.WT/ACC/LAO/3
Page 39
3. Telecommunication services
Basic data for the Lao PDR telecommunication sector is set out in Table 8.  The total
number of telephone lines was 29,626 in 1997 growing by 19 per cent to some 35,303 in
1998.  In 1997, mobile phones comprised 16.6 per cent of total subscribers increasing to 18.3
per cent in 1998.
Table 8
Lao PDR - Basic Data for the Telecommunication Sector 1997-1998
Item 1997 1998
Automatic 24 553 28 005
Magnetic 161 162
Public --- 194
Mobile 4 912 6 453
Package-switched --- 489
Total number of telephones 29 626 35 303
(Source:  Ministry of Communication, Transport, Post and Construction)
Table 9 indicates that connections to the private sector comprised about 85 per cent of
total connections as of 1998, while international organizations took up 16 per cent and the
state sector 11.5 per cent.
Table 9
Lao PDR - Number of Telephones by Sector, 1997 –1998
Item 1997 1998
State sector 3 805 4 056 (11.5%)
International organization 538 569 (16.1%)
Private sector 19 598 29 866 (84.6%)
LTC 773 812 (2.3%)
Total number of telephones 24,714 (excl. mobile) 35,303 (incl. mobile)
(Source:  Ministry of Communication, Transport, Post and Construction)
The Department of Posts and Telecommuni cation is currently responsible for the
regulation of the telecommunication sector.  The regulatory framework has not been fully
developed in the Lao PDR telecommunication sector.  A draft law on the telecommunication
is under consideration at present, which is expected to establish the new institutional
structure, regulatory principles and to create legal basis for opening up of the market in
mobile services.  The market itself is under development with a current penetration rate ofabout 1 mainline per 100 persons and the need for a massive expansion and modernization.
To date, Lao Telecommunication Company is the sole provider of telecommunication
services in the Lao PDR, which operates as a joint venture with 49 per cent of foreign capital.
Internet:   In the Lao PDR, Internet usage began in 1996 with the use of servers based
in Thailand, with some subscribers continuing to use this avenue for accessing Internet
service.  With sharply increasing demand, a Satellite company Globe Communications
Electronic started to operate Internet services in 1997 under a pilot scheme supported by theMinistry of Information and Culture.  At present Lao Telecom also provides Internet services,
connecting Internet servers with SingTel and using a gateway based in Singapore.  The
sharply increasing demand has not been fully met by the existing facilities.WT/ACC/LAO/3
Page 40
III. CONSTRUCTION AND RELATED ENGINEERING SERVICES
Construction services come under the superv ision of the Ministry of Communication,
Transport, Post and Construction.  The major construction projects often include a large
component of external financing from official bilateral and multilateral donors.  There is open
bidding for tenders on large projects and international construction companies often receivecontracts to perform the construction work.  Construction work for buildings and related to
civil engineering may be provided by companies, established in the Lao PDR as joint ventures
with one or more domestic Lao investors and with at least of 30 per cent of foreign capital
participation, also wholly foreign owned enterprises or branches.
IV. DISTRIBUTION SERVICES
The laws which are relevant to distribution services, are:  Business Law No. 3/94/NA,
dated 18 July 1994; Regulations of the Ministry of Commerce No. 463/MOC, dated 8December 1993 on the authorization to operate the wholesale trade and No. 464/MOC dated 8
December 1993 on the authorization to operate the retail trade.  Distribution channel in this
country includes wholesalers and retailers.  Import-export companies usually act as
wholesalers.  There are no special provisions regarding involvement of foreign operators in
wholesale trade.  Most retail trade is in the hands of small private retail stores, and privatemobile vendors.  Business Law provides that employment is limited to nationals in retail
trade.
VII. EDUCATIONAL SERVICES
The Lao PDR with a population of about five million has a rate of 250 graduate
students per 100,000 people.  The Lao PDR recognizes the crucial importance of educationand has been strongly supportive of foreign participation in the supply of private education.
Decree No. 64/PM, dated 14 August 1995, allows private schools to operate.  The
Bureau of Private Education located within the Ministry of Education regulates suppliers of
private education applying guidelines set out in the Prime Minister’s Decree No. 64.  The
objective is to upgrade private education in order to complement state supplied educationthereby reducing pressure on the Lao PDR national education budget.  The policy of
encouraging supply of private education has been successful.  In 1991 there were 73 private
schools employing 335 teachers with 9,591 students, by 1999 this number had risen to 197
schools, 1,209 teachers and over 37,000 students.  In 1999, there were four tertiary level
colleges in the Lao PDR offering diplomas in four-year programs, with a combined enrolment
of 2,700 students.
VI. ENVIRONMENTAL SERVICES
Sewage, refuse disposals and sanitation fall under the portfolio of Ministry of
Communication, Transport, Post and Construction.   Only 18 per cent of the population have
access to adequate sanitation and 44 per cent to safe water supply.  Foreign participation is
allowed and encouraged in accordance with the general provisions on investment in sewage,
refuse disposal and sanitation services.  These services could be provided for households andindustrial and commercial establishments.  Concessions are granted for servicing selected
districts.  However, companies are operating with low profit margins in this area.  For
example, in Vientiane, where five private companies were established in the beginning of
1993, only one private company is still operating along with the municipal service provider in
the area of garbage collection.  This is Lao Garbage Co with a 100 per cent foreign capitalinvestment and which has been granted a concession for operating garbage collection fromWT/ACC/LAO/3
Page 41
households and outdoor sweeping services for a 15 year period.  Good sanitation cannot be
provided in most municipalities, because of a lack of funds and investment, low participation
of households, insufficient public awareness, and inadequate equipment.
VII. FINANCIAL SERVICES
1. All insurance and insurance-related services
The insurance services sector is regulated by  the Ministry of Finance.  The insurance
sector is governed by Law No. 11/90/PSA of 18 December 1990 and a related Decree No
01/PMO of 23 January 1992).  Further specification of the mode of operation in the provision
of insurance services are expected to be developed in the years to come.  The market is open
to foreign investment and competition.  At present, there is one insurance company operating
in the country, the Assurance Generale de Laos (AGL), which is a joint venture between the
Government of the Lao PDR and the AGF of France.  The Government has a 49 per centshare in the company and AGF holds 51 per cent.  The authorized capital of the AGL is US$2
million.  The type and share of insurance services is shown in Table 10.
Table 10
Lao PDR - Insurance Market
(by share of total contracts)
Type of Insurance Share
Automobiles 30 %
Fire 40 %
Accident 20 %
Other 10 %
(Source:  Ministry of Finance)
2. Banking and Other Financial Services
The Bank of the Lao PDR is in charge of the country's monetary policy as well as of
the supervision of the banking sector.  The Law No. 05/95 of 14 October 1995 on the Bank ofthe Lao PDR and amended on 14 October 1999 provides the legal basis in this respect.
All forms of foreign commercial establishment may be present in the commercial
banking sector in the Lao PDR.  The establishment of branches, however, is limited to the
municipality of Vientiane, but no restrictions apply for establishment through incorporation.
The minimum capital requirement is applied for prudential considerations and is US$10million at the present.  In addition, natural persons must have of the bankers' qualifications in
order to be appointed as bank managers.
The intermediate steps in developing the financial market in the coming years are to:
(a) maintain and continue the current accessibility of the Lao financial market for foreign
banks through branching and direct investments; (b) improve the technology and humanresource capability in the banking sector; (c) improve and strengthen supervision by the
central bank through improved techniques, rules and procedures and technical personnel; and
(d) improve the banking environment in general.
Decree No. 01/NA of the President of the Lao PDR on Commercial Banks of 11 March 1997,
stipulates the range of banking activities which are permitted in the Lao PDR.  They includeWT/ACC/LAO/3
Page 42
acceptance of deposits in kip, US dollars and in Thai baht.  Commercial banks are authorized
to mobilize deposits of different types such as demand deposits, savings deposits, and other
types of deposits, including sales of Treasury Bills and Central Bank Bills to the public.
Commercial banks must guarantee the withdrawals by their customers on demand, or
in accordance with the agreement for the ty pes of deposits they offer, and maintain
confidentiality of information concerning customer accounts.  Commercial banks may
determine their own interest rates on deposits within the general guidelines issued
periodically by the central bank.  The banks must pay the interest on deposits that have been
agreed upon.
A commercial bank may extend credit to its customers, may discount bills, bonds or
other commercial papers from its paid up capital, from its liability deposits, from borrowed
funds from other commercial banks or from other financial institutions.  In case of insufficientfunds, a commercial bank may request additional loans from the central bank in the form of
temporary advance or by selling bills in accordance with regulation of the central bank.  The
types of credit that may be extended by a comm ercial bank are: temporary advance, overdraft,
current loans, short-term loans (one year or less ), medium-term loans (1 to 3 years) and letters
of credit for export and import.
In addition to accepting deposits, serving withdrawals and extending credits; a commercial
bank may perform the following additional comm ercial banking services: transferring money,
clearing items, dealing in foreign exchange and issuing letters of guarantee.
The commercial bank legislation requires compliance with central bank regulations
concerning prudential requirements relating to ratios, including: capital adequacy, lending tolarge customers of commercial banks and financial institutions, policies on soundness, credit
policy, treatment of failed banks, loan classification and foreign currency exposure.
A commercial bank must follow the conditions set by the central bank in buying and
selling foreign exchange or establish foreign exchange bureaus and the central bank
supervises the foreign exchange transaction.  The total net foreign exchange position of a
commercial bank is evaluated by the end of each month.  Losses from buying and selling may
be debited as expenditure.  The gain from buying and selling may be credited by the
commercial bank as revenue of the bank.
VIII. HEALTH RELATED AND SOCIAL SERVICES
The public system of hospitals includes a central university hospital and five regional
hospitals, as well as 13 provincial and 150 small district hospitals and health posts.  Although
private investment, including foreign, is not restricted in the area of hospital services since1998, no hospitals have been opened to date.
The demand for health care services has been exceeding the capacity of local supply
as well as the budgetary financial resources needed to this end.  A cost recovery system was
implemented in the bigger hospitals, supported by the introduction of health insurance
schemes for public employees.  The Prime Minister’s Decree No. 52 of 1995 provided thenecessary legal framework for these changes.  The lack of doctors and the need for their
continuous training have not been solved so far.  Foreign medical specialists are allowed to
work in the hospitals provided that they are suitably qualified, as judged by the Ministry of
Public Health.  Ministry of Public Health on the basis of the adequate education received and
experience and possess a work permit from the Ministry of Labour and Social Welfare.  ToWT/ACC/LAO/3
Page 43
reflect the most recent changes, the Law on Health is being prepared wherein the criteria and
conditions for establishment of hospitals will be detailed.
IX. TOURISM AND RELATED SERVICES
The development of the tourism industry is important to the Lao PDR economy
because it has the potential to create jobs, earn foreign exchange and make a significantcontribution to the country’s economic development.  As Table 11 indicates, in 1995, tourism
contributed an estimated 24.7 million US dollars of ‘export revenue’ to the Lao PDR
economy, rising to 43.6 million in 1996 and to 73.3 million in 1997.  These figures keep
rising, in 1998 it reached US$79.9 million and 97.3 million in 1999.  The Lao PDR is aiming
to increase the number of tourists to about 1 million in 2000.  Regulations relating to tourism
are covered by government decrees.  Decree No. 100/PM dated 23 December 1992 was
issued by the Prime Minister on the establishment and activities of the National TourismAuthority.  Other relevant regulations have been subsequently issued:  Regulation No.
1150/PM, dated 25 October 1993 on the Establishment and Activities of Travel Agencies;
Notification No. 1289/PM, dated 19 November  1993, on the Administration of the Tourism
Sector; Regulation on the Supervision of Hotels and Guest House Business Activities No.
159/PM, dated 30 July 1997.
Table 11
Lao PDR – Key tourism statistics 1990-1997
Year Number of Tourist
ArrivalsChange(%) Average Length of
stay (days)Revenue from Tourism
US$
1990 14,400 -- Not available
1991 37,613 161.2 2,250,000
1992 87,571 132.8 4,510,000
1993 102,946 17.6 3.5 6,280,000
1994 146,155 42.0 5.1 7,557,600
1995 346,460 137.1 4.3 24,738,480
1996 403,000 16.3 4.1 43,592,263
1997 463,200 14.9 5.0 73,276,904
1998 501,200 7.9 Not available 79,9
1999 614,278 22.5 Not available 97,265,324
(Source:  National Tourism Authority of Lao PDR, Lao Tourism
Statistical Report 1997, Statistics, Planning, marketing and Co-operation Division, page 4)
In October 1997, the Lao PDR introduced changes in conditions governing
investment in international hotel operations.  Investment is promoted in two or more star
hotels with at least fifteen rooms’ capacity.  Foreign investment can take the form of a joint
venture with Lao nationals so long as there is a minimum of 30 per cent foreign equityparticipation, or it can be a wholly foreign-owned enterprise.  Foreign nationals may be
engaged under a short-term contract for senior level managerial positions, as they concern
services related to tourism.  Tourist guide services are limited to the Lao PDR services
suppliers.  There are no restrictions on foreign operators of restaurants although a licence
renewable annually must be obtained.
X. RECREATIONAL, CULTURAL AND SPORTING SERVICES
The Ministry of Information and Culture provides general oversight for activities in
the area of cultural services and mass media services.  The treatment of entertainment services
as commercial activity is relatively recent in the Lao PDR and the legal instruments have not
been fully developed with a number of new laws is being promulgated in the area ofWT/ACC/LAO/3
Page 44
entertainment services at present.  The domestic market is relatively small for these services
but is open to foreign participation in the area of entertainment services, including theatre,
live performances and circus, provided that the performers have proven ability to supply the
service.  At the same time, national artists have been successful in performing traditional
dances and songs abroad, suggesting that this could become an important area of serviceexports.
XI. TRANSPORT SERVICES
To provide transport services, foreign comp anies should establish a joint venture with
a Lao company.  The Law on Road Transportation No. 03/97/NA of 12 April 1997 provides
the legal basis for the commercial activities in the transport sector.
There is no railway system in the Lao PDR.  Road transportation is essential and the
most important sub-sector of transport services.  Table 12 indicates use of various forms ofpassenger transport during 1997 and 1998.  Passenger transport by motor vehicles made up
about 92 per cent of transport in 1998.  6 per cent of passengers were transported by river and
1.5 per cent by air in 1998.
Table 12
Lao PDR - Passenger transport, 1997 and 1998 (in ‘000s)
Year Total By motor vehicles By river By air
1997 19 996 18 009 1 599 388
1998 18 897 17 491 1 126 278
% share in 1998 100 92.6% 6% 1.5%
(Source:  Ministry of Communication, Transport, Post and Construction and Lao Aviation)
2. Policies affecting Trade in Services
(a) Government departments, agencies, professional associations or other bodies with
authority or role relevant to the conduct of service activities
GATS Services Sectoral Classification ListGovernment Departments Relevant to Conduct Service
Activities
SECTORS AND SUB-SECTORS
BUSINESS SERVICES
Professional Services
Legal Services Ministry of Justice, Lao Bar Association
Accounting, auditing and book keeping services Ministry of Finance, National Audit Office, Association
of Accountants, Professional Accounting Body
Taxation Services Ministry of Finance
Architectural services Ministry of Communication, Transport, Post and
Construction
Engineering services Ministry of Communication, Transport, Post and
Construction
Integrated engineering services Ministry of Communication, Transport, Post and
Construction
Urban planning and landscape architecturalservicesMinistry of Communication, Transport, Post and
Construction
Medical and dental services Ministry of Public Health
Veterinary services Ministry of Agriculture and ForestryWT/ACC/LAO/3
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GATS Services Sectoral Classification ListGovernment Departments Relevant to Conduct Service
Activities
Services provided by midwives, nurses,physiotherapists and para-medical personnelMinistry of Public Health
Computer and Related Services Science, Technology and Environment Agency
Research and Development Services Science, Technology and Environment Agency
R&D services on natural sciences Ministry of Public Health
R&D services on social sciences and humanities Ministry of Education  (National University of Laos)
Interdisciplinary R&D services Science, Technology and Environment Agency
Real Estate Services Ministry of Finance
Rental/Leasing Services without Operators
Relating to ships Ministry of Communication, Transport, Post and
Construction
Relating to aircraft Ministry of Communication, Transport, Post and
Construction, Civil Aviation Department
Relating to other transport equipment Ministry of Communication, Transport, Post and
Construction
Other Businesses
Advertising services Ministry of Information and Culture
Management consulting service Ministry of Commerce and Tourism
Services related to management.  consulting Ministry of Commerce and Tourism
Technical testing and analysis services Science, Technology and Environment Agency;
Ministry of Industry
Services incidental to agriculture, hunting and
forestryMinistry of Agriculture and Forestry
Services incidental to fishing Ministry of Agriculture and Forestry
Services incidental to mining Ministry of Industry and Handicraft
Services incidental to manufacturing Ministry of Industry and Handicraft
Services incidental to energy distribution Ministry of Industry and Handicraft
Placement and supply services of Personnel Ministry of Education
Ministry of Labour and Social Welfare
Investigation and security None
Related scientific and technical consulting services Science, Technology and Environment Agency
Maintenance and repair of equipment (notincluding maritime vessels, aircraft or othertransport equipment)Ministry of Communication, Transport, Post and
Construction
Building-cleaning services None
Photographic services None
Packaging services None
Printing, publishing Ministry of Information and Culture
Convention services* None
COMMUNICATION SERVICES (except D) Ministry of Communication, Transport, Post and
Construction
Audio Visual Services Ministry of Information and Culture
CONSTRUCTION AND RELATEDENGINEERING SERVICESMinistry of Communication, Transport, Post and
Construction
DISTRIBUTION SERVICES Ministry of Commerce and Tourism
EDUCATIONAL SERVICES Ministry of Education
ENVIRONMENTAL SERVICES Ministry of Communication, Transport, Post and
Construction; Vientiane Municipality Sewage Services
FINANCIAL SERVICES
All insurance and insurance related services Ministry of Finance
Banking and other financial services Bank of the Lao PDR
HEALTH RELATED SERVICES Ministry of Public HealthWT/ACC/LAO/3
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GATS Services Sectoral Classification ListGovernment Departments Relevant to Conduct Service
Activities
TOURISM AND TRAVEL RELATEDSERVICESMinistry of Commerce and Tourism (National Tourism
Authority)
(A-C)  RECREATIONAL AND CULTURALSERVICESMinistry of Information and Culture
Sporting and Other Recreational Services National Sports Committee
TRANSPORT SERVICES Ministry of Communication, Transport, Post and
Construction
(b) Judicial, arbitral or administrative tribunals or procedures providing for the review of,
or remedies in relation to administrative decisions affecting trade in services
The same procedures apply in the area of services as in the area of goods.
(c) Provisions, including in international agreements, concerning qualification
requirements and procedures, technical standards and licensing and/or registration
requirements for supply of services
A single licence is required for the supply of services in the Lao PDR.  Application for the
establishment of the foreign commercial presence must be submitted to the Foreign Investment
Management Cabinet (FIMC), Prime Minister's Office .  Prior to the approval by FIMC, application is
sent to the line ministries for expert evaluation.  Feasibility of the business undertaking is evaluated in
view of the applicant's competence and ability to provide services.  Licence is issued without undue
delay and on the automatic basis when approval from the line ministries concerned (as indicated in the
table above, under(a) ) is received.
Foreign Investment Management Cabinet is a new government agency and is still considering
how to improve and simplify the procedure for attracting investment.  The drafting of the relevant
legislation is in progress at the present.
The criteria for issuing licence have been developed in accountancy services and minimum
requirements for establishment in the banking sector.  These have been detailed in the corresponding
sections.  Where no legislation has been established yet, ability to supply the service and qualificationrequirements is used as the principle.
(d) Provisions governing the existence and opera tion of monopolies or exclusive service
suppliers
Small private companies are a typical feature of domestic economy and they are not able to
provide services in sectors, which require significant capital investment and foreign capital is notreadily available.  The drafting of legislation is underway in some sectors.
The Government is an exclusive provider in the areas of natural monopolies for the supply of
water.
The first licence has been granted (until 2020) to Lao Telecommunication Company in the
area of telecommunication services with the exclusivity period due to expire in 2001.WT/ACC/LAO/3
Page 47
(e) Provisions relating to safeguard measures as they apply to trade in services
So far, no safeguard measures have been applied to trade in services.
(f) Provisions relating to international tran sfers and payments for current transactions of
services
The Lao PDR is facing serious financial difficulties associated with the balance of payments
deficit.  This necessitates the use of restrictions for maintenance of financial reserves in order to meet
the development objectives.  The mechanism has not been developed yet for this purpose, thus the
Bank of the Lao PDR must approve the international transfer in hard currency.  The approach is being
considered at the present on how to maintain financial reserves with minimum restrictions on trade
and investment.  Companies are free to make intern ational transfers on their hard currency earnings.
Minimum paid-up capital may not be transferred from the Lao PDR abroad unless justification is
provided to the Bank of the Lao PDR.
(g) Provisions relating to capital transactions affecting the supply of services
See (f).
(h) Procedure governing procurement of services by government agencies of services
Procedures for government procurement in services are the same as those for goods.
(i) Provisions concerning any form of aid, grant, domestic subsidy, tax incentive, promotion
scheme affecting trade in services
Lower preferential taxes are applied for the projects involving foreign investment.  In
addition, exemptions on profit taxes may also apply to foreign investment projects.  In accordance
with the Domestic Investment Promotion La w No. 03/95/NA, dated 14 October 1995, domestic
investors in sectors identified as preferential may qualify for the tax incentives and promotion schemefrom the Government, comparable to those provided to foreign investors.
3. Market Access and National Treatment
(a) Limitations on the number of service suppliers
So far, no other quantitative limits on the number of service suppliers have been in place
except in the area of the natural monopoly in the supply of public water and electricity,telecommunications and postal services.
(b) Limitations on the total value of  the service transactions and assets
No limitations on total value on services transactions have been introduced so far.
(c) Limitations on the total number of service op erations or on the total quantity of service
output
None, except in the case of public utilities, telecommunications and postal services.WT/ACC/LAO/3
Page 48
(d) Limitations on the number of natural persons that may be employed in a particular
service sector
All foreign nationals are required to obtain a work permit from the Ministry of Labour and
Social Welfare.  Temporary entry and stay may not exceed a period of one year for the supply of
services in the Lao PDR.  The permit may be renewed upon expiry.  The Ministry of Labour andSocial Welfare will not accept applications for work permit renewal, of less than thirty days.
Provisions in Business Law No. 03/94/NA, dated 18 July 1994, establishes services activities
which are limited to natural persons of Lao nationality.  They are:  services incidental to forestry,
services incidental to manufacturing, retail services, teaching Lao language to foreigners, clerical or
secretarial services, tourist guides, road transport services, building-cleaning services, postal services,
security guard services.
Employment of assistants of Lao nationality is a requirement in the accountancy services
under the provisions of the Prime Minister’s  Decree No. 161/PM of 26 August 1996 on the
Establishment of the Accounting Board and the Accountants Professional Body.
Foreign investors may employ foreign skilled personnel and foreign experts, however the
priority should be given to Lao nationals.
Foreign investors have an obligation to upgrade the skills of their Lao employees.
(e) Restrictions on, or requirements of specific types of legal entities through which a
service may be supplied
All forms of commercial establishment are allowed in the Lao PDR.  To establish a joint
venture, foreign partners must contribute at least 30 per cent of the equity.  Foreign investors can open
a representative office and also establish as a branch and as a fully foreign owned enterpriseincorporated in the country.
Branches of foreign banks in the banking sector may be established only in Vientiane.
Foreign companies must establish joint ventures to provide transportation services.
(f) Limitations on the participation of foreign capital
There is no ceiling on the participation of foreign capital invested in the Lao PDR.
(g) Measures providing for less than the treatmen t accorded to national services or service
suppliers
Foreign persons are allowed to use land, but possession is limited to the citizens only, as
established by the Land Decree No. 33/PO of the Prime Minister, adopted in 1992.  The Ministry of
Finance issues all regulations regarding the administration of land use, including land registration
certificates and collecting taxes.  The Ministry of Communication, Transportation, Post and
Construction administers regulations regarding to easements related to communication, transportation,construction, and other related service sectors.  Foreign persons conducting legal activities in the Lao
PDR may lease land from the State.  Foreign investors may obtain lease of land for 50 years, which
may be extended.  To lease land from Lao citizens, approval must be obtained from the provincial,
prefecture or administrative authorities where the land is located, which then must be approved by the
Ministry of Finance.  All land leases of an area larger than ten thousand hectares must be approved bythe National Assembly.WT/ACC/LAO/3
Page 49
4. Most-Favoured-National Treatment
There is no general discrimination against foreign service providers.  To practice as a certified
public accountant, licenses will be issued only for those foreign natural persons who are nationals of
countries with which bilateral agreements have been signed in this regard.
Bilateral agreements on provision of cross-border transportation services have been signed with
Vietnam, People's Republic of China, Thailand, and Cambodia.  A tri-party agreement for provision of
cross-border road transportation services has been signed with Vietnam and Thailand.
VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH
THIRD COUNTRIES
1. Bilateral or plurilateral agreements relating to foreign trade in goods and trade in
services
Bilateral agreements have been signed between the Lao PDR and China, the European Union,
Malaysia, Myanmar, the People’s Republic of North Korea, Thailand and Vietnam.  For details see
Annex 7.  Only the agreement with the European Union provides for preferential treatment for Lao
PDR exports, granted under the EU GSP Scheme.  The list of bilateral agreements is in Annex 7.
2. Economic integration, customs union and free-trade area agreements
The Lao PDR joined the ASEAN Free Trade Area (AFTA) in July 1997.  Under AFTA, the
Lao PDR is entitled to preferential access to ASEAN markets and provides reciprocal access to other
ASEAN countries in its markets through the Common Effective Preferential Tariff (CEPT)
Agreement.
The CEPT Agreement obliges members to reduce tariffs under the CEPT scheme to 0 per
cent.  Timetables for reductions vary according to when countries joined ASEAN.  The original six
members of ASEAN are committed to reduce most tariffs to a maximum of 0 per cent by 2003.  The
commitment of the Lao PDR is to reach this target by 2008.
However, two categories of products are excluded from the above timetable.  One is products
on what is called the "Sensitive List".  These are mainly unprocessed agricultural products.  They
have to be reduced to a maximum of 0 to 5 per ce nt by the year 2010 for the ASEAN Six and 2015 for
the Lao PDR.  The other is products on the General Exceptions List.
Products falling within the first target dates for tariff reductions under AFTA are divided
between an Inclusion List and a Temporary Exclusion List.  When products are listed in the Inclusion
List, a right of access at the preferential rate is established, subject to a reciprocity right being
satisfied.  If tariffs of both countries are over 20 per cent, then access at the preferential rate is not
granted.  Products set out in the Temporary Exclusion List do not create rights of access at
preferential rates until they are shifted to the Inclusion List.  All AFTA members are under anobligation to shift tariffs on the Temporary Exclusion List to the Inclusion List so that they are
reduced to 0 per cent by the target date.
The Lao PDR has listed 1247 tariff lines on its Inclusion List (35.1 per cent of its total tariff
lines) and 2126 tariffs on the Temporary Exclusion List (59.8 per cent).  The effect of these
commitments will mean that by 2008, 94.9 per cent of the total tariff lines of the Lao PDR for tradewith other ASEAN countries will be at a maximum of 5 per cent.  The tariff commitments of the Lao
PDR to AFTA have been supplied to the ASEAN secretariat.WT/ACC/LAO/3
Page 50
As a member of ASEAN, Lao PDR is also member of the ASEAN Framework Agreement on
Services.  The Agreement commits members of ASEAN to make commitments to open services
markets which go beyond the commitments made under the GATS Agreement.  It does not create an
obligation to provide national treatment to other members of AFTA.
Seven areas have been identified for priority - Transport, Construction, Finance-Banking,
Maritime Transport, Business Services, Teleco mmunication and Tourism Services.  Lao PDR has
made commitments in these sectors.  Details have been provided to the ASEAN Secretariat.
The Lao PDR is also a member of the ASEAN investment area agreement.  This obliges
members of ASEAN to remove barriers to inve stment from other ASEAN countries.  Commitments
are being developed.
3. Labour markets integration agreements
The Lao PDR is not a member of any labour market integration agreement.
4. Multilateral economic cooperation, membership in the multilateral economic
organizations, trade-related programmes of other multilateral organizations
The Lao PDR joined ASEAN in 1997.  It is a member of the United Nations and therefore
participates in ESCAP and UNCTAD.
List of Lao PDR’s Membership of International Organizations
Organizations Date of Membership
Association of South-East Asian Nations (ASEAN) 23 July 1997
Asia Development Bank (ADB)
Authorities Internationale des fond Maritimes
Bureau of International Exhibition (BIE)
Economic and Social Commission for Asia and the Pacific (ESCAP)
Food and Agriculture Organization (FAO) 9 August 1960
Franco Phonie
International Civil Aviation Organization (ICAO) 9 August 1960
International Development Association (IDA) 9 August 1960
International Fund for Agricultural Development (IFAD) 13 December 1978
International Labour Organization (ILO) 9 August 1960
International Maritime Organization (IMO) 9 August 1960
International Telecommunication Union (ITU) 9 August 1960
International Center for the Settlement of Investment Disputes (ICSID)
International Finance Corporation (IFC) 9 August 1960
International Monetary Fund (IMF) 9 August 1960
Multilateral Investment Guarantee Agency (MIGA)
United Nations (UN) 14 December 1955
United Nations Educational, Scientific and Cultural Organization (UNESCO) 9 August 1960
United Nations Population Fund (UNFPA)
United Nations Industrial Development Organization (UNIDO) 21 June 1985
United Nations Development Program (UNDP)
United Nations International Drug Control Program (UNDCP)
Universal Postal Union (UPU) 9 August 1960
Office of the United Nations High Commissioner for Refugees (UNHCR)
United Nations Capital Development Fund (UNCDF)
United Nations Environment Program (UNEP)
United Nations Center for Human Settlements (UNCHS)
United Nations Development Fund for Women (UNIFEM)WT/ACC/LAO/3
Page 51
List of Lao PDR’s Membership of International Organizations
Organizations Date of Membership
World Health Organization (WHO) 9 August 1960
World Intellectual Property Organization (WIPO) 19 January 1950
World Meteorological Organization (WMO)
World Food Program (WFP)
World Bank (IBRD) 9 August 1960WT/ACC/LAO/3
Page 52
ANNEX 1
STATISTICS AND PUBLICATIONS
1. Foreign trade statistics for goods and services: responsible agencies
Foreign trade statistics are provided by the Cust oms Department of the Ministry of Finance and
the Ministry of Commerce and Tourism.  Line agenci es with responsibilities in services sectors produce
statistics for those sectors, for example, the Mini stry of Construction, Transport, Communication and
Post for transport and communication and the Bank of  the Lao PDR and the Ministry of Finance for the
finance industry.
2. Publications related to statistics
The National Statistics Centre of the State Planning Committee annually publishes the “Basic
Statistics about the Socio-Economic Development of the Lao PDR”
The Bank of the Lao PDR publishes “Annual Repor t of the Bank of the Lao PDR on  fiscal,
monetary and economic policy”.
3. Statistical Data
(a) main economic indicators
The following tables are provided:Table II.1 Lao PDR - Share of Gr oss Domestic Product by sector
Table II.2 Lao PDR - GDP by Industrial Origin 1994-98
Table II.3 Lao PDR - Real Growth GDP, 1995 - 98
Table II.4 Lao PDR - Selected Ec onomic and financial indicators
Table II.5 Lao PDR - Privatization of State-owned enterprises
Table II.6 Lao PDR – Strategic Enterprises to remain state owned as of 1998Table II.7 Lao PDR - General Go vernment Revenue 1995/96 - 1997/98
Table II.8 Lao PDR - General Gove rnment Expenditure 1996/97 - 1997/98
Table Annex 1.1 Lao PDR - Balance of Payments 1994 - 1998
Table Annex 1.2 Lao PDR - International Reserves 1993- 98
Table Annex 1.3 Lao PDR - Exchange rates 1996- 98Table Annex 1.4 Lao PDR - C onsumer price index 1993 - 1998
(b) foreign trade statistics
The following tables are provided:Table II.9 Lao PDR Composition of Exports 1994 - 98
Table II.10 Lao PDR Composition of Imports 1994 - 98
Table II.11 Lao PDR Direction of Trade, Exports 1993 - 97
Table II.12 Lao PDR Direction of Trade, Imports 1993 - 97Table II.13 Lao PDR Composition of  Non-factor Services 1994 - 98
(c) Lao PDR tariffs
Table Annex 1.5 Structure of Lao PDR MFN tariffs.WT/ACC/LAO/3
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(d) government procurement statistics
Table Annex 1.6 Lao PDR General Go vernment Operations 1994/95 - 1998/99.
(e) foreign investment statistics
Table Annex 1.7 Lao PDR Foreign Investment by Sector 1988 - 1999
Table Annex 1.8 Lao PDR Foreign Investment by source
Table II.1
Lao PDR - Share of Gross Domestic Product by Sector
(per cent of total)
1994 1995 1996 1997 1998 est.
Agriculture 56.35 54.29 52.19 52.02 52.08
Industry 17.76 18.77 20.60 20.82 21.73
Services 23.76 24.45 24.81 24.95 25.15
Import duties 2.13 2.49 2.40 2.01 1.05
Total 100.00 100.00 100.00 100.00 100.00
(Source:  Bank of Lao PDR)
Table II. 2
Lao PDR: GDP by Industrial Origin, 1994-98
(in billions of Kip, at 1990 constant market prices)
1994 1995 1996 1997 1998 est
Agriculture 439.2 453.7 466.2 498.7 517.1
Crops 221.6 216.0 222.3 253.4 269.6
Livestock and fishery 172.6 179.0 183.9 188.3 193
Forestry 45.8 59.0 59.8 56.9 54.4
Industry 138.6 156.8 183.9 198.8 215.7
Mining and quarrying 1.7 1.7 2.7 3.6 4.1
Manufacturing 98.8 116.2 137.2 150.0 164.5
Construction 25.9 27.7 31.1 32.6 26.7
Electricity, gas, water 12.3 11.2 12.8 12.6 20.5
Services 185.4 204.3 221.6 238.3 249.7
Transportation, storage and communication 36.9 43.6 48.0 52.9 56.8
Wholesale and retail trade 63.2 69.0 76.7 85.0 102.3
Banking, insurance and real estate 8.5 12.0 11.7 12.7 1.6
Ownership of dwellings 27.5 28.4 30.1 30.9 28.1
Public wage bill 28.9 27.6 27.7 28.0 29.3
Nonprofit institutions 10.1 9.9 10.6 10.5 12.4
Hotels and restaurants 9.2 12.4 15.0 16.5 17.6
Other 1.1 1.3 1.4 1.5 1.5
GDP at factor cost (source: IMF) 764.0 814.9 869.6 935.8 982.5
Import duties 16.7 20.8 21.4 19.1 10.4
GDP at market prices 780.7 835.7 893.2 955.0 992.9
Nominal GDP at market prices 1,108 1,419 1,726 2,200 4,2600
(Source:  Bank of Lao PDR)WT/ACC/LAO/3
Page 54
Table II.3
Lao PDR: Real Growth GDP, 1995 -98 (percentage)
1994 1995 1996 1997 1998
Agriculture 8.3 3.1 2.8 7.0 3.7
Crops 12.7 -2.5 2.9 14.0 6.4
Livestock and fishery 4.3 3.7 2.8 2.4 2.5
Forestry 4.0 28.2 2.0 -4.9 -4.4
Industry 10.7 13.1 17.3 8.1 8.5
Mining and quarrying 30.4 -3.7 61.2 28.6 13.8
Manufacturing 7.0 17.7 18.1 9.3 9.6
Construction 17.2 5.6 13.6 5.0 -18.2
Electricity, gas, water 29.0 -8.8 15.0 -1.9 62.7
Services 5.5 10.2 8.5 7.5 4.8
Transportation, storage and
communication4.3 18.2 10.1 10.3 7.4
Wholesale and retail trade 7.9 9.3 11.2 10.8 20.2
Banking, insurance and real
estate8.2 42.0 -2.7 9.0 -87.0
Ownership of dwellings 8.6 3.4 6.2 2.5 -9.1
Public wage bill -6.6 -4.5 4.0 1.1 4.5
Non-profit institutions -3.8 2.4 7.9 -1.2 18.1
Hotels and restaurants 53.6 35.0 14.5 9.6 6.2
Other 3.0 15.4 16.4 3.2 -1.3
GDP at factor cost 8.0 7.0 6.7 7.6 5.0
Import duties 13.2 25.0 8.6 -10.5 -45.7
GDP at market prices 8.1 7.0 6.8 6.9 4.0
(Source:  Bank of Lao PDR)WT/ACC/LAO/3
Page 55
Table II.4
Lao PDR: Selected Economic and Financial Indicators
1994 1995 1996 19971998
(est.)
Growth (percentage change in GDP) 8.0 7.0 6.0 7.2 4.0
Prices (per cent change)
Consumer prices (end-year to end-year) 6.8 25.7 7.0 26.6 142.0
Government budget (percentage of GDP)
Revenue 12.3 12.2 13.0 11.3 11.2
Expenditure 23.8 21.9 22.1 21.3 26.9
Current account balance (excluding grants) 0.4 1.4 2.8 1.8 3.0
Overall balance
Excluding grants -11.5 -9.7 -9.1 -10.1 -15.8
Including grants -5.2 -4.2 -5.6 -6.6 -10.0
Domestic financing 0.5 -0.4 -1.1 0.9 3.3
Foreign financing 4.7 4.6 6.7 5.6 6.7
Money and credit (per cent change, end of period)
Broad money 31.9 16.4 26.7 64.9 113.3
Credit to the private sector 50.0 30.4 20.8 67.3 76.3
Interest rates (per cent change, end of period)
On one year deposits 12 16-19 16-19 17.5 19-25
On short term loans 24 22-28 24-27 20-27 30-36
External trade (percentage change)
Exports (value in US$) 24.9 4.3 2.6 -1.4 6.3
Imports (value in US$) 30.6 4.4 17.1 -6.0 -14.7
Balance of payments (percentage of GDP)
External current account balance
Including official transfers -6.3 -6.9 -12.2 -10.6 -4.7
Excluding official transfers -14.4 -13.0 -16.6 -16.2 -10.6
Overall balance ( in US$ millions) -11 15 69 -31 -17.8
Gross foreign reserves (in US$ millions)
Gross official reserves (GOR) 61 93 167 136 114
GOR in months of total imports, CIF 1.3 1.9 2.9 2.5 2.5
External debt (in per cent)
Ratio of debt to GDP 38.2 37.7 43.5 55.0 87.6
Debt services ratio 3.3 5.7 5.3 8.9 8.4
Exchange rate (Kip per US dollar ,end of period)
Official 719 925 954 2,152 4,274
Parallel market 730 940 975 2,205 4,750
(Source:  Bank of Lao PDR)WT/ACC/LAO/3
Page 56
Table II.5
Lao PDR: Privatization of State-owned enterprises
Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Total privatized 2 3 13 22 14 11 11 16 13 To be
completed
Mode
- Lease 2 3 12 19 8 5 6 Ibid
- Hire purchase 1 3 2 Ibid
- Sale 6 6 11 10 9 Ibid
- Transfer to Province 2 Ibid
Scheduled for disposal 32
(Source: IMF 1998 Staff Country Report)
Table II.6
Lao PDR – Strategic Enterprises to remain
state-owned and not to be privatized as of 1998
EnterpriseAsset value
(Kip millions)Number of
employees
Prime Minister’s Office
Lao National Tourism 350 29
Ministry of Industry and Handicraft
Electricite Du Lao (DDL) 139,548 2688
Ministry of Commerce
Lao Trade Import-Export Company 1,320 96
Magazin D’Etat Pour les Missions Etrangeres 1,413 40
Technical-Materials Supply Company 657 9
Vehicle and Spare Parts Supply Company 1,229 40
Lao (State) Fuel Company 4,914 254
Ministry of Communication, Transport, Post & Construction
Lao Water Supply Company 2,500 375
Lao Post Office Company 7,560 1,167
Ministry of Education
Editing and Printing Enterprise 506 80
Educational Material Products Factory 114 6
Ministry of Culture and Information
The Lao State Printing Enterprise 492 129
Ministry of Public Health
Pharmaceutical Factories No 2 and 3 4,258 339
Ministry of Labour and Social Welfare
Employment Service Company 155 20
The Central Youth Federation
Youth Printing Factory 256 24
Ministry of Finance
Lao National Lottery 2,459 36
Mountains Development Company (Phoudoi) 17,093 3,200
Development of Agro-Forestry Industry (DAFI) 19,865 872
Agro-Forestry and Service Company (Northern WoodCompany)17,179 784
Bank of the Lao PDR**
Sethathirath Bank 3,920 99
Nakhoneluan Bank 995 74
Bank for Foreign Trade (BCEL) 4,496 141
Lane Xang Bank 2,338 208WT/ACC/LAO/3
Page 57
Table II.6
Lao PDR – Strategic Enterprises to remain
state-owned and not to be privatized as of 1998
EnterpriseAsset value
(Kip millions)Number of
employees
Agricultural Promotion Bank 1,000 381
Lao Mai Bank 2,394 129
Pak Tai Bank 3,224 189
Aloun Mai Bank 663 53
Vientiane Municipality
Bus Transport Service Commission 3,276 171
Vientiane Municipality’s Printing Works 310 51
Luang Prabang Province
Irrigation Company 378 49
Luang Prabang Tourist Company 133 28
Savannakhet Province
Savan Wood Company 61 134
(Source:  IMF 1998 Staff Country Report)
**Note: In 1999, six of the state-owned commercial banks were consolidated into two banks.
Table II.7
Lao PDR General Government revenue
1995/96 - 1997/98 (Kip billions)
1995/96 1996/97 1997/98 1998/99 Budget
Tax revenue 176.0 189.6 290.3 552.7
Profit tax 20.7 23.4 33.6 64.0
Income tax 13.5 11.5 19.7 32.0
Agricultural land tax 2.1 2.5 3.1 4.5
Business licenses 0.1 0.2 0.3 0.8
Turnover tax 33.9 40.0 62.5 131.8
Tax on foreign trade 46.7 53.3 58.3 124.0
Import duties 40.6 47.0 50.8 100.0
Export duties 6.0 6.3 7.5 24.0
Excise tax 15.5 17.9 49.4 109.6
Timber royalties 34.6 31.7 36.9 35.0
Hydro royalties 0.0 0.0 4.2 9.0
Other 8.8 9.1 22.3 42.1
Non-tax revenue 41.4 38.7 76.7 116.5
Depreciation/dividend
transfers5.2 9.4 7.1 9.1
Other 36.2 29.3 69.6 107.4
Total Revenue 217.3 228.3 367.0 669.2
(Source:  Bank of Lao PDR/Ministry of Finance)WT/ACC/LAO/3
Page 58
Table II.  8
Lao PDR General Government Expenditures
(annual total, Kip billions)
1996/97 1997/98
Ministries 430.2 541.5
Public Health 8.8 17.3
Social Welfare 19.4 14.9
Education 31.0 37.4
Information and culture 7.6 6.2
Agriculture and forestry 10.7 17.5
Industry (includes Mining and Power) 43.6 45.2
Communication, transport and post 66.9 108.5
Commerce 0.2 0.4
Interior 15.3 17.3
Defense 49.2 53.5
Justice 0.4 0.5
Finance 1.4 1.9
Administration 24.5 17.9
Foreign Affairs 4.9 7.7
Committee for Planning and Coordination 0.3 0.4
Provinces 120.6 155.1
(Source: IMF 1998 Staff Country Report)
Table Annex 1.1
Lao PDR Balance of Payments 1994 - 1998 ( US$ millions)
1994 1995 1996 1997 1998
Current account -97 -124 -226 -185 -60
(excluding official transfers) -221 -223 -307 -282 -128.5
Merchandize trade balance -264 -276 -307 -331 -216
Exports f.o.b. 300 313 321 317 337
(per cent change) 4.3 2.6 -1.4 6.3
Imports c.i.f. 564 589 690 648 553
(per cent change) 4.4 17.1 -6.0 -14.7
Services (net) 35 27 25 28 71
Factor income (net) -2 -6 -7 -21 -37
Of which Interest payments 5 6 6 -19 -26
Transfers (net) 134 131 125 140 123
P r i v a t e 1 02 24 34 3 4 9
Official 125 109 82 97 74
Of which technical assistance 21 14 14 19 17
Capital account 83.7 138 297.5 131.3 62.3
Long-term loans 65 83 139 161 131
Disbursements 73 98 155 179 150
Amortization -8 -15 -16 -18 -19
Foreign investment incl. ext. loans 60 95 176 89 46
Other private flows, errors and omissions -40 -39 -20 -110 -145
Commercial banks (net) 8 10 -7 14 -18
Errors and omissions -48 -49 -13 -125 -126
Overall Balance -13 15 72.7 -53.1 7.4
Financing 12 -15 -72.7 53.1 -7.4
Central bank net foreign assets 12 -16 -69 30 18
Assets (increase - ) 2 -31 -74 31 21
Liabilities (reduction -) 10 16 5 -1 -3WT/ACC/LAO/3
Page 59
Table Annex 1.1
Lao PDR Balance of Payments 1994 - 1998 ( US$ millions)
1994 1995 1996 1997 1998
Current account as % of GDP -6.3 -6.9 -12.2 -10.6 -4.5
(excluding official assistance) -14.4 -13.0 -16.6 -16.3 -10.5
(Source:  Bank of Lao PDR and IMF)
Table Annex 1.2
Lao PDR International Reserves 1993 - 98 (US$ millions)
1993 1994 1995 1996 1997 1998 (est.)
Central Bank
Foreign Assets 63.3 61.1 92.5 166.7 135.5 114.3
Foreign Liabilities 36.3 46.6 62.2 67.0 66.4 62.9
Net foreign assets 27.0 14.5* 30.3 99.7 69.2 51.4
Commercial Banks
Foreign Assets 87.7 97.1 98.6 112.4 84.8 107.8
Foreign Liabilities 12.9 29.9 41.7 49.2 35.7 40.4
Net foreign assets 74.8 67.1 56.9 63.6 49.1 67.4
Total
Foreign Assets 151.0 158.2 191.1 279.5 220.4 222.1
Foreign Liabilities 49.2 76.5 103.9 116.2 102.1 103.3
Net foreign assets 101.8 81.7 87.2 163.3 118.2 118.8
(Source:  Bank of Lao PDR)
Table Annex 1.3
Lao PDR Official and Parallel Exchange Rates 1996 - 1998
Exchange rates Dec 96 Dec 97 Mar 98 Jun 98 Sep 98 Dec 98
Parallel-market monthly average
Buy (Kip/dollar) 978.16 2060.00 2427.00 3678.00 4483.00 4534.00
Sell (Kip/dollar) 983.16 2105.00 2522.00 3810.00 4622.00 4638.00
Official exchange rate monthly average
Buy (Kip/dollar) 935.00 2015.00 2407.00 3401.00 3916.00 4182.00
Sell (Kip/dollar) 943.00 2023.00 2421.00 3420.00 3945.00 4252.00
Parallel-market gold monthly average
Buy (Kip/dollar) 174.00 202.10 340.00 480.00 500.00 570.00
Sell (Kip/dollar) 185.00 261.31 380.00 500.00 565.00 650.00
(Source:  Bank of Lao PDR)WT/ACC/LAO/3
Page 60
Table Annex 1.4
Lao PDR - Consumer price index 1993 - 1998
(Percentage change over twelve months)
1993 1994 1995 1996 1997 1998
January 6.43 7.45 7.70 26.98 11.4 31.3
February 6.42 7.34 8.51 29.09 12.0 44.6
March 6.07 9.34 10.54 24.97 12.4 45.5
April 7.58 7.98 14.75 19.71 12.3 62.4
May 5.16 7.29 21.12 13.76 16.2 62.7
June 5.19 6.95 18.99 13.25 15.9 101.5
July 4.35 5.11 19.56 11.42 19.6 103.8
August 5.19 5.01 24.67 4.56 25.7 99.5
September 6.54 5.88 27.05 2.95 27.7 106.5
October 6.68 5.29 26.98 5.65 26.9 112.5
November 7.03 7.07 26.86 6.99 25.1 136.3
December 8.94 6.78 25.66 7.28 26.6 141.9
Average 6.30 6.79 19.37 13.88 19.30 87.40
(Source:  Bank of Lao PDR)
Table II.9
Lao PDR:  Composition of Exports 1994-1998  (in millions of U.S. dollars)
21 April 2000 1994 1995 1996 1997 1998
Customs Data 147.5 166.6 195.3 142.3 181.9
Wood products 96.1 88.3 124.6 89.7 115.4
Logs 41.8 28.7 34.3 16.7 10.5
Timber 48.5 51.5 78.7 67.4 87.4
Others (including semi-finished and finished products) 5.8 8.1 11.6 5.6 17.5
Coffee 3.1 21.3 25.0 19.2 48.0
Volume (mil. pounds) 4.3 9.2 9.6
Price (US$ per pound) 0.7 2.3 2.6
Agriculture/forest products 12.1 13.7 17.8 18.1 8.4
Other products (excludes garments and wood products) 36.3 43.3 27.9 15.3 10.1
Garments 58.2 76.7 64.1 90.5 70.2
Motorcycles 46.2 17.7 12.5 17.1 17.8
Car re-exports 4.5 0.0 0.0 0.0 0.0
Electricity 24.8 24.2 29.7 20.8 66.5
Gold re-exports 18.8 21.9 15.2 41.5 0.0
Fuel purchased by foreign carriers 0.4 0.4 0.4 0.5 0.4
Adjustment for Russian dept. 5.7 4.2 4.2 4.0
TOTAL EXPORTS 300.4 313.2 321.4 316.8 340.8
MEMORANDUM ITEM
Total Exports/GDP (percentage) 19.5 17.5 17.4 18.2 27.7
Growth rate exports (percentage) 24.9 4.3 2.6 -1.4 7.6
Growth rate of exports excluding re-exports (percentage) 25.0 5.1 5.1 -10.1 23.8
(Source:  Bank of Lao PDR and Customs Department)WT/ACC/LAO/3
Page 61
Table II.10
Lao PDR: Composition of Imports 1994-1998
(in millions of U.S. dollars)
21 April 2000 1994 1995 1996 1997 1998
Customs data (cif) 422.6 473.1 585.0 494.5 460.8
Investment Goods 146.1 189.3 277.0 226.8 226.7
Machinery and equipment 32.0 43.8 71.3 52.0 44.4
Vehicles (50% of total) 25.0 36.0 71.7 53.8 39.4
Fuel (50% of total) 21.4 30.8 32.8 38.2 61.8
Construction/electrical equipment 67.7 78.8 101.2 82.8 81.1
Consumption goods 276.5 283.8 308.0 267.7 234.1
Materials for garment industry 51.3 66.3 70.0 73.7 66.8
Motorcycle parts for assembly 34.6 13.3 12.0 24.9 17.0
Cars for re-export 4.5 0.0 0.0 0.0 0.0
Gold and silver (includes gold for re-export)46.8 29.5 18.8 50.4 0.7
Electricity 2.4 3.1 2.6 3.2 5.8
Fuel purchased abroad by Lao carriers 2.0 3.5 1.2 1.3 1.7
Total recorded imports (cif) 564.1 588.8 689.6 647.9 552.8
Unrecorded imports 0.0 0.0 0.0 0.0 0.0
TOTAL IMPORTS (cif) 564.1 588.8 689.6 647.9 552.8
Imports fob (less 8%) 519.0 541.7 634.4 596.1 508.6
MEMORANDUM ITEMS
Total import/GDP (%) 36.6% 32.9% 37.3% 37.3% 45.0%
Growth rate total imports (per cent) 30.6% 4.4% 17.1% -6.0% -14.7%
Growth rate imports, excl. re-exports 30.9% 4.8% 19.0% -10.1% -8.8%
Investment goods imports
from aid and grants 65.9 48.4 37.3 44.8 32.0
from project loans 36.6 58.1 92.3 119.0 104.7
from hydropower investment 15.5 40.9 89.6 52.5 22.4
from other sources 28.1 42.0 57.8 49.0 52.6
of which:  other FDI related 25.9 21.0 7.6 18.5 19.0
(Source:  Bank of Lao PDR and Customs Department)
Table II.11
Lao PDR: Direction of Trade, Exports 1993-1997 (US$ millions)
1993 1994 1995 1996 1997
Thailand 74.8 77.2 83.3 96.7 70.1
Vietnam 23.1 81.2 87.7 157.6 135.2
France 12.6 10.3 11.1 8.2 20.0
United Kingdom 0.0 0.9 0.9 6.6 14.9
United States 10.7 5.0 5.3 2.7 7.0
Russia 7.4 1.0 1.1 0.5 0.0
China 25.5 8.1 8.8 0.8 0.3
Germany 9.0 11.8 12.7 4.8 16.2
Taiwan 10.1 4.6 5.0 1.3 0.5
Japan 8.8 4.9 5.3 1.7 6.7
Finland 2.0 1.6 1.7 0.8 1.5
Netherlands 3.6 5.0 5.4 0.0 0.1WT/ACC/LAO/3
Page 62
Table II.11
Lao PDR: Direction of Trade, Exports 1993-1997 (US$ millions)
1993 1994 1995 1996 1997
Italy 1.9 0.7 0.8 1.0 4.7
Korea 1.9 0.0 0.0 0.5 0.7
Belgium 0.4 1.2 1.3 2.0 17.9
Norway 0.1 0.6 0.7 1.8 3.2
Singapore 0.2 0.1 0.1 0.8 0.3
Other 48.4 86.2 81.6 32.9 17.9
Total 240.5 300.4 312.8 320.7 316.9
(Source:  Lao PDR Ministry of Commerce and Tourism, published by IMF)
Table II.12
Lao PDR: Direction of Trade, Imports 1993 - 97 (US$ millions)
1993 1994 1995 1996 1997
Thailand 164.8 270.3 287.8 310.0 336.6
Japan 56.1 45.8 48.8 52.5 10.4
Vietnam 19.7 22.5 23.9 25.8 25.1
Singapore 19.2 14.7 15.7 16.9 0.6
China 18.1 20.2 21.5 23.2 4.9
France 6.6 5.9 6.2 6.7 1.7
Taiwan 4.8 4.6 4.9 5.3 4.3
United States 4.4 1.4 1.5 1.6 0.6
Hong Kong 4.3 7.0 7.5 8.1 9.5
Russia 2.7 2.6 2.8 3.0 0.0
Cambodia 3.0 2.6 2.8 3.0 0.0
Korea 2.3 2.2 2.3 2.5 3.3
Australia 3.4 0.4 0.4 0.5 0.3
Denmark 0.5 0.5 0.6 0.6 0.0
Macao 0.4 0.4 0.4 0.5 1.3
Pakistan 0.8 0.7 0.8 0.8 0.0
Other 120.8 162.3 160.9 228.6 249.5
Total 431.9 564.1 588.8 689.6 647.9
(Source Ministry of Commerce and Tourism, published by IMF)WT/ACC/LAO/3
Page 63
Table II.13
Lao PDR Composition of Non-factor Services 1994-1998
(US$ million)
1994 1995 1996 1997 1998
Non factor services (net) 35.0 27.1 25.0 27.5 70.6
Receipts 85.7 96.5 104.3 100.4 129.7
Transportation 11.4 15.1 16.0 17.7 18.8
Overflight 8.4 10.3 9.9 10.5 11.8
Freight to Lao carriers 0.1 2.7 3.3 3.7 2.9
International fares to Lao carriers 1.9 1.2 1.4 2.5 2.2
Lao port charges 1.0 0.9 1.5 1.0 1.9
Lao road charges 0.0 0.0 0.0 0.0 0.0
Travel 42.7 51.4 62.3 54.0 80.0
Communications 0.0 0.4 0.4 0.6 0.7
Insurance 0.4 0.4 0.4 0.5 0.8
Embassies and International organizations 31.2 29.2 25.2 27.6 29.4
Payments 50.7 69.4 79.3 72.9 59.1
Transportation 7.9 4.0 7.1 6.3 5.4
International fares to foreign carriers 4.3 3.3 6.3 5.4 4.6
Foreign port charges 3.6 0.4 0.8 0.9 0.8
Overflight 0.0 0.3 0.0 0.0 0.0
Travel 18.0 29.6 22.2 21.0 17.2
Communications 0.8 0.4 0.6 0.7 0.8
Construction 10.8 24.0 36.1 35.4 26.1
Hydropower 2.9 7.4 16.9 12.0 3.6
Other projects 7.9 16.6 19.2 23.5 22.5
Technical Assistance (50% of inflow) 10.5 8.4 9.9 5.9 6.3
Lao embassies abroad (non-salary) 2.7 3.0 3.4 3.6 3.3
(Source:  Bank of Lao PDR)WT/ACC/LAO/3
Page 64
Lao PDR Tariff
Table Annex 1.5
Structure of Lao PDR MFN tariff
Tariff
lines
at 5
%Tariffs above 5% Notable higher tariffs HS
chapter
groupProduct for groupNo.
of
tariff
lines No of
linesLeading groups
No of
linesMedian
tariffHS line tariff
01 Live animals 15 3 Live cattle, pigs,
poultry12 10 (12
lines)01 Live animals 10
02-04 Animal and fish
products82 11 Meat of cattle, swine,
poultry, fish, dairyproduce, eggs71 30 (42
lines)02.02
02.040304.0104.0604.03Beef
Sheep meatFish productsMilkCheeseYogurt30
301051020
05 Products of
animals17 1 Human hair, skins,
semen16 10 (16
lines)05.11 Bovine semen 5
06-07 Plants and edible
vegetables55 7 Fresh and processed
vegetables48 40 (55
lines)07 Vegetables 40
08-09 Edible fruits,
coffee, spices63 5 Fresh and processed
fruits58 30 (31
lines)08
09.0109.02Fresh fruit
CoffeeTea30
4040
10-11 Cereal and
products ofmilling44 44 Wheat, rice, grains and
flour5 (44
lines)
12-14 Oil seeds,
industrial ormedicinal plants54 20 Soya bean, other
oilseeds, nuts34 20 (24
lines)12.00
12.09Oilseeds
Seeds for sowing20
5
15 Animal and
vegetable fats31 7 Lard, olive oil and
other vegetable oils,margarine24 10 (22
lines)15.13
15.1515.17Copra oil
Other vegetable oilsMargarine30
1010
16 Preparations of
meat, fish.Includingsausages16 Nil Sausages, canned meats 16 30 (15
lines)16.01 Sausages 30
17 Sugar and sugar
confectionery16 Nil Raw sugar, molasses,
confectionery16 30 (15
lines)17.01
17.04Raw sugar
Sugar confectionery10
30
18-21 Cocoa and cocoa
products,preparations ofcereal79 3 Coca bean, butter fat,
bread, pastry, biscuits,processed coffee76 30 (44
lines)18
21Cocoa
Processed coffee10
20
22 Beverages and
spirits21 Nil Mineral water, wine,
spirits, beer21 30 (12
lines)22.01
22.0322.04Mineral Water
BeerWine40
4030
23 Residues and
waste from foodindustry24 24 Waste food products Nil
24 Tobacco and
tobacco products9 2 Manufactured tobacco,
cigarettes7 40 (6
lines)24.01
24.02Raw tobacco
Cigarettes5
40
25 – 27 Mineral products 114 107 7  10  (2
lines)2523
27102710alumnus cement
gasoline2710 oils/greases10
20/1510
28 – 38 Chemicals 338 241 Most basic chemicals 97 10
(19lines)30
3233333334343435363636
37
3838medicaments
paintscosmeticsperfumesdeodorantssoaporganic agentspolishesadhesivesmatchespropellant and explosivesfireworks, flares
photo supplies
ind chemicalsfoundry binders10
2020301030/20401010201020
10
1010
39 – 40 Plastics 128 55 36 products,
bicycle tubes39 range of polymers40 rubber73 10
(58lines)39
393939polymer pipes/tubes
plastic boxesplastic bagstableware20
404020
41 – 43 Hides, leathers,
furs74 3 41 patent leather
41 waste leather74 20 (21
lines)42
42saddlery
leather products30
10WT/ACC/LAO/3
Page 65
Table Annex 1.5
Structure of Lao PDR MFN tariff
Tariff
lines
at 5
%Tariffs above 5% Notable higher tariffs HS
chapter
groupProduct for groupNo.
of
tariff
lines No of
linesLeading groups
No of
linesMedian
tariffHS line tariff
44 – 46 Wood and wood
products106 3 45 cork 103 20 (23
lines)44
44.07
44.0844.0944.17-194444444444.0345fuel
sawn wood
veneerparquetry woodboxes, windows,assembled parquetparticle boardfiberboardplywoodtablewarerough wood (generalexclusion item)cork products10
20
404030402040202010
(Summary:  40-13 lines, 30-16 lines, 10-4 lines)
47 – 49 Pulp and paper 130 95 Pulp and paper
Products35 10 (26
lines)48
484848
48
4848484849cigarette paper
wall paperfloor coveringsenvelopes
toilet paper
personal paper productsboxeslabelspaper productspostcards20/10
101010
20
1510101010
50-63 Textiles and
clothing407 211 raw silk
cotton, cardedsilk and cotton yarnunprocessed wool
wool yarn
animal fur yarnmetallic yarn287 10 (279
lines)50
5256silkworm cocoons
raw cottontextile wadding20
2020
64 – 67 Footwear
/headwear47 4 43 10 (25
lines)65
666767headwear
umbrellas/walking sticksartificial flowerswigs20
202020
68 – 70 Stones/ ceramics/
glass115 96 Stone, concrete,
asbestos and glassbricks and productsAsphaltfiberglass21 10
(19lines)68
686969asbestos fiber
mica, stone substancessilicone productsbuilding bricks10
101020
71 Precious
Metals35 35
72 – 83 Iron and non-alloy
steel297 218 Basic lead, zinc and tin
products.Basic non-ferrousmetalsManufactured metalproducts.79 10 (64
lines)78
798081828383lead pipes
zinc building productsall tin materials andproductsrarer metalscutleryoffice equipment83 made up metal article(including electric wire)10
2020
10
102010
84 Mechanical
products(includingengines)403 352 Machinery, machine
toolsAgriculturalmachinery.Food processingmachinery except dairyand sugar machinery.Machinery for printingMachinery forhousehold sewing ortextile manufacture.
Office or ADP
equipment.Mining equipment.Generally machineryusable as well forconsumer purposes,e.g.  air conditioners.51 10 (48
lines)84.07
84.14/1584.1884.2284.07 engines (internal
combustion)marine propulsion>50cc for motor vehicles50 – 250 cc250 – 1000 cc<1000ccparts forfans and air conditionersrefrigeratorsdishwashers10
3040404020
20
1010WT/ACC/LAO/3
Page 66
Table Annex 1.5
Structure of Lao PDR MFN tariff
Tariff
lines
at 5
%Tariffs above 5% Notable higher tariffs HS
chapter
groupProduct for groupNo.
of
tariff
lines No of
linesLeading groups
No of
linesMedian
tariffHS line tariff
(Summary of levels: 40 - 3 lines;  30 - 1 line; 20 - 7
lines)
85 Electrical
Equipment200 130 Electric motors,
generators,transformers,Batteries, domestictools,spark plugs, signalingequipment formotorcycles, radio
transmission
equipment,electrical capacitors orswitching equipment,diodes, cathodes orinsulators.70 10
(47lines)85.07
85.09/16
85.10
85.13
85.16batteries
domestic appliancesshaversportable lampswater heaterstelephonic and audioequipmentConsumer electronic
audio and video
equipment and receivers.10
1010101010
20
86 Transport
Equipment – rail18 18 Railway equipment
87 Transport
equipment –road77 10 crane lorries,
agricultural trailers67 10 (36
lines)Motor cars
Transport vehicles - 5 – 20 tonnes < 20 tonnesChassis, cabs for motorvehiclesMotorcycles > 50cc<250 ccBicycles, car spare parts,tractors40
30
20
40
3040
10
(Summary of levels: 40-16 lines; 30 - 3 lines; 20 -
12 lines)
88 – 89 Transport
equipment – airand water.16 16 10 (16
lines)Air and water vessels
Gliders, hang gliders,aircraft and aircraftarrestor and training gear10
10
90 – 92 Scientific
instruments228  110 Medical and scientific
equipmentAutomaticphotographicprocessing equipmentdrawing or measuringinstruments.118 10
93 Arms 1 1 30
94-96 Misc.
manufacturing123 41 Lamps,
Sporting equipmentBallpoint pensartworks82 10 (61
lines)
97 Art/antique 5 5
(Source:  Lao PDR Schedules prepared for accession to the ASEAN CEPT Agreement)
Government procurement
Table Annex 1.6
Lao PDR General Government Operations 1994/95 - 1998/99
(billions of Kip)
94/95 95/96 96/97 97/9898/99
Budget98/99
Projected
Current expenditure 289.8 360.7 430.2 886.1 1094.4 1685.1
Materials and supplies 42.7 52.0 56.9 62.9 132.3 148.3
(Source:  IMF)WT/ACC/LAO/3
Page 67
Foreign investment statistics
Table Annex 1.7
Lao PDR Foreign Investment by Sector 1988-1999
(US$ millions)
Sector Total projects Value
Agribusiness 82 130.4
Textiles and garments 78 73.0
Industry and Handicraft 134 473.7
Wood industry 37 167.6
Mining, oil 33 139.5
Trading 112 67.6
Hotel, tourism 34 600.6
Banking, insurance 12 83.8
Consultancy 33 7.1
Services 146 65.8
Construction 39 64.8
Telecom, transport 16 637.7
Electric power 7 4,500.8
TOTAL 763 7,012.4
(Source:  Foreign Investment Management Committee)
Table Annex 1.8
Lao PDR Foreign Investment by source
(US$ millions)
Country/territoryNo. of
ProjectsValue Country/territoryNo. of
ProjectsValue
Thailand 252 2,928.8 Germany 8 2.7
USA 44 1,490.3 Macao 1 2.5
South Korea 31 633.2 Canada 11 2.5
Malaysia 19 293.3 Finland 3 1.3
UK 18 69.2 Switzerland 3 1.1
Chinese Taipei 34 68.2 Sweden 7 0.9
China 68 63.0 Norway 3 0.9
Australia 44 41.8 New Zealand 3 0.9
France 86 37.4 Holland 4 0.8
Hong Kong 20 26.0 Denmark 6 0.5
Singapore 15 20.0 India 2 0.5
Russia 15 18.9 Austria 3 0.2
Japan 26 17.5 Ukraine 1 0.2
Vietnam So.  Rep. 19 10.6 Bangladesh 2 0.2
Indonesia 1 5.0 Cambodia 1 0.1
North Korea 1 3.3 Myanmar 1 0.1
Italy 6 3.2
Belgium 6 2.7
TOTAL 7,012.4
(Source:  Foreign Investment Management Committee)WT/ACC/LAO/3
Page 68
ANNEX 2
LIST OF LAWS AND LEGAL ACTS
1. Laws and legal acts regulating the activity of the customs authorities; responsible agencies.
i. Law - Customs – No. 4/94/NA:
Adopted on 18 July 1994 - Enacted on 13 August 1994
(Department of Customs, Ministry of Finance)
2. Laws and legal acts relating to non-tariff regulation of imports, exports and trade in transit
rules of origin:  responsible agencies.
i. Regulations on the Authorization for the Operation of the Import-Export Business -
No. 462/MOC
Adopted on 8 December 1993
(Ministry of Commerce)
ii. Notice of Amended to Notification No. 175/MOC, issued on 4 April 1994 – No.
870/MOC
Prohibited Goods for Import or Export
Adopted 19 September 1996
(Ministry of Commerce)
iii. Notification on the Import of Motor Cycles Over 250cc – No. 1552/MCTPC
Adopted 8 July 1996
(The Ministry of Communications, Transport, Post and Construction)
iv. Law - Forestry – No. 01/96:
Adopted on 11 October 1996, Enacted on 2 November 1996
(Ministry of Agriculture and Forestry)
v. Resolution on the Adoption of the Forestry Law No.  04/96
Adopted on 11 October 1996
(Ministry of Agriculture and Forestry)
vi. Decree on the Promulgation of the Forestry Law No. 125/PDR
Adopted on 2 November 1996
(Ministry of Agriculture and Forestry)
vii. Notification on the Management of Fore stry and the Timber Industry No. 11/PM
Adopted on 23 August 1999
(Ministry of Agriculture and Forestry)
viii. Decree on the Preservation of Cultural, Historical and Natural Heritage No. 03/PR
Adopted on 20 June 1997
(Ministry of Information and Culture)
ix. Regulations on the Control and Use of Plant Pesticides in the Lao PDR
No. 894/MOAF
Adopted on 21 November 1992
(The Ministry of Agriculture and Forestry)WT/ACC/LAO/3
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x. Regulations on the Quarantine of Plants in the Lao PDR No.069/MOAF
Adopted on 2 July 1993
(Ministry of Agriculture and Forestry)
xi. Regulations on the Management and Use of Plant Species and Seeds for Planting in
the Lao PDR No. 719/MOAF
Adopted on 3 December 1997
(Ministry of Forestry and Agriculture)
xii. Decree on the Quarantine of Pl ants in the Lao PDR No. 66/PM
Adopted 23 March 1993
(Ministry of Forestry and Agriculture)
xiii. Decree on the Management of the Standard s and Quality of Goods and Services No.
85/PM
Adopted on 2 November 1995
(Science Technology Environmental Agency)
xiv. Decree on Livestock Management in Lao PDR No. 85/PMO
Adopted on 31 May 1993
(Department of Agriculture and Forestry)
xv. Regulation on Livestock Management in Lao PDR No.  0004/MOAF
Adopted on 2 January 1997
(Department of Agriculture and Forestry)
xvi. Instruction for the Regulation on Livestock Management in Lao PDR No.
0005/MOAF
Adopted on 2 January 1997
(Department of Agriculture and Forestry
xvii. Provisions on the Control of Export-Oriented and Imported Foodstuffs No.
035/FMC
Adopted on 26 October 1991
(Ministry of Health)
xviii.  Elaborated Recommendations Relating to the Regulations on Quality Control of
Export-Oriented and Imported Foodstuffs No. 035/FMC
Adopted on 9 September 1991
(Ministry of Health)
xix. Provisions on Quality Control of Domestically Produced Food Products
No. 048FMC
Adopted 26 September 1991
(Ministry of Health)
xx. Provisions for Quality Control No. 105/FMC
Adopted 31 October 1991
(Ministry of Health)WT/ACC/LAO/3
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xxi. List of Medicines Prohibited in the Lao PDR based on Decree of the Ministry of
Public Health No. 740/MPH
Adopted on 3 April 1994
(Ministry of Health)
xxii. List of Chemical Products Under Restricted Control No. 1364/95/DFM
adopted in September 1995
(Ministry of Health)
xxiii.  Implementation of Rules and Regulations on Government Procurement of Goods
Construction Repairs and Services No. 01639/MOF
Adopted on 22 December 1998
(Ministry of Finance)
3. Laws and regulations relating to foreign investment:  responsible agencies.
i. Law on the Promotion and Management of Foreign Investment in the Lao PDR No.
1/94:
Adopted on 14 March 1994
(Science Technology Environmental Agency)
4. Other laws and legal acts dealing with economic issues that affect trade:  responsible
agencies.
i. The Constitution of the Lao PDR
Adopted on 15 August 1991
(The Ministry of Justice)
ii. Business Law No. 03/NA:
Adopted on 18 July 1994 - Enacted 17 August 1994
(Ministry of Commerce and Tourism)
iii. Decree on the Implementation of the Business Law No. 31/PMO
Adopted on 1 February 1996
(Ministry of Commerce and Tourism)
iv. Notification on the Implementation of Enterprise Registration Based on the Business
Law No. 750/MOC:
Adopted on 6 August 1996
(Ministry of Commerce)
v. Decree on Trademarks No. 06/PM
Adopted on 18 January 1995
(The Science, Technology and Environmental Agency, Prime Minister’s Office)
vi. Law - Domestic Investment  Promotion No 03/95/NA
Adopted 14 October 1995
(Science Technology Environmental Agency)
vii. Resolution Approving the Law on Domestic Investment Promotion  No.3/NA
Adopted 14 October 1995
(Science Technology Environmental Agency)WT/ACC/LAO/3
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viii. Decree on Domestic Invest ment Promotion No. 27/PM
Adopted 26 October 1995
(Science Technology Environmental Agency)
5. (a) Existing, laws, regulations or administrative guidelines, which significantly affect
trade in services.
i. Law on the Bank of the Lao PDR No. 5/95/NA
Adopted on 14 October 1995 - Enacted 26 October 1995
(Ministry of Finance)
ii. Decree on the Bank of Lao No. 95/PM
Adopted on 22 June 1993
(Ministry of Finance)
iii. Regulation on Commercial Banks and Financial Institutions’ Capital Adequacy
Under Supervision by the Bank  of the Lao PDR No. 02/BOL
Adopted on 15 January 1996
(Ministry of Finance)
iv. Regulation on Protecting Soundness Practices of the Commercial Banks and
Financial Institutions which are Under the Supervision of the Bank of the Lao PDR
No. 04/BOL
Adopted 15 January 1996
(Ministry of Finance)
v. Regulations on Foreign Currency Exposure No. 08BOL
Adopted on 7 May 1996
(Ministry of Finance)
vi. Regulation on Conditions for Establishing Banks in the Lao PDR
Adopted on 30 November 1995
(Ministry of Finance)
vii. Decree on Commercial Banks No. 01/NA
Adopted on 11 March 1997
(Ministry of Finance)
viii. Insurance Law No. 11/90/PSA
Adopted on 29 November 1990 - Enacted December 1990
(Ministry of Finance)
ix. Decree on the Management of Foreign Exchange and Precious Metals No. 53/PCM
Adopted on 7 September 1990
(Ministry of Finance)
x. Regulations on the Establishment of Businesses of Transportation Shipping and
Repair Services by the State; State Private Collectives and Private Individuals No.
1413/49/MCTPC
Adopted on 22 June 1996
(The Ministry of Communications, Transport, Post and Construction)WT/ACC/LAO/3
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xi. Law on Road Transportation No. 3/97/NA
Adopted on 12 April 1997, Enforced 31 May 1997
(The Ministry of Communications, Transport, Post and Construction)
xii. Decree on the Enforcement of the Law on Road Transportation No. 35/PDR
Adopted on 31 May 1997
(The Ministry of Communications, Transport, Post and Construction)
xiii. Decree on Private Education No. 64/PM
Adopted on 14 August 1995
(The Ministry of Education)
xiv. Regulations on the Management of Hotels and Guesthouses No. 159/OPM
Adopted on 30 July 1997
(The Ministry of Commerce and Tourism)
xv. Regulations on the Establishment and Management of Tourist Service Operators No.
1150/PM
Adopted on 25 October 1993
(Ministry of Commerce and Tourism)
(b) Publications or sources of information, concerning measures of general application,
of relevance to the GATS.
Information about measures relevant to the obligations of GATS is available at the agencies
responsible for the sector or activity.
Information about general measures relating to investment are available from the Foreign
Investment Management Committee at the Prime Minister's Office.
(c) Enquiry points, if any, as foreseen in Article III of GATS.
The Enquiry point as foreseen in Article III of the GATS is the Department of Foreign Trade
in the Ministry of Commerce and Tourism.WT/ACC/LAO/3
Page 73
ANNEX 3
INFORMATION ON IMPORT LICENSING PROCEDURES
I. OUTLINE OF THE SYSTEM
Businesses wishing to trade are required first to register as import/export companies.  See
details in Section IV.1 (a) on Policy Affecting Tr ade in Goods.  For imports other than yarn and
textiles used by the garment manufacturing industry and products listed on the ASEAN Free Trade
Area CEPT Inclusion List of the Lao PDR,  an import licence is required for each import.  MOCT
operates the system as an automatic licensing system.  It is administered by the Ministry of Commerce
and Tourism through its trade and tourism offices in the Municipality of Vientiane and the Provinces,subject to the prior approval of the imports by the relevant line Ministries where technical regulations
apply.
Where quantitative restrictions apply (fuel and lubricants, steel bars for construction, all types of
cement, motor vehicles and motor cycles) and controls exist for health and safety reasons, licenses are
not issued automatically.
II. PURPOSES AND COVERAGE OF LICENSING
1. Ministerial Decree No. 462/MOC of 8 December 1993 is the principal instrument under
which import licensing administered by the Ministry of Commerce and Tourism is maintained.  The
licensing of chemical imports is authorized by Notification No. 1364/95 of September 1995 from the
Ministry of Public Health.  Licensing is not statutorily required.  The Decree and the Notification donot leave product coverage to administrative discretion.  The Government can abolish the system
without legislative approval.
The licensing system is administered by the Ministry of Commerce and Tourism and covers
all products.  Licenses are granted automatically except for imports of fuels and lubricants, steel bars
for construction, casino equipment and rifles and guns for sporting and hunting purpose, all types ofcement and all types of motor vehicles.  Imports of these products require the prior approval of the
relevant line Ministry where technical regulations (health and safety and quarantine) apply.
2. With the exception of imports from ASEAN which are listed on the Lao PDR’s Inclusion List
for the AFTA CEPT scheme, import licensing applies to goods from all countries.
3. The purpose of non-automatic licensing is to monitor and control the quantity of imports:
(a) In the cases of steel bars and cement, the purpose is to protect small, infant industries.
Alternative methods of industry assistance are under consideration.
(b) In the case of automobiles and motorcycles, the purpose is to control traffic
congestion in the Lao PDR cities and towns.   Alternative methods of management are
under consideration.
(c) In the case of foodstuffs, seeds and chemical fertilizers, the reason is to protect health
and safety.
(d) Controls on print and audio-visual material and casino equipment communication
equipment, and rifles and guns are controlled to protect public morals  and internal
security.
(e) Strict import controls on certain chemicals are to ensure they are not diverted to the
production of illegal drugs e.g.  amphetamines, and explosives.WT/ACC/LAO/3
Page 74
III. PROCEDURES
1. For products under restriction as the quantity or value of imports, etc
(a) For motor vehicles and fuel which are under quantitative control from all sources
information is not presently published, but it is proposed to rectify this in the near
future.  At present, prospective importers can inquire at the Department of ForeignTrade in the Ministry of Commerce and Tourism.  The overall amount is not
published.  No amount is allocated to particular countries or importers.
(b) Currently, the quantity of cars is determined on a case by case basis.  However, the
system is under review with the objective of replacing the quantitative restriction on
cars with a fiscal measure.  The quantity of fuel is determined quarterly.  There are no
cases where the quota is set on a yearly basis and the licenses issued either six-
monthly or quarterly.  It is proposed to introduce quarterly licenses for motorvehicles.  In the case of imports of cement and steel bars for construction formal
quotas are not set.  When permits for imports are lodged, the Ministry of Commerce
and Tourism consults with the Ministry of Industry and Handicraft who advise on
whether the proposed level of import is reasonable.
(c) Domestic producers of like goods are not excluded from licenses.  Licenses issued by
the Ministry of Commerce and Tourism lapse after 90 days.  Licenses issued by the
Ministry of Public Health are valid for 60 days.  The remainder of this segment does
not apply to the Lao PDR.
(d) This is not relevant to the licensing system in the Lao PDR.
(e) Processing of applications for licenses by Ministry of Commerce and Tourism takes
between one and three days.
(f) This question is not relevant to the licensing system in the Lao PDR.
(g) Applications for the importation of goods subject to quantitative restrictions are
firstly examined by the Department of Foreign Trade in the Ministry of Commerce
and Tourism.  If approved, a licence is issued by the Municipal and Provincial tradeoffices of the Ministry of Commerce and Tourism.  In the case of applications for
motor vehicles, the Ministry of Communi cation, Transport, Post and Construction
must first certify compliance with technical specification requirements.
(h) Licenses are issued on a ‘first come, first served’ basis.  No maximum amounts are
allocated.  New importers apply for registration with the Department of Internal
Trade, Ministry of Commerce and Tourism.  Applications are examined on receipt.
(i) This is not relevant to the licensing system in the Lao PDR.
(j) This is not relevant to the licensing system in the Lao PDR.
(k) In the case of machinery for internationally funded development projects, import
licenses are issued until the completion of the project, subject to the goods being re-
exported.  Similarly, temporary entry is granted to private diplomatic motor vehicles,
to motor vehicles used by foreign companies executing developmental projects andfor trade promotion purposes, subject to the vehicles being re-exported when the
reason for importation can no longer be justified.
2. Where there is no quantitative limit on importation of a product
(a) There is no statutory period for how far in advance of importation an application for a
licence must be made, but the administrative understanding is that the applicationmust be in advance of importation.  Yes, licenses can be issued at shorter notice.
However, as licenses are valid for 90 days, the approval system allows adequate time
for obtaining a licence before effecting the importation.
(b) Yes, on a case by case basis, a licence can be issued immediately in an emergency.
(c) No limitations as to the period of the year when an application for a licence.WT/ACC/LAO/3
Page 75
(d) and importation can be made.
(e) See 1. (g) above.
3. Applications for licenses which meet the ordinary criteria are not refused
IV. ELIGIBILITY OF IMPORTER TO APPLY FOR LICENCE
To be eligible to apply for licenses a person or firm must be registered as an import company
with Department of Internal Trade, Ministry of Commerce and Tourism.  All persons or firms may
apply to be registered as an importing company, subject to the criteria set out in Section IV.1.a.
V. DOCUMENTATION AND OTHER REQUIREMENTS FOR APPLICATION FOR
LICENCE
1. The application form requests the name and address of the applicant, source of financing,
method of payment, invoice number, a description of the goods, method of packing, country
of origin, gross and net weight, quantity of the goods, the unit price, total value in Kip andforeign currency, port of entry, method of transport, final destination, countries of transit and
the name of the person who is to receive the goods.  A sample is at Attachment 3.1.
2. The following documents are required on actual importation: licensing form, detailed list of
items attached to the application form, purchase order, invoice, certificate of origin and
authorization or certificate from line Ministry or Government agency where this is requiredfor importation of particular products.
3. A fee of Kip 5,000 is charged for the application form.
4. No deposit or advance payment is required.
VI. CONDITIONS OF LICENSING
1. In the case of the Ministry of Commerce and Tourism, a licence is valid for 90 days and for
60 days in the case of the Ministry of Public Health.  This can be extended by completing a
form stating the reasons for extension and attaching the documents mentioned in V.2 above.
2. No penalty applies to non-utilization.
3. Licenses are not transferable.
4. No other conditions apply to granting a licence for products whether or not subject to
quantitative restrictions or not.
VII. OTHER PROCEDURAL REQUIREMENTS
1. No other administrative procedures are required prior to importation.
2. Foreign exchange is not automatically provided by the banking authorities for the goods to be
imported.  Before importing, importers must present their import licenses for signature of the
bank through which the transaction will be processed.WT/ACC/LAO/3
Page 76
ANNEX 4
INFORMATION ON IMPLEMENTATION AND ADMINISTRATION OF THE
AGREEMENT ON CUSTOMS VALUATION
1. Questions concerning Article I
(a) Sales between related persons
(i) Are sales between related persons subject to special provisions?
(ii) Is the fact of intercompany prices prima facie considered as grounds for
regarding the respective prices as being influenced?
(iii) What is the provision for giving the communication of the afore-mentioned
grounds in writing if the importer so requests? (Article 1.2(a))
(iv) How has Article 1.2(b) been implemented?
Article 9 of the Customs Law of the Lao PDR accepts as the declared import value
the actual value of delivered goods to the Lao border inclusive of the value of the
goods and others, such as, insurance and transport costs which buyers and sellers
have agreed to transact.  The Customs Law is silent on sales between related parties.
Consequently, no information on the issues raised in (ii), (iii) and (iv) is available.
(b) Price of lost or damaged goods
There are no special provisions or practical arrangements concerning the valuation of
lost or damaged goods.
2. How has the provisions of Article 4 to allow the importer an option to reverse the order of
application of Articles 5 and 6 been implemented
The Lao PDR customs law does not yet reflect this provision of the Customs Valuation Code.
3. How has Article 5.2 been implemented
The Lao PDR Customs Law does not yet reflect this provision of the Customs Valuation
Code.
4. How has Article 6.2 been implemented
The Lao PDR Customs Law does not yet reflect this provision of the Customs Valuation
Code.
5. Questions concerning Article 7
(a) What provisions have been made for making value determinations pursuant to
Article 7?WT/ACC/LAO/3
Page 77
(b) What is the provision for informing the importer of the customs value determined
under Article 7.
(c) Have the prohibitions found in Article 7.2 been delineated?
The Lao PDR customs law does not yet reflect this provision of the Customs
Valuation Code.
6. How have the options found in Article 8.2 been handled? In the case of f.o.b. applications, are
ex-factory prices also accepted
Article 9 of the Customs Law adopts the c.i.f. method of valuation.
7. Where is the rate of exchange published, as required by Article 9.1
Article 24 of the Customs Law that customs duties will be computed at the applicable
exchange rate on the day the detailed customs declarations are registered in absolute numbers.
The exchange rate is set by the Ministry of Finance.
8. What steps have been taken to ensure confidentiality, as required by Article 10
Article 104 of the Customs Law requires customs officers, in the performance of their duties,
to maintain the confidentiality.  Article 105 provides for disciplinary measures or penalties if
a customs officer abuse their rights or use their rights and duties for illegitimate personalinterest or act in a manner to hinder or restrict the lawful circulation of goods.
9. Questions concerning Article 11.
10. What rights of appeal are open to the importer or any other person
Article 23 of the Customs Law enables importers to appeal to the investigation committee of
the Customs Department if they are dissatisfied with decisions of customs officers.  The
decision will be made within 2-3 days.  In the case of dissatisfaction with the decision of the
investigation committee, the importer may further apply to Ministry of Finance or judicial
court.
(a) How is he informed of his right to further appeal
Advice of right of further appeal would be by letter or notification.
11. Provide information on the publications, as required by Article 12, of
(a) (i) the relevant national laws
The national law is Customs Law No. 04/94 of 18 July 1994.  Publications are
provided in the Official Gazette and they are also available in media.
(ii) the regulations concerning the application of the AgreementThe Ministry of Finance proposes to amend the Customs Law in order to comply with
the provisions of the WTO Customs Valuation Agreement.WT/ACC/LAO/3
Page 78
(iii) the judicial decision and administrative rulings of general application relating
to the Agreement
No such arrangements are yet in place.
(iv) general or specific laws being referr ed to in the rules of implementation or
application
No such arrangements are yet in place.
(b) Is the publication of further rules anticipated? Which topics would they cover
The Lao PDR customs law, including procedures for customs valuation are being reviewed.
12. Questions concerning Article 13
(a) How is the obligation of Article 13 (last sentence) being dealt with in the respective
legislation
(b) Have additional explanations been laid down
In certain cases, Article 25 permits customs officers to authorize the removal of certain types
and inspected goods from the warehouse before payment of customs duties, but a guarantee
shall be made for the payment of customs duties in due time as specified by the customs
officer which shall not exceed seven days.  Imported goods for which authorization for
removal has been given shall be removed immediately.
13. Questions concerning Article 16
(a) Does the respective national legislation contain a provision requiring customs
authorities to give an explanation in writing as to how the customs value was determined
There is currently no such provision yet.
(b) Are there any further regulations concerning an above-mentioned request
There is currently no such provision yet.
14. How have the Interpretative Notes of the Agreement been included
The Lao PDR customs law does not yet reflect this provision of the Customs Valuation Code.
15. How have the provisions of the Decision of 26 April 1984 on the Treatment of Interest
Charges in the Customs Value of Importe d Goods (Val/6/Rev.1) been implemented.
The Government is studying the decision and also understands that acceptance of the decision
is not obligatory for the WTO members.
16. For those countries applying paragraph 2 of the Decision of 24 September 1984 on the
Valuation of Carrier Media Bearing Software for Data Processing (Val/8), how have the
provisions of this paragraph been implemented?
The Government is studying the decision and also understands that acceptance of the decision
is not obligatory for the WTO members.WT/ACC/LAO/3
Page 79
ANNEX 5
INFORMATION ON TECHNICAL BARRIERS TO TRADE
1. Description of relevant laws etc relating to the implementation and administration of technical
barriers to trade.
The relevant law governing the system for establishing and managing the standard and quality
of goods and products is Decree No. 85/PM issued by the Prime Minister of the Lao PDR
effective 2 November 1995 regarding the Management of the Standard and Quality of Goods
and Products.  Article 1 of the Decree declares its objective to be to ensure and to improve the
quality of goods and products, to expand international cooperation, to promote the production
of high quality products and to protect consumer rights and benefits.  Article 3 places the
liability on producers for the quality of goods and products.  Article 4 gives producers to file
petitions to standard–making agency regarding the production or marketing of fake goods andproducts and all instances of misrepresentation regarding the quality of goods and products.
Chapter II of the Decree deals with the duties and rights of the national and local level
agencies dealing with the standard and quality of products.  Article 6 establishes a Central
Management Agency with primacy in establishment and management of the standard and
quality of good.  Articles 7 and 8 set out the duties and rights of the Central Agency and localagencies respectively.  Some other Articles deals with issues such as notification, supervision
and quality control and testing, dispute resolution, creating standards and international
cooperation.
Chapter III covers the establishment and usage of national standards certification of standards,
an office of quality inspection and a program for inspecting goods and products.  Chapter IVsets out the duties and responsibilities of producers and businesses and the protection of
consumer rights.  Chapter V covers inspection of the quality of goods and products.  Chapter
VI stipulates an award scheme for persons reporting violations of the provisions of the Decree
and the penalties for violations.  In Chapter VII on implementation, the Science, Technology
and Environmental Agency (STEA) in the Office of the Prime Minister is assigned the rolemanaging agency and is tasked to expand the Decree by further regulations and detailed
instructions for implementation.  Finally, concerned Ministries and Agencies, provinces and
the prefecture (of Vientiane) must strictly abide by their respective rights and duties under the
Decree.
2. Information regarding:
(a) New  technical regulations or standards and procedures are published in the official
gazette and other media such as newspapers and broadcasting.
(b) Under Decree 85/PM issued by the Office of the Prime Minister effective 2
November 1995, a Central Management Agency was established whose role is to
coordinate the management of standards and quality of goods.  The agency
management of standards and quality of goods is divided into two levels, namely, the
central management agency which is appointed by the Science, Technology andEnvironment Agency of the Prime Minister’s Office; the local Provincial, Municipal
and Division management or line Ministries level.  While all three levels would be
able to provide documentation on request, the Science, Technology and Environment
Agency (STEA) in the Office of the Prime Minister would be the appropriate inquiry
point for the purposes of Articles 10.1 and 10.3.  Details are Director-General,
Department of Intellectual Property, Standardization and Metrology, Science,WT/ACC/LAO/3
Page 80
Technology and Environment Agency, Prim e Minister’s Office, P.O.  Box 2279
Nahaidiao Rd., Vientiane, Lao PDR.
The agency dealing with consultation and dispute settlement mentioned in Article 14
of the Agreement is STEA at the address given in (b) above.
(c) For matters dealing with food and drugs the contact details are Director-General,
Department of Food and Drug, Ministry of Public Health, Simuang Rd. Vientiane,
Lao PDR.  All other product inquir ies should be addressed to STEA.
(d) The scope of responsibility of the government authorities in the area of notification
requirements provided for in the TBT Agreement mainly rests with Ministry of
Commerce and Tourism and Authorities concerned.
(e) Measures and arrangements to ensure that national and sub-national authorities
preparing new technical regulations or substantial amendments to existing ones,provide early information on their proposals are provided for in the supervisory,
reporting and dispute settlement provisions of the Decree.  Article 6.1 allocates to the
Central Management Agency the role of coordinator for the Central Government in
the organization, recommendation and inspection of the activities of government
divisions, localities, grass roots production units and businesses throughout thecountry.  Under Article 7.1, the Central Agency has the right and duty to inspect,
monitor and evaluate the performance of organizations, plans, rules and regulations
regarding the management of standards and the quality of goods and products and to
report periodically on these matters to the Office of the Prime Minister.  Article 7.5
allocates to the Central Agency the role of resolving issues concerning proposals,petitions and demands from all parties and from the people regarding the standard and
quality of goods and products.WT/ACC/LAO/3
Page 81
ANNEX 6
INFORMATION ON STATE-TRADING ENTERPRISES
Please refer to Section IV. 3 (e).WT/ACC/LAO/3
Page 82
ANNEX 7
FOREIGN TRADE AGREEMENTS
List of foreign agreements on trade and economic cooperation
An analytical summary of the bilateral trade agreem ents of the Lao PDR is set out in table Annex 7.1.
Details of preferential provisions in CEPT Agreement of the ASEAN Free Trade Area:The commitments by the Lao PDR under the ASEAN Free Trade Agreement have been supplied to
the ASEAN Secretariat.
The margin of preference accorded to ASEAN countries can be deduced from existing commitments.
The Lao PDR has made binding commitments on the AFTA inclusion list to reduce 1247 tariffs (out
of a total of 3551 lines) to zero by 2008.  The average level of those tariffs is 7.5 per cent.  The tariffs
are to be reduced in annual cuts to reach 0 per cent by the end of the timeframe.
It is difficult to estimate the rate of preference when the tariffs on the Temporary Exclusion List (a
further 59.8 per cent of the tariff lines of the Lao PDR are transferred to the Inclusion List of AFTA
because the rates of reduction will be determined during the period 2001 to 2005.WT/ACC/LAO/3
Page 83
Table Annex 7.1
Lao PDR - Bilateral Trade and Economic Agreements
Country Agreement Signed Entry into
forceTerm
(years)Preference mfn
China Agreement on the
Foundation of the
Economic, Trade andTechnical CooperationAgreementTrade Agreement11/6/97
11/6/9711/6/97 5
5Yes
Korea,
NorthTrade Agreement 2/5/97 2/5/97 5 Yes
Malaysia Trade Agreement 11/8/98 5 Yes
Myanmar Trade Agreement 8/5/95 1
(extends
automatically)Yes
Thailand Trade Agreement 20/6/91 10/6/91 1
(extends
automatically)Yes
USA Agreement on
Investment Promotion8/3/96 26/3/96 20 Yes
Vietnam Trade Agreement 9/3/98 mfn
(Source:  Ministry of Commerce and Tourism)WT/ACC/LAO/3
Page 84ANNEX 8
SUMMARY OF THE TAX SYSTEM AS OF MAY 1999
Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
1. Taxes on income and profits
1.1 Taxes on
enterprise profits(profit tax)Annual levy on profits derived in the
Lao PDR by enterprises frombusiness operations (production,
trade, and service), payable in
advance on a quarterly basis.a.  Travel and guest's reception expenses
which shall not exceed 0.20 per cent of theannual business income, or not more than
6,000,000 kip for each item per year. (page
21)* Gifts, allowances, presents and prizeswhich shall not exceed 0.15 per cent of the
annual business income, and not more than
4,000,000 kip per year.
b.  Asset amortization of each asset permitted,
using the following four annual rates:  50 per
cent:  business establishment;  20 per cent:
land transport facilities (vehicles) machines
and other equipment for industrial,agricultural, craft and other activities and
instruments and tool sets;  10 per cent:  office
instruments and other supplies; office
installation,; improvement and decoration,;and temporary trade premises; and trade
premises and dwelling-houses:  temporary
bases (or medium-term basis),  5 per cent:
industrial, permanent trade premises andvessels and passenger planes.  Non-allowed
residue is deducted from the sale price to
compute the profit or loss.
c.  Carry-forward of losses available for up to
3 years.
d.  Three computational regimes:  Real
taxation Regime based on extended
accounting system for foreign investors,
import-export traders and businessmen withannual turnover greater than KN 240 million;Simplified taxation Regime based on ordinary
or common accounting system, for otherGeneral rate
Discount rates
For enterprises in designated
areas/city
For enterprises in rural and lowland
areas
For enterprises in mountain and
remote areas.35
20
15
10WT/ACC/LAO/3
Page 85Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
businessmen with annual turnover between
24 million and 240 million kip;  Presumptive
taxation Regime for those with primary
accounting system, based on agreedestimation for turnover less than 24 millionkip with progressive rates for production,
construction, and transport (1-7 per cent),
trade (2-8 per cent), and services, restaurants(3-9 per cent).
e.  The Profits shared or other taxable benefits
shall include such profits as may be appliedto any forms of utilization, including directspending, unless it shall be saved to the
accumulation funds or included to the
companies' capital assets, bonuses, meetingper diems, benefits arisen by increase orreduction of capital assets of companies,
concentration of enterprises, transfer of
shares, values added from the companiesbankruptcy or dept liquidation;General rate
Discount rates
Urban area
Rural and low land areas
Mountainous and remote areas35
20
15
10
f.  Reliefs:  Case-by-case tax relief given to
domestic enterprises (2-5 years) under
Domestic Investment Law 03/95/NA ofOctober 14, 1995 and to foreign and jointlyowned enterprises (2-4 years), under Law
1/94 of march 1994.
1.2 Minimum profit
taxApplicable annually to gross turnover
of the previous year of those
enterprises subject to the extended or
ordinary accounting system.Advance once-and-for-all paymentCreditable against final liability but
no reimbursement of over payment.Foreign and local investors who are in a
system of annual profit tax exemption.1%
1.3 Tax on social /
religious / cultural
organizations and
associationsIncomes from immovable property
leasing and non-business activitiesNone 10%WT/ACC/LAO/3
Page 86Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
1.4 Tax on personal
income from
employmentLevied on wages, salaries, bonuses,
and other emoluments derived from
employment in the Lao People's
Democratic Republic (Lao PDR) or,when deputed to internationalorganizations, by Lao citizens
receiving emoluments abroad on
which they are not taxed.  Withheld atsource by the employer on a monthlybasisAll persons with monthly wages or salaries
below KN 30,000
Exemptions are granted to a selected list (12)
of incomes, including income fromagricultural production by peasants
themselves, from cultural events, etc.Monthly Wage
or Salary (In kip)
equal to or less than 30,000
30,001-125,000125,001-250,000
250,001-500,000
500,001-1,000,0001,000,001-2,000,0002,000,001-3000,000
3,000,001-5,000,000
5,000,001 and aboveTax Rate (In %)
-
510
15
202530
35
40
1.5 Tax on personal
incomes of
persons in self-employmentLevied on net profits made by
individuals form business operations,
and immovable property leasing.payment on an advance quarterlybasisFirst KN 360,000 is exempt General Activities
(In kip)
equal to or less than 360,000
360,0001-1,500,000
1,500,001-3,000,000
3,000,001-6,000,0006,000,001-12,000,00012,000,001-24,000,00024,000,001-36,000,000
36,000,001-60,000,000
60,000,001 and aboveTax Rate
(In %)
-
10
15
20253035
40
45
1.6 Tax on personal
incomes from
immovableproperty leasingLevied on incomes received by
individuals form immovable property
leasing.House with domestic lease holder:
Permanent house - 30 percent of rent price.
Half permanent (wooden) house - 25 percentof the rent price
House with foreign lease holder:
If income from leasing house over
2000US$/Month;
House with 2 floors or building - 2.0 US$
M²/Month
House with 1 floor - 1.7US$M ²/Mth
Block house with 2 floors or more -
1.2 US$ M ²/Month
Block house with 1 floor - 1.0 US$M ²/Month
If income from leasing house less than
2000US$/Month
Incomes from leasing land and other property30%
25%WT/ACC/LAO/3
Page 87Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
1.7 Tax on investment
incomeLevied on incomes of entities and
individuals form gross market-based
rents, dividends, lending interest
rates, and guarantee fees on a globalbasis, where appropriate.Interest on bank deposits 10 %
1.8 Tax on property
rightsLicenses and other intellectual
property rights.None 5 %
2. Taxes on land and property
2.1 Transfer taxes Applied to the market value of real
estate property transferred between
private persons through inheritance,sale or gift.None Transfers between:
direct descendants
second-degree relativesthird-degree relatives
other land and houses
undeveloped land0.5
12
3
4
2.2 Land tax Annual tax levied on land area.  Tax
is collected from January to end-
April.
Taxable land is divided in three
categories:
1.  Occupied land (i.e. land occupied
by buildings and factories)
2.  Agricultural land
3.  OtherLand occupied by temples, public welfare
buildings, embassies and housing for disabled
persons (for extensions of less than 5,000 sq.km)
Agricultural land, not exceeding two hectares
per family, occupied by disabled military
personnel and civilians
Agricultural land situated in mountainous
areas yielding less than 150 kg rice per
person per year
Agricultural and affected by natural disaster
or other damages in accordance to thedamage.
Newly cleared rice fields in mountainous (5
years) and flat land (3 years)
Industrial orchards (2-3 years)1.  Occupied land:
Rates vary from KN 0.5 to KN 30 per square meter per year in accordance
with the use (housing, production factories, business or service and unusedopen land) and location.
2.  Agricultural land
Rates vary from KN 500 to KN 6,000 per hectare per year in accordance
with:  (I) land use (rice land, garden la nd, and farm land); (ii) location (level
field and mountainous areas); and (iii) type of production (for rice, number
of crops per year and for garden, type of trees)
3.  Other land:
KN 1,000-6,000 per hectare per year.WT/ACC/LAO/3
Page 88Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
3. Taxes on goods and services
3.1 Turnover tax The tax is levied on the turnover of
importers, domestic manufacturers,and service providers (but notretailers) and allows for a credit for
tax paid at earlier stages.  Importers
and domestic distributors pay tax
monthly on their sales and receive
credit for the turnover tax they may
have paid on their imports.  Domestic
manufacturers pay monthly, on their
sales (at wholesale prices) and receive
credit for any tax that has been paid
on their raw material purchases or
imports (but not on their capital goodpurchases or purchases of services).
Service providers also pay tax
monthly, on their sales receipts and
receive credits for their inputpurchases.  Retailers are not subject
to tax.
All imports, not exempt from import
duties, are subject to turnover tax andthe base of taxation is customs valueplus customs duty, and fees plus
excise duty, if any.Large suppliers, with an annualturnover of more than KN 24 million,who are subject to accounts-based
profits tax, pay turnover tax based on
the issued invoices and their saleinvoices are required to show thepayment of the tax separately.The following activities are exempt from
turnover tax:
− import of crop seeds, animal breeds and
insecticides;
− import of materials, instruments and
chemical components for research
purposes;
− import of gold for the notes issuing
institution;
− import of bank notes or coins;
− import or activity relating to tax or post
stamps;
− import of planes and instruments for
international air transportation;
− imports of goods or accessories for
components of international airtransportation
− import of goods for selling to diplomats
and international organizations in the LaoPeople's Democratic Republic (Lao PDR)
according to permissions of the Ministry
of Foreign Affairs;
− import of goods with tax exemption or
temporary import;
− import and sales of animal treating
medicines;
− sales of self-produced agricultural
products by peasants;
− forestation activities, industrial trees and
fruit planting;
− sales of agricultural and handicraft
products by the government employees orco-operative members on family basis or
limit;
− export of goods and services;
− sales of allowed text books, newspapers
and magazines;
− international transportation and relevant
services;(international transportation -transportation of passengers or cargoes
from abroad or to abroad by land, air and
sea/river)The turnover tax is levied at 5
percent and 10 percent.Illustrations of items subject to these
rates follow:
Category
Agricultural products, rice flour,
manioc and maize flour.
Chemicals and mineral productsAll foodstuffMachinery and equipment
Medical services
Agricultural servicesGoods and services not specificallymentioned in 10 percent rates
Electricity and fuel
Consumer durablesFurniture, tea and coffeeCapital equipment, raw materials,and spare parts
Construction and land development
Softdrinks and non-alcoholic drinksTransportation
Motorcycles, trucks, minibuses,
buses and associated spare parts.Imports and sales of TV, radio and
other electronic equipment
Passenger cars, jeeps, pickups, planeships, motorboats for recreationPrecious metals and jewelry
Hotels and tourism
Telecommunication servicesAlcoholic drinks and cigarettesGames
Entertainment activitiesTax Rate (In %)
5
5
55
5
55
5
51010
10
1010
10
10
10
10
10
101010
10WT/ACC/LAO/3
Page 89Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
− transport by people, animals and boats
without engines;
− provision of leasing immovable
properties, such as land, houses and
others by persons who do not havebusiness activities;
− export services;
− independent job-occupation by one's own
labour;
− educational activities:  child schools,
primary schools, secondary and high
schools, universities and professional
technical schools;'
− activities for public benefits held by
government authorities and internationalorganizations; and
− banking and insurance activities.
− rice
− fertilizer
− wheelchairs
− fire trucksexemption
exemptionexemptionexemption
3.2 Excise duties Levied equally on imports and
domestic supplies of petroleumproducts and selected consumer
goods.  Imported items are subject to
tax on customs duty-inclusive valueswhile domestic suppliers are subjectto tax on ex-factory costs.The following are exempt:
− Purchases by embassies and international
organizations
− 
− Kerosene
− 
− Accon (90) for medical purposes
− 
− Purchases of petroleum products for
externally-funded projects
− 
− Exports of excisable goodsThe ad valorem excise duties are as
follows:
Item
Petroleum products:
Super gasoline
Regular gasoline
DieselKeroseneHydraulic, brake, lubricating, and
grease oil
There is an additional excise duty
on:
Super
RegularDiesel
Alcohol
All types with 15 proof and moreAll types with less than 15 proof23
24
12105
kip/ltr
30
2020
60
50WT/ACC/LAO/3
Page 90Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
Soft drinks
Cigarettes and cigars
Cosmetics and perfumes
Playing cards, and the likeVehicles - CarsAll Types of passenger cars
All types of Jeeps
All types of Pick upsBuses and CoachesAll types of  Trucks
Motorcycles
Miscellaneous Items:Electrical appliances (freezers,heaters, air conditioning units,
washing machines, vacuum cleaners,
color TVs, cameras, VCRs,cameras)Entertainment tools and services,
hunting guns
There is an additional specific rate
on:Beer
Soft rink
Tobacco(kip/pack)30
50
20
70
180
111
846158
120
12
10
kip/ltr
500
200
600
3.3 Business and
professional
licenceLevied annually on registered
industrial and commercial enterprises,
based on turnover and on import-export enterprises, based on capital.Payable during the first three months
of the year on a current basis.None Different rates apply to enterprise s producing for the local market and
import-export enterprises.
Turnover
(In millions of kip)
0-1
1-55-10
10-20
20-5050-100100-200
200 & aboveRates applicable to local enterprises
(In kip)
0.0
6,00010,000
20,000
40,00070,000100,000
150,000WT/ACC/LAO/3
Page 91Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
Capital
(In millions of kip)
10-50
50-100100-150
150-200
200 & aboveRates applicable to import-export
(In kip)
100,000
200,000300,000
400,000
500,000
Fees vary according to size of
engine (for cars and motorcycles),
weight (for trucks), and the numberof seats (for buses)KN 2,000
to
KN 360,000
3.4 Road Tax Levied annually on all motor vehicles
(motorcycles, cars, trucks, etc)The following are exempt:
Government cars
Cars of the diplomatic corps, international
organizations, and foreign experts
50 percent reduction for government staff,
soldiers, policemen, students for one vehicle
60 percent reduction for pensioners
3.5 Air travel fees Levied annually for:
(i) Civil aviation registration
(ii) Examination issuance and renewal
of permitsNone Fees vary according to weight
KN 7,000 to KN 70,000KN 5,000 toKN 40,000
3.6 Airspace over-
flight feesLevied on all aircraft without regard
to nationality over-flying the territory
of the Lao People's DemocraticRepublic (Lao PDR)VIP special aircraft
Hospital aircraft carrying patients$160-$250 per
over-flight
3.7 River transport
feesLevied annually None Fees vary according to size of boats KN 200 to KN 20,000
3.8 Border entry and
exit fees
Persons VehiclesDiplomatic personnel and relatives
Foreign experts and relativesNationals
Foreigners
Land and water vehiclesKN 500
US$5
KN 1,500 toKN 11,000
3.9 Fees for extended
residence in theLao PDRDiplomatic corps, foreign experts, and their
relatives.Fees vary according to length of
stay.KN 6,000 to KN 12,000WT/ACC/LAO/3
Page 92Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
3.10 Fee for temporary
border passesNone KN 200 to KN 3,000
3.11 Fees on delivery
of passports, visas,and laissez-passer
documentsNone Fees vary according to nature of
document and applicant.
Foreigners:
Lao Nationals:US$10-US$80
KN300 to KN 10,000
3.12 Consular fees
overseasLevied every five years. None Fees vary in accordance with the
location of the consular office andtype of document.$2-$32
3.13 Fees on possession
of personal armsLevied annually None KN 3,000 to
KN 4,000
3.14 Television and
audio use feesNone Television sets:
Video cassette recorders:KN 500
KN 1,000
4. Taxes on international trade
4.1 Import duties Until recently, imposed on values
fixed in US$ terms.  Such values werefixed for most items, jointly by theMinistry of Trade and the CustomsDepartment.  The main exceptions are
motor vehicles and selected computer
equipment, for which invoice valuesare accepted.  The U.S. dollar valuesare converted into local currency at
rates set by the Ministry of Finance.
Increasingly, duties are being levied
on c.i.f. values.Imports of diplomats and army/police are
exempt.  Goods imported by the Governmentfor use in externally-financed developmentprojects are also exempt;  the Governmentotherwise pays duties on its other imports.
Imports of fuel by Lao Aviation for
international transport is exempt.  Alsoexempt are imports under bilateral grants andexternally-funded humanitarian imports.
There are no discretionary exemptions.  The
Minister of Finance does not have the powerto grant duty exemptions.
Currently, there is no drawback scheme for
import duties paid on inputs for exports.Six rates ranging from 5 to 40
percent.  The kinds of goods subjectto these rates are as follows:
Imported inputs (raw materials,
machinery and equipment, building
materials) for approved foreign-financed private sector and jointventure investment projects.
Raw materials, chemicals (including
fertilizers), packaging materials,some machinery (incl. tractors and
tools for agriculture), and essential
consumer goods (rice, wheat flour,salt, baby foods, medicines, booksand printed materials), cameras.
Other machinery and spare parts,
and less essential goods (sugar,cheese, butter, chocolate, cooking
oils, footwear, garments,
photographic films, refrigerators,dishwashers, household electricalappliances, stereo systems, carpets,
pearls and diamonds).
Selected luxury consumer goods
(premium petrol, cosmetics andTax Rate
(In %)
1
5
10
20WT/ACC/LAO/3
Page 93Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
toiletries, TVs and VCRs, radio
cassette players, table games and
funfair articles, buses, minibuses,
air-conditioning units).
Other luxury consumer goods
(prepared meats and fish, cereals and
prepared foods, white chocolateconfectionery, toilet soaps anddeodorants, perfumes, wines, and
spirits), pick up trucks.
Soft drinks, liquors, beer, tobacco,
detergents, processed wood, jeeps,
cars, motorbikes, cigarettes, cigars.
In addition, one highest rate applies:
Essentially a protective tariff rate
(on unprocessed vegetables andfruits, non-roasted coffee, roastedcoffee, furniture, soft drinks,motorcycles).30
40
50
4.2 Export duties Levied on selected products.  (Duties
on exports of logs and wood productsare included in timber royalties or
stumpage prices)None Electricity:  20 percent of invoice value; coffee:  5 percent of FOB value;
livestock:  5 percent of FOB value; logs: specific rates; saw-wood specificrates; semi-finished wooden products (lumber, parquet):  40 percent of FOB
value; finished wood products (plywood):  3 percent of FOB value.
4.3 Transit tax Imposed on "transit" vehicles
shipping traded commodities between
Thailand, Vietnam, and China via the
Lao People's Democratic Republic(Lao PDR)*A Fee Does Apply*
4.4 Tax on foreign
investmentsImposed on declared profits of new
government ventures and privateenterprises with foreign capitalSeveral tax holidays 20 percentWT/ACC/LAO/3
Page 94Rates Tax Nature of Tax Exemptions and Deductions
Rates Tax Rate (In %)
5. Taxes on timber and other natural resources
5.1 Timber royalties Levied as a fixed dollar amount per
cubic meter of timber sold, both fordomestic consumption and export.Timber royalties incorporate other
taxes previously levied on timber
products, i.e. the reforestation tax, the
resource tax levied on the timber
production rate, and the export duties,
levied by the Customs Department onexported timber.None Royalties established by the
Ministry of Commerce and theForestry Department of the Ministryof Agriculture.  Since February
1995, royalties average about
US$15,650, depending on the timberquality.
5.2 Taxes on natural
resourcesLevied in the form of specific duties
on volume of mineral extraction, or
ad valorem duties on sale price ofmineral productsNone Ferrous metals
Non-ferrous metals
Coal
Construction Materials2% of sale value
2-5%
2-3%
KN 50 per 100m²
Source:  Ministry of Finance.
Note: This summary incorporates the revised tax rates and revisions in other aspects of the tax system which are a part of the n ew tax law, adopted by the National Assembly
at the end of 1995.
__________