Doing business

Current business situation

Laos is one of the fastest growing economies in the East Asia and Pacific region. The country’s economy has increased more than fourfold over the past decade with average gross domestic product (GDP) growth of more than eight per cent per annum. However, growth slightly decreased in 2015 reaching six per cent as a result of global economic instability, lower commodity prices and slowing growth in China.

The economy of Laos is driven by:

  • power (hydropower, power plants)
  • mining and Resources
  • construction and Real Estate
  • manufacturing
  • services
  • tourism.

The commissioning of several power plants, both the 1,878 megawatts Hongsa lignite power plant and several hydro facilities have helped to boost the economy. Service sector especially trading is the most important production market for the economy, accounting for 8.5 per cent of GDP growth. 75-80 per cent of the population relies on agriculture (often subsistence), which accounts for a declining share of less than one-third of GDP. Tourism remains one of the most essential sectors, accounting for more than four per cent of GDP and the second-largest source of foreign exchange.

The total two-way trade of goods and services between Australia and Laos was A$104 million in 2015. Australia ranks 26th of Laos principal export destinations and 11th as an import source in 2015. The relationship between Australia and Laos remains strong and Australia has the longest unbroken diplomatic relationship for Laos. 2017 will mark the 65th anniversary of bilateral relations between the two countries.

Opportunities for Australian investment include:

  • energy
  • mining and mining support services
  • agriculture and forestry
  • services (education and finance)
  • tourism
  • manufacturing.

Business tips

Laos people traditionally greet each other by pressing their palms together in front of their bodies and bowing, called a 'nop'. This custom has been partially replaced by the Western practice of shaking hands. It is considered acceptable for foreigners to shake hands with locals of both sexes.

The head is regarded as the highest part of the body, both literally and figuratively. As a result Lao people don’t approve of touching anyone there, even in a friendly gesture.

If possible, a business card written in both English and Lao language should be presented during the initial greeting.

While English is becoming more widely spoken, foreigners should try to ascertain whether their business partner is fluent in English. Using an interpreter can help to ensure a smooth meeting and follow-up.

Though the Lao language is not easy, people will sincerely appreciate any efforts to learn their language. Basic greetings or several words, even if mispronounced, will act as a good icebreaker in business dealings and show that you are keen to understand an integral part of Laos culture.

Laos people should be addressed by their first names, preceded by their title ‘Mr/Madame’ or ‘Than’ (pronounced ‘Tarn’) (the latter if they occupy a position of respect).

In Laos, social engagements such as eating or playing golf, are useful to create a level of mutual trust and understanding between business partners. Foreign businesses who have been successful in Laos have taken considerable time to build the necessary business and government contacts to operate successfully.

Face-to-face contact is very important in initial dealings with Laos people and a capacity to understand a very different set of viewpoints. Foreigners should take care to avoid a confrontational or aggressive style in their business meetings. Laos people are generally not direct or forthright in their dealings and take to subtle, rather than blunt, messages and will often say yes to direct questions, but this may only mean that they hear and understand you, but nothing more.

It is very important to determine at the outset in any business dealings the hierarchy and seniority of whom you are dealing with, and those responsible for decision-making.

Correspondence and communications should be addressed to the senior decision-makers. Bear in mind that decisions often take a considerable length of time as they are relayed up and down the chain of hierarchy due to the lack of delegation within companies or government ministries.

A small token of gratitude in the form of a gift is always appreciated when visiting a Laos counterpart. Gifts should always be offered with the right hand.

Bargaining is expected in most commercial transactions, although Laos people are generally gentle hagglers.

Links and resources

Government, business and trade

Austcham Lao
European Chamber of Commerce and Industry – Investment Guide
Ministry of Industry and Commerce
Ministry of Planning and Investment
Laos PDR Trade Portal

News and media

The Vientiane Times

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.