Country Listing

Laos Table of Contents


Trade Policy

Trade policy prior to the introduction of the New Economic Mechanism had been highly restrictive, revolving around the centralized allocation of goods for export. In 1988, however, in line with the New Economic Mechanism, the government began to progressively decentralize some of its trade-oriented responsibilities, including planning and arranging trade contracts with foreign suppliers. Trade, controlled by the ministries of trade and finance, is conducted by about twenty-four state trading companies and some provincial trading companies. Several measures promulgated in March 1988 modified trade policy. According to Decree 16, the government became the sole exporter through state import-export organizations. Under Decree 13, the State Committee for Foreign Economic Relations and Trade, provincial administrative committees, and municipalities are empowered to supervise the management and control of import and export activities. The decree also authorizes trade agents at LPDR embassies worldwide to make direct trade contacts.

Decree 18 identifies a number of "strategic" goods, including coffee, tobacco, wood products (such as timber, sawn wood, pressed wood, and rattan), other forestry products (such as benzoin and sticklac), and minerals, for which the state has an export monopoly: in short, all the major export commodities. Only the central government's import-export organization, the Lao ImportExport Company (Société Lao Import-Export), and certain provincial and state enterprises are permitted to export these goods to fulfill national trade agreements with the nonconvertible currency area. All importing units are required to submit plans for their trading operations to the State Committee for Foreign Economic Relations and Trade in order to formulate the national importexport plan. However, importers are permitted to trade in all commodities not on the strategic or restricted lists. Under Decree 18, export businesses are permitted to export goods on the strategic list directly, after national requirements have been met. The decree thus considerably liberalizes trade regulations. The main reason for the restriction on trade in strategic goods is that the government has to plan its supply of export goods to coincide with its multiyear trade arrangements with the nonconvertible currency area countries. After 1990, however, this issue was moot because as the trade volume with these countries dropped to a negligible amount.

The import of certain items, including automobiles and military vehicles, fertilizers, drugs, and "decadent cultural products and pictures," is subject to quotas and other restrictions. In addition, trade in certain goods is entirely prohibited, including poisons, weapons, and other goods related to national security.

At the end of the 1980s, the authority of the Lao Import-Export Company had begun to diminish, because import-export licenses were being granted to increasing numbers of private organizations. By 1991 the national trade company was slated for privatization.

Data as of July 1994