Laos

For three hundred years Lan Xang included large parts of present-day Cambodia and Thailand, as well as all of what is now Laos. After centuries of gradual decline, Laos came under the control of Siam (Thailand) from the late 18th century until the late 19th century when it became part of French Indochina. The Franco-Siamese Treaty of 1907 defined the current Lao border with Thailand. In 1975, the Communist Pathet Lao took control of the government ending a six-century-old monarchy and instituting a strict socialist regime closely aligned to Vietnam. A gradual return to private enterprise and the liberalization of foreign investment laws began in 1986. Laos became a member of ASEAN in 1997.

Main Airports

Vientiane (VTE) (Wattay)

U.S. Embassy

Rue Bartholonie, That Dam, Vientiane
tel: 21-26-7000
http://vientiane.usembassy.gov/

Statistics

GDP: purchasing power parity:

$12.13 billion (2005 est.)

GDP - real growth rate:

7.2% (2005 est.)

GDP - per capita: purchasing power parity:

1,900 (2005 est.)

Inflation rate (consumer prices):

7% (2005 est.)

Labor force:

2.8 million (2002 est.)

Exports:

$379 million (2005 est.)

Exports - partners:

Thailand 30%, Vietnam 12.2%, France 6.2%, Germany 4.6% (2005)

Imports:

$541 million f.o.b. (2005 est.)

Imports - partners:

Thailand 66.3%, China 9.1%, Vietnam 6.7% (2005)

Population:

6,368,481 (July 2006 est.)

Population growth rate:

2.39% (2006 est.)

Population Below Poverty Line:

34% (2002 est.)

Major Industries:

copper, tin, and gypsum mining; timber, electric power, agricultural processing, construction, garments, tourism, cement

Employing Workers: 71*

Registering Property: 148*

Enforcing Contracts: 146*

Closing a Business: 151 *

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	Laos	Region
Procedures (number)	8	8.2
Time (days)	163	46.3

Laos Risk Assessment

Country Rating

Rating: D

A high-risk political and economic situation and an often very difficult business environment can have a very significant impact on corporate payment behaviour. Corporate default probability is very high.

Risk Assessment

The strong growth posted in 2007 should stay on track in 2008 underpinned by development of the mining sector (copper and gold) and hydroelectricity. The natural resources of that landlocked country are of particular interest to its dynamic neighbours: Vietnam, Thailand and China. Thanks to investments in infrastructure and the hydroelectricity sector with the building of the Nam Theun 2 Dam, the construction industry has outperformed. Poverty should continue to decline in this context. There are nonetheless persistent weaknesses. Services, particularly financial, and manufacturing sector remain underdeveloped. Elimination in 2008 of the European safeguard measures, which had limited imports of Chinese textiles, could affect Laotian exports. The agricultural sector, which provides a livelihood for 80 per cent of the population, still lacks competitiveness.

Sovereign risk, meanwhile, although still high has improved. The public sector deficit and public foreign debt declined in 2007. The debt service ratio has, however, weighed on fiscal revenues, which have been flat. Implementation of tax reforms has moreover been lagging as evidenced by the postponement of the application of VAT. And the gradual reduction of customs duties resulting from the country's membership in ASEAN and NAFTA could lead to further widening of the fiscal deficit.

The current account deficit widened in 2007 due mainly to imports of construction materials and machinery for projects in the mining and hydroelectricity sectors. A substantial influx of foreign direct investment has partly covered the country's financing needs. The still-low level of foreign exchange reserves has a destabilising effect on the exchange rate. The banking system remains underdeveloped and strained by non-performing loans.

In the political arena, the country has enjoyed domestic stability and good relations with its neighbours. In governance terms, Laos has one of the poorest records in Asia while the economy's increasing dependence on exports of natural resources has hampered its development and consolidation.

• Agriculture
• Apparel
• Arts & Crafts
• Automobile
• Bags, Cases & Boxes
• Chemicals
• Computer Hardware & Software
• Construction & Real Estate
• Consumer Electronics
• Electrical & Electronics
• Energy & Environment
• Food & Beverage
• Furniture & Furnishing
• Health & Medicine
• Home Supplies
• Industrial Supplies
• Lights & Lighting
• Machinery
• Mineral & Materials
• Office Supplies
• Security & Protection
• Service
• Sports & Entertainment
• Telecommunications
• Textile
• Toys
• Transportation