An Undiscovered Land Of Opportunities

Recognised internationally as a high-growth emerging market, the Lao People’s Democratic Republic, or Laos for short, offers Malaysian businesses and entrepreneurs many exciting opportunities with its liberalised market-oriented economy and growing consumerism.

Overview
Laos is a land-locked country that is bordered by Myanmar and China to the northwest, Vietnam to the east, Thailand to the west, and Cambodia to the south. It boasts a population of approximately 6.6 million, dispersed unevenly across a land area of 236,800 sq km. The average temperature in Laos is 28°C, and rises to a maximum of 38°C in April/May. The overall climate is hot and humid with two distinct seasons: the rainy season runs from May to September and the dry season from October to April.

The most densely populated area is Vientiane, the country’s capital and premier urban centre. It is served by the Wattay International Airport, which features international connections to other Asian countries. Other noteworthy cities and towns in Laos are Savannakhet, Luang Prabang, Champasack and Khammouane. Luang Prabang is the former capital and a UNESCO World Heritage Site as well as Champasack province.

Three quarters of the population live in rural areas where subsistence farming, fishing and hunting are the main activities. Laos’ population is remarkably young with more than half of the population under 20 years of age.

The Economy
Since the government of Laos initiated gradual economic and business reforms in 1986, the country has been growing at a steady pace. According to the Asian Development Bank, Laos is one of Asia’s fastest growing economies, expanding 7.9% in 2012 with double-digit growth in exports and imports.

Although the country lacks conventional energy resources such as oil and natural gas, it has an abundance of renewable energy resources such as biomass, hydropower and solar energy. A boom in construction for mining, hydropower and similar projects is currently driving the country’s rapid economic growth.

Subsistence agriculture accounts for about 30% of GDP and 75% of total employment. Economic growth reduced official poverty rates from 33.5% in 2003 to 26% in 2010.

Inflation decreased from 7.7% year on year in December 2011 to 3.4% in August 2012, largely because of a better rice harvest, restrictions on rice exports, and moderating fuel price inflation.

International Organisation Membership
Both Laos and Malaysia belong to the following international organisations: the United Nations, ASEAN, International Monetary Fund, and World Bank, among others. Additionally, it was recently announced that Laos will be officially admitted to the World Trade Organisation (WTO) on 2 February 2013.

Business Reforms
The opening of the Lao Securities Exchange in 2011 was a landmark event that reflected the exciting potential of the country’s emerging economy. It also underscored the commitment of the Lao government to implement measures to attract investors and create a business-friendly investment and operating environment.

Bilateral Relations
Bilateral trade between Laos and Malaysia expanded from US$1.3 million in 1996 to US$19.2 million in 2005. Malaysia ‘s exports to Laos in 2005 amounted to US$6.3 million, while imports amounted to US$12.9 million.

Malaysia ‘s major exports to Laos (2005): Refined petroleum products, textiles and clothing, electrical and electronic products, beverages and palm oil.

Malaysia’s major imports from Laos (2005): Copper, sawn logs, sawn timber, textiles and clothing.

Business And Investment Opportunities
The country is blessed with a wealth of natural resources, low labour costs, low cost of living, preferential market access into Europe and the United States, and good infrastructure. Construction will continue to be a major force for economic development in Laos. This sector offers Malaysian companies many rewarding business opportunities, especially in the construction of hydroelectric dams and related facilities. Hydropower is an important source of income for Laos with the region’s increasing demand for energy. There are many other sectors still untapped in Laos which present vast opportunities for Malaysian investors, namely the tourism, banking, casino, plantation and manufacturing sectors. Products that Malaysian manufacturers can supply to Laos include computer components and parts; food processing machinery; autoparts; canned drinks, biscuits and confectioneries; cooking oil; and household electrical items.

Key Contacts For Investment And Information

Embassy of the Lao People’s Democratic Republic
No. 7, Jalan Mesra, Off Jalan Damai, 55000 Kuala Lumpur.
Tel: 603-2148 7059 • Fax: 603-2145 0080
Email: embassylao_kualalumpur@hotmail.com

Ministry of Planning and Investment
Investment Promotion Department (IPD)
Souphanouvong Road, Vientiane, Lao PDR.
Tel: +856 21 218377, 222690, 223002
Fax: +856 21 215491 • Website: http://www.investlaos.gov.la