Business in Laos and the Lao National Chamber

Business in Laos and the Lao National Chamber of Commerce and Industry (LNCCI) Mr. Oudet Souvannavong Vice-President LNCCI U. S. Embassy and American Chamber of Commerce Business Mission to Laos May 7, 2008 Lao Plaza Hotel Vientiane Capital

Investment Climate – Macro-Economic Factors Lao PDR is undergoing a process of rapid industrialization. Production has moved from agriculture to industry and service. The manufacturing sector has grown rapidly raising its share in GDP and employs more than 120, 000 workers. SME dominate manufacturing sector with 23, 000 firms with less than 10 employees and only 116 firm employing more than 100 employees Food and beverage, garments, wood processing and construction materials are the largest manufacturing subsectors Tourism has strong potential and employ more than 22, 000 employees. Private Sector is growing and taking an important part in the economic and social development of the country.

Constraints in Doing Business (According to World Bank Investment Climate Assessment - 2007) The 3 main constraints to firms’ growth and operation are: quality of infrastructure, regulation and taxation. High tariff for electricity combined with low quality of supply is rated as the major constraint. Regulatory uncertainty - high burden reported by garment firms and exporters Taxation discretionary application especially for SME Transport had lower value added and higher lead time Lao PDR has still a high number of procedures required to start a business and significant long time to complete them. Labor productivity is low and staff turnover is high especially in tourism sector Financial sector is under developed and access to finance is a constraints Corruption, land acquisition, and labor skill not reported as constraints

Doing Business in Lao PDR - The Challenges Investment environment and competitiveness is getting better. number of FTI increased in term of value and numbers of projects growth is due to investment in mining and hydro-power but a large portion into manufacturing, agro-industry and tourism. Lao PDR integration with the regional and world economies contributes to private sector and export growths, and foster trade and investment. Commitment under ASEAN – AFTA … ASEAN Economic Community GMS – CBTA … Preparation to WTO accession A Wild-Wild East to be discover with many unexploited resources to be developed – in all sectors

The Lao National Chamber of Commerce and Industry (LNCCI) LNCCI is established in 1989. The organization has actually 1, 057 corporate members, 25 Affiliated Business Associations and 12 Provincial Chamber of Commerce and Industries. LNCCI is representing the employers from private and State Own Enterprises. LNCCI is acting as the platform for public and private partnership and serve as an intermediate between government & private sectors

LNCCI Membership 1989 -1993 -2001 -2005 -2008 Corporate Members 149 575 800 1057 Affiliated Members (Business Associations) 0 0 7 25 Provincial CCI 0 0 6 12 International CC 0 0 0 4

LNCCI Role Assist local and multinational enterprises to establish themselves in Lao PDR Provide information and assistance to members on issues related to business operation in trade and industry Assist firms registered in Lao PDR to comply with national and international laws and regulations Coordinate and arbitrate local business operations Provide recommendation to the government on different issues related to the development of the private sector, trade, investment and of the economy in general

LNCCI Tasks • Conduct trade and investment negotiations with foreign partners • Issue Certificate of origin • Approve the establishment of Local Chamber of Commerce and Industries and business managed organizations • Assign Overseas Representatives • Propose the establishment of Foreign Chambers in Lao PDR.

LNCCI Services • • Business to Business Matching (B 2 B) Trade missions and Trade Shows Trade fairs and Exhibitions Seminars and Workshops Trainings to SMEs Information and Resource Center – Web Site Consultation and Arbitration

LNCCI – Trade Relations • Participation in the U. S. NTR negotiation and is working on the LDC Bill in order to get duty free for all export to the U. S. • Participation in the preparation for Lao PDR’s WTO accession. • LNCCI, affiliated to ASEAN CCI and ASEAN BAC, is participating in divers ASEAN trade and investment schemes with the ASEAN-US Business Council. • LNCCI, that is assuming the Secretariat of the GMS-BF, is assisting the development of GMS-CBTA, SME Pre-export finance and the development of GMS Economic Corridors. • GMS-BF Corporate members are TNT Express Worldwide, Oxeania-Lane Xang Mineral Ltd, Expo and Convention Promotion Inc. (USA) • LNCCI signed Cooperation Agreements (Mo. U) with more than 10 countries.

LNCCI and Trade with the U. S. • Trade and investment is still small compare with existing potential! • Export to the U. S. amounted to US$ 20 Millions in 2007. • 7 Garment Factories exported to the US under the NTR with an export value of US$ 10 Millions the amount will double in 2008. • Export of green coffee bean amounted to US$ 5. 2 Millions • Handicrafts and other commodities to US$ 4. 8 Millions • Increased establishment US company branches and enterprises in automobile trade, office equipment, logistics, agriculture … • Naming a few firms (Lao Ford City, 3 M, Shenker)

LNCCI and The American Chamber of Commerce – a Future Cooperation? LNCCI is willing to cooperate with the American Chamber of Commerce To facilitate U. S. FDI To enhance Lao Export under the N. T. R. agreement To identify potential areas for joint business development (B 2 B) between American and Lao Firms Mining and hydropower Agro-industry and forest plantation Garment and manufacturing Transport and logistics Tourism (hotels, inbound-outbound tours and travel) Other services and industries

LNCCI and The American Chamber of Commerce – a Future Cooperation? LNCCI is ready to negotiate a cooperation agreement with the American CC based in Bangkok. Mo. Us are already signed with CCPIT, VCCI, FTI and TCC, Kadin, Nippon Keiranden and a few others. Cooperation can also be made under the GMS-BF as Lao PDR is linked with almost all GMS Economic Corridors including the EWEC. Collaboration is made with Japan CC, Swiss CC in Bangkok under this scheme Shenker is co-chairing a Technical Committee for studying the establishment of a GMS Transport Association under the CBTA Cooperation can also be made under ASEAN-BAC and ASEAN-US Business Council Regular dialogue is made between LNCCI and members of ASEAN US Business Council.

Thank You LNCCI Address and Contact Numbers Phonphanao Village Kayson Phomvihane Avenue Saysettha District P. O. Box 4596 Vientiane Capital, Lao PDR Tel: (865 - 21) 452579, 453312 -4 Fax: (856 - 21) 452580 E-mail: lncci@laopdr. com Web site: www. lncci. laotel. com