Laos Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Within the framework of the status of one of the least developed countries, the EU perceives Laos as a partner with which it is necessary to combine development cooperation and trade facilitation in order to ultimately support sustainable economic development. For this purpose, the “Everything but Arms” initiative is used, which opens the door to the EU single market for Laos through import quotas and duty-free access.

  • Allcountrylist: Overview of major industries in Laos, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 199.4 148.8 93.6 136.5 247.7
Imports into the EU (million EUR) 250.8 231.6 286.9 307.0 284.9
Balance with the EU (million EUR) 51.4 82.8 193.3 170.5 37.1

Source: European Commission

Trade relations with the Czech Republic

Minimal turnover with slightly increasing imports to the Czech Republic, especially in the field of agricultural crops and textile products.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.1 0.6 0.2 0 ON
Imports to the Czech Republic (billion CZK) 1.0 0.1 0.5 0.7 ON
Balance with the Czech Republic (billion CZK) 0.9 -0.5 0.3 0.7 ON

Source: CZSO

Trade relations with countries outside the EU

The increasing dependence of the Lao economy and the country’s foreign trade on the most important partners – especially China, Thailand and Vietnam.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 3,942.7 4,447.9 4,841.4 5,061.3 6 171.5
Imports to countries outside the EU (million EUR) 4,566.4 5,135.9 5,044.1 4,257.8 5,343.5
Balance with non-EU countries (million EUR) -623.7 -688.0 -202.7 803.5 828.0

Source: EIU, Eurostat

Foreign direct investment

The largest source of FDI are economically strong neighboring countries – China (infrastructure projects, i.e. railways, highways, special economic/production zones), Thailand (hydropower) and Vietnam.

Czech investments in the country are unknown.

FTAs and treaties

Treaties with the EU

There is no framework agreement on free trade (FTA) with the EU, foreign development cooperation instruments and the “Everything but Arms” platform are used. Preferred relations especially with France.

Contracts with the Czech Republic

Agreement between the Government of the Czechoslovak Socialist Republic and the Government of the Lao People’s Democratic Republic on cooperation in the field of healthcare

Agreement on the exchange of goods between the Czechoslovak Socialist Republic and the Lao People’s Democratic Republic

Agreement on scientific and technical cooperation between the Czechoslovak Socialist Republic and the Lao People’s Democratic Republic

Consular Convention between the Czechoslovak Socialist Republic and the Lao People’s Democratic Republic

Agreement on cultural cooperation between the government of the Czechoslovak Socialist Republic and the government of the Lao People’s Democratic Republic

Agreement between the Government of the Czech Republic and the Government of the Lao People’s Democratic Republic on the settlement of mutual claims and liabilities

Agreement on Civil Air Transport between the Government of the Czechoslovak Socialist Republic and the Government of the Lao People’s Democratic Republic

Agreement between the Government of the Czechoslovak Socialist Republic and the Government of the Lao People’s Democratic Republic on the abolition of the visa requirement for holders of diplomatic, special and service passports

Note: detailed information on the contractual base is available on the website of the Ministry of Foreign Affairs of the Czech Republic

Developmental cooperation

In 2016, a small development/local project (MLP) took place in Laos to equip a new school in Kokpherng village in the capital Vientiane prefecture. The area has long been one of the poorest in Laos. The equipment provided a better background for school and preschool children and created a more dignified working environment for teachers.

In 2017, two MLPs were implemented in Laos in the area of ​​the capital Vientiane. The first of the projects further equips the school to which the MLP from 2016 was tied. The second focuses on helping and transporting children from excluded locations to educational facilities.

In 2018, two MLPs were approved and implemented, focusing on education and assistance to “street children” and children from ethnically excluded groups.

In 2019, one MLP focused on education (enhancing computer literacy) of rural children was implemented. The EU (and individual member countries) has its own broad program of development cooperation with Laos.

In the years 2020 – 2021, the Czech Republic participated significantly (financially and materially through AVDZP companies) in the reconstruction and equipping of two hospitals (in the cities of Vientiane and Pakse) with medical facilities (beds, X-rays, pediatric departments).

Overall, the EU (both individual EU member states and the European Commission) provides more than half of official development aid to Laos. The main objective of EU activities in Laos is the eradication of poverty. Areas of primary interest include agriculture, business and economic development, education, health and the disposal of unexploded ordnance (UXO). Other areas of interest are: sustainability of public finances, efficiency of state administration, human rights and climate change issues. Further information and documents can be found on the website of the EU Delegation in Vientiane.

Prospective fields of study (MOP)

Laos mainly supports the mining industry due to its rich and still relatively little exploited mineral wealth. The processing industry and the construction of energy capacities also enjoy the attention of the government. An important area is the development of infrastructure, including the construction of roads and, more recently (with Chinese help), the construction of railways. A potentially interesting area of ​​application of Czech products and know-how is agriculture, which still represents a significant part of the Lao GDP.

Due to the lack of own financial resources, the Lao side prefers the creation of joint ventures and the use (especially in energy) of the BOOT (Build-Own-Operate-Transfer) system when building new production capacities. For financial reasons, it is possible to assume the participation of Czech companies mainly in possible projects covered by international organizations and specialized UN agencies or in projects supported by foreign financial and industrial conglomerates.

With regard to the needs of the Lao economy, the following products and goods in particular can be considered as potentially promising (taking into account the financial limitations mentioned above):

– energy equipment (hydro power plants of various capacities, diesel generators, etc.), belt conveyors for mines and raw material extraction

– machines and technology for the food industry (confectioneries, breweries)

– textile machines and equipment for the clothing and leather industry

– machinery and technology for agriculture (agricultural machinery, tractors and semi-trailers, equipment for housing cattle and pigs, irrigation equipment) and the woodworking industry

– medical technology, medicines and food supplements, projects for complete hospital equipment

– construction machinery (for the construction of transport infrastructure), means of transport (primarily trucks)

– glass production technology

In the field of investments, it is necessary to draw attention to the imperfect and largely non-transparent legal framework and the difficult enforcement of the law. At the same time, it is necessary to take into account the very limited local (domestic) market.

Laos Trade