Subchapters:
- Basic data
- Public finances and the state budget
- Banking system
- Tax system
Basic data
Laos is one of the least developed countries. It has a very simple infrastructure – only a basic road network, limited telecommunications, electricity is reliably available only in the cities. Agriculture is still a very important sector employing over 70% of the workforce. The mining and processing industry is gradually developing. The service sector is mainly dominated by tourism, which will also be supported by the new high-speed railway from China to the capital Vientiane. Check ebizdir for economical facts of Laos.
A gradual decentralization and liberalization of the business environment is currently taking place. The goal is to attract foreign investment, which is a key prerequisite for the future development of the Lao economy and its capacities. Laos can offer foreign investors particularly significant natural resources – forests, minerals and, last but not least, huge hydro-energy potential. Opportunities are also offered in labor-intensive areas, where Laos can compete with neighboring countries primarily on its price. However, given that Laos is a landlocked country with an underdeveloped infrastructure, its potential remains underutilized.
In the following period, an increase in the volume of imports, especially capital goods, can be expected again, which is related to massive foreign investments (FDI) in the aforementioned (hydro)energy sector from Thailand and transport infrastructure (roads, railways) from China.
Despite stable GDP growth in recent years, the domestic economy is still dependent on foreign aid. This situation cannot be expected to change in the following period.
| Pointer | 2019 | 2020 | 2021 | 2022 | 2023 |
| GDP growth (%) | 4.7 | 0.7 | 3.7 | 7.6 | 4.1 |
| GDP/population (USD/PPP) | 8 172.7 | 8,234.5 | 8,700.0 | 9,490.0 | 10,010.0 |
| Inflation (%) | 3.3 | 5.1 | 3.9 | 4.3 | 2.7 |
| Unemployment (%) | 0.6 | 1.0 | ON | ON | ON |
| Export of goods (billion USD) | 5.8 | 6.1 | 7.6 | 8.4 | 9.0 |
| Import of goods (billion USD) | 6.3 | 5.5 | 6.6 | 7.1 | 7.3 |
| Trade Balance (Billion USD) | -0.5 | 0.7 | 0.9 | 1.4 | 1.6 |
| Industrial production (% change) | ON | ON | ON | ON | ON |
| Population (millions) | 7.2 | 7.3 | 7.4 | 7.5 | 7.6 |
| Competitiveness | ON | ON | ON | ON | ON |
| OECD export risk | 07.VII | 07.VII | 07.VII | ON | ON |
Source: EIU, OECD, IMD
Public finance and state budget
| Public finance | 2021 |
| State budget balance (% of GDP) | -6.1 |
| Public debt (% of GDP) | ON |
| Current account balance (billion USD) | 0 |
| Taxes | 2022 |
| AFTER | 20% |
| F.O | 0 – 25% |
| VAT | 10% |
The country is becoming enormously indebted due to large infrastructure projects (and their financing…) by China.
At the same time, the closure of the country due to the Covid-19 pandemic (tourism, foreign investments) and the issue of a long-term water shortage in the Mekong River (energy) had a negative impact on the economic situation of Laos.
Banking system
The Central Bank (Bank of the Lao PDR) is in charge of issuing money and conducting monetary policy. At the same time, it supervises financial institutions.
The Lao banking system is dominated by three state-owned commercial banks (Banque pour le Commerce Exterieur Lao/BCEL, Lao Development Bank and Agricultural Promotion Bank). Foreign trade operations are also largely conducted through these banks, especially through BCEL.
Branches of foreign banks (Vietnamese, Thai, Chinese, etc.) can so far only operate in Vientiane, and their operations are mostly focused only on services to foreign companies and foreigners living here. Branches of foreign banks also do almost no operations in local currency (Lao kip/LAK).
The list of banks in Laos can be found on the website of the Central Bank (BoL).
Tax system
Indirect taxes
Value Added Tax: 10% (unless otherwise specified by the government)
Consumption tax: from 3 to 100% depending on the type of goods/product
Direct taxes
Corporate income (profit) tax: 20% (but e.g. 35% for mining companies)
Personal income tax (payroll tax): from 0 to 25% depending on the amount of income
Other taxes and fees
Payment of additional taxes (e.g. environmental) may be required by law.
More detailed information on the tax system can be found on the website of the tax administration of the Ministry of Finance. Overviews of current rates can also be found on The Laotian Times or ASEAN Briefing website.
