19 Dec, 2023

Laos Raises Immediate Excise Tax Rates on Specific Products

Laos introduced a new decree introducing strategic excise tax adjustments on various products, emphasizing the government’s commitment to mitigate foreign currency depletion, promote sustainable practices, and fortify economic resilience through prioritized imports.On October 9, 2023, Laos implemented Presidential Decree No. 003 (hereinafter referred to as “new decree”), ushering in immediate changes to excise tax rates.The new decree, effective without delay, marks a strategic response by the Lao government to the prevailing economic context, characterized by the marked depreciation of the national currency, the Lao kip (LAK). The urgency of the measure reflects the government’s commitment to swiftly address issues related to foreign currency outflow and economic stability.This article delves into the key aspects of the new decree, with a particular focus on its timely and impactful nature in the face of currency depreciation.Context: Laos currency depreciationAgainst the backdrop of Laos’ economic landscape, the persistent depreciation of the Lao kip emerges as a critical factor, significantly impacting the cost of living and exacerbating an ongoing inflation crisis.Indeed, the economic narrative in Laos has been defined by a substantial increase in inflation since the outset of 2022. Data indicates that the inflation rate reached a staggering 41.26 percent in February 2023, marking a drastic ascent from 6.25 percent in January 2022. This surge in inflation has created a cascading effect, placing heightened financial burdens on the populace grappling with the soaring cost of essential commodities.Recognizing the urgency of the situation, the Lao central bank has announced plans to sell savings bonds, totaling up to 2 trillion Lao kip (approximately US$96.5 million). This strategic move aims to provide the public with investment opportunities while supporting the government’s monetary policy and efforts to stabilize the value of the kip. This initiative also follows a series of bond sales and aligns with the government’s commitment, as outlined in the 2023 monetary plan, to lower the annual average inflation rate to a single-digit figure of 9 percent.Significance and implicationsThe new decree carries profound implications in aligning with the broader economic strategies of the Lao government. This new rate policy not only addresses immediate fiscal considerations but is strategically positioned to dovetail with recent governmental initiatives aimed at fortifying the nation’s financial resilience. Along this line, some immediately observable key objectives include:Mitigating foreign currency depletion: The decree serves as a linchpin in the government’s ongoing efforts to safeguard foreign currency reserves. Against the backdrop of the marked depreciation of the Lao kip, the directive strategically discourages payments in foreign currency. Notably, commercial banks have proactively responded by rationing foreign currency supply, prioritizing essential imports—particularly emphasizing the import of vital goods like fuel. The specified products in the decree thus formalize the impetus to selectively prioritize imports, thereby curbing unnecessary expenditures in foreign currency.Transition to sustainable practices: An intrinsic element of the new decree lies in its role as a catalyst for sustainable practices. This is observable, for example, in the escalated excise tax rates on fuel-powered vehicles which underscores a resolute commitment by the Lao government to propel the nation towards an eco-friendly trajectory. This strategic move is indicative of a broader agenda to embrace electric vehicles (EVs), aiming to reduce the country’s dependence on fuel imports.Economic resilience through import prioritization: By formalizing the prioritization of certain imports, the new decree contributes to a more resilient economic framework. The selective encouragement of essential goods aligns with the government’s overarching goal of fortifying economic stability.

13 Dec, 2023

Laos Targets Global Audience for "Visit Laos Year 2024"

In a bid to enhance international tourism in Laos, the government has reached out to countries across the world, extending invitations for their support of “Visit Laos Year 2024.” This nationwide tourism campaign seeks to draw more visitors, ultimately contributing to Laos’ economic growth.With this objective in mind, the country is specifically focusing on its Chinese neighbors, capitalizing on their geographical proximity and the recently developed transportation infrastructure connecting the two nations.The plea was made during a meeting on 7 December in Vientiane Capital that focused on fostering Laos-China tourism collaboration, aligning with the Belt and Road Initiative’s objectives.Director General of the Tourism Marketing Department, Ministry of Information, Culture, and Tourism, Khom Douangchantha, emphasized the growing influx of Chinese tourists and encouraged Chinese businesses to offer tailored Lao tourism programs for a successful Visit Laos Year 2024.The inauguration of the Laos-China railway has not only enhanced travel options but also fostered reciprocal visits between Laos and China. This development has also enticed visitors from various other countries across the region.Additionally, major airlines like Lao Airlines and China Eastern Airlines now provide direct flights connecting key cities in both nations, such as Vientiane Capital in Laos and Guangzhou, as well as Kunming in China.The Lao government has further sought support on a global scale, focusing not only on China but also on neighboring countries like Thailand and Vietnam. In the first nine months of 2023, tourists from these nations claimed the top two spots among international visitors to Laos.With nearly 1 million Thai tourists already having visited Laos during this period, the numbers are poised to soar in the coming years. The anticipated launch of the first train service connecting Nong Khai station to the newly built Vientiane (Khamsavath) station in 2024 is expected to significantly amplify cross-border tourism.Laos also aims to attract more visitors from neighboring Vietnam. In a strategic move, Lao Airlines recently signed up for a partnership with Vietjet, Vietnam’s top low-cost airline, to enhance cooperation in passenger and cargo travel. The collaboration was initiated in early December, and Vietjet plans to introduce a direct flight route between Vientiane Capital and Ho Chi Minh City, featuring four weekly flights starting in February 2024.To cater to both domestic and international tourists, the Lao government is actively pushing for improvements in hotel accommodations, tourism resources, products, transportation, and medical facilities, prioritizing quality, safety, and visitor satisfaction.Visit Laos Year 2024 stands as a comprehensive tourism promotion initiative, highlighting the country’s cultural, historical, and natural wonders. The Ministry of Information, Culture, and Tourism, in collaboration with provinces nationwide, has curated a diverse calendar of 79 events, featuring 14 national-level and 65 local events. Tourists can leverage this calendar to plan their visits.Anticipated as a catalyst for economic growth, Visit Laos Year 2024 is expected to attract 2.7 million foreign visitors and generate USD 401 million in revenue, according to the Ministry of Information, Culture, and Tourism. The government envisions widespread benefits, particularly for businesses in the tourism sector.