Laos has been making steady progress toward liberalization and a market economy since 1986. The government has decentralized control and encouraged private enterprises. Between 1988 and 2008, the economy grew at around 6% per year, except for a short-lived drop caused by the Asian financial crisis beginning in 1997. This growth has been fueled by high-profile foreign direct investment in hydropower dams along the Mekong River, copper and gold mining, logging, and construction. Mining and hydropower compose eighty percent of foreign direct investment.

The 2010 Law on Investment Promotion introduced uniform business registration requirements and tax incentives that apply equally to foreign and domestic investors. Laos has several SEZs located in Vientienne, Champassak, and in more remote areas including along the Chinese border. Locus Economica helped refocus the SEZ Program to better address the country’s economic priorities and assisted with the development of a new SEZ Bill presented to the National Assembly in 2017.

Since Locus Economica assistance to the SEZ program, and as a direct result of this work, Prime Minister’s Decree 188 on Special Economic Zones was signed in July 2018. Furthermore, the new Pakse-Japan SEZ has been established, with Phase I development now completed and 6 Japanese investors now successfully attracted. Saysettha SEZ infrastructure has been built and so far registered 56 companies, aiming to register 20 more by 2020. An estimated 30 new companies (beyond the 53 already operating in 2014) in the Vientiane Industrial and Trade Area (VITA) SEZ had invested by 2018. As of February 2018, 22 firms (largely real estate developers) had committed to invest in Thakhek SEZ. All in all, as of April 2018, Lao SEZs had attracted 377 companies, committing to invest $8 billion (of which $1.8 billion has so far come in), creating 20,000 jobs. This figure was up from 138 companies investing $4 billion and creating just under 9,000 jobs in 2014.

Our Experience in Lao PDR