(Last updated: 24 January 2012)

Current business situation

The Department of Foreign Affairs and Trade (DFAT) provides advice for business travellers and tourists going to Laos. This is regularly updated, and should be checked before planning travel.

Country facts

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Economic climate

On 1 January 2010 the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) came into force; Australia’s most ambitious trade deal to date. Australian business is urged to take a close look at the opportunities created by the agreement, as it will deliver real commercial benefit for Australian exporters and investors doing business in Laos. More information on AANZFTA is available here.

The economy is dominated by subsistence agriculture (on which 80 per cent of the population relies), and the cash economy has made little inroad into remote areas. Notwithstanding significant improvements in recent years, infrastructure constraints limit the efficiency of agriculture.

Against these constraints, since the Lao Government adopted a policy of economic liberalisation it has made progress towards a more market-based economy. Market prices are in place for most products, the currency has been floated and a fledgling private sector is growing.

Opportunities for Australian suppliers exist in the education, health, energy, agriculture and infrastructure development sectors, ranging from advisory consultancies to tenders for supply of equipment. There are also several significant upcoming commercial projects in the hydroelectricity and mining sectors that offer opportunities to Australian companies.

There is a small but growing market for overseas education in Laos, and Australia is a market leader in this sector. AusAID provides 40 scholarships for tertiary level study in Australia annually.

For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade country economic fact sheet.

Political climate

The Lao People’s Democratic Republic (Lao PDR) is a one-party communist state. The head of state and government is the President, General Khamtay Siphandone and the Prime Minister is Colonel Bounnhang Vorachit. The ruling Lao People's Revolutionary Party exerts control over most aspects of civil society.

Constitutionally-guaranteed freedom of assembly, religion and speech are not always evident. However, since 1986 the Lao People’s Revolutionary Party has introduced gradual economic liberalisation leading to the adoption of a new constitution that formalised the establishment of a market-oriented economy. The government is gradually relinquishing control over commercial activity through privatisation of state-owned enterprises and legislative reform.

Trade relations and statistics

Australia is the seventh largest investor in Laos ranked by project costs on a cumulative basis. A bilateral agreement on the promotion and protection of investment between the two countries was signed in 1995. Aid assistance has also played a prominent part in this relationship and contributed largely to the positive Australian profile in Laos.

Thailand is one of Laos’ most important bilateral partners with strong trade and investment links. The Australian-funded ‘Friendship Bridge’, which opened in 1994, linking Thailand and Laos over the Mekong River has contributed to closer commercial and people-to-people links between the two countries. The relationship with Vietnam is Laos’ most important bilateral political link cemented by the 1977 Treaty of Friendship and Cooperation.

Laos joined the Association of South East Asian Nations (ASEAN) in 1997. Laos is also a member of the ASEAN Regional Forum and the Mekong River Commission and has applied to join the World Trade Organization.

The Lao Government is currently endeavouring to stimulate growth in domestic manufacturing capabilities and foreign investment in such activities is encouraged.

Please see the Department of Foreign Affairs and Trade country economic fact sheet for key trade statistics.