26 Dec, 2023

Laos Charts Course for Growth in 2024 with Tourism Focus

As 2023 nears its conclusion, Laos continues to face economic challenges, including surging inflation, a scarcity of labor, and an expanding trade deficit. In response, the nation has initiated the Visit Lao Year 2024 campaign, turning to tourism as a key strategy to overcome economic obstacles and lay the groundwork for a prosperous ASEAN chairmanship in 2024.The government officially announced the launch of the campaign back in January with measures to improve public transport accessibility, with a focus on simplifying ticket sales for the Laos-China Railway. The plan also included completing infrastructure projects such as roads and airports, restoring highways damaged by natural disasters, and resolving the labor shortage in the hospitality sector.According to Logistics Capacity Assessments (LCA), only 28 percent of roads in the country are paved, and more than 60 percent of national roads are considered to be in poor or bad condition. To address this, the government plans to enhance technical standards and increase the number of weighing stations across the country. Currently, only 14 weighing stations are operational, serving as checkpoints for heavily loaded trucks to ensure compliance with weight limits.These efforts aim to prevent poor road conditions from adversely affecting tourists during Visit Lao Year 2024.Another challenging aspect of Laos’ economic sector lies in the labor shortage. This year, a substantial number of Lao workers have opted to seek employment abroad in pursuit of higher wages, primarily driven by the continuous depreciation of the Lao kip, which struggles to keep pace with the world market.The ongoing depreciation of the Lao kip can be traced back to 2020, triggered by the Covid-19 pandemic. Throughout 2022 and 2023, the kip has experienced a steady decline, reaching a historic low in international markets by August. Despite the Bank of the Lao PDR setting the exchange rate at LAK 19,917 to the US dollar, commercial banks have been selling at rates dropping below LAK 20,000.In an attempt to effectively tackle the issue, government organizations in Laos have actively supported and facilitated workers in securing temporary employment opportunities overseas, particularly in countries such as South Korea, Thailand, and Japan, through established legal channels and programs.Despite the ongoing efforts, the country continues to grapple with economic instability and a high trade deficit, marking the eighth month of the year and the seventh consecutive month of deficits in November. Data from the Lao Trade Portal reveals that in November, Laos had a total trade volume of USD 986 million, with USD 625 million in imports and USD 361 million in exports, resulting in a trade deficit of around USD 264 million.As the economic expansion of Laos has been hampered by challenges such as economic pressures from high public debt and a weakened local currency, in September, the Asian Development Bank (ADB) revised down its growth forecast for Laos in 2023 to 3.7 percent from the earlier projection of 4 percent.Rising Above Economic Challenges for a Prosperous 2024Despite numerous economic challenges, Laos has achieved noteworthy success in curbing its inflation rate. Initially recorded at a staggering 40.30 percent in January, the latest December inflation report reveals a significant reduction, with the rate now resting at 24.3 percent.In response to the surging inflation rate, the Bank of the Lao PDR (BOL) has outlined a strategic goal to bring inflation down to 9 percent or another single-digit figure by the conclusion of 2024. The central bank is set to bolster the enforcement of monetary policy, with a focus on increasing the domestic money supply, channeling export income into the banking system, and harmonizing currency exchange rates with market mechanisms. Complementary efforts will concentrate on fostering greater flexibility in foreign currency exchange and elevating the quality of services provided by commercial banks.In another noteworthy development this year, Laos was appointed the ASEAN Chair for 2024. The official handover ceremony took place during the closing of the 43rd ASEAN Summit in Jakarta, Indonesia, on September 7. Lao Prime Minister Sonexay Siphandone received the ASEAN Chairmanship gavel from Indonesian President Joko Widodo during the ceremony. In his pledge, Prime Minister Siphandone expressed his commitment to foster a more connected and resilient region during Laos’ chairmanship in 2024.As preparations intensify for both the ASEAN Chairmanship and Visit Laos Year 2024, the Department of Information, Culture, and Tourism in Vientiane Capital is closely monitoring the enhancement of hotels, restaurants, and tourist attractions. This is part of the comprehensive preparations to host high-level meetings and a greater influx of foreign tourists in the upcoming year.The department is placing emphasis on the renovation of key tourist attractions in Vientiane Capital, including landmarks such as Pha That Luang Stupa, Ho Phrakeo Museum, Sisaket Temple, and Patuxai Monument.On a regional level, Laos is determined to carry on Indonesia’s initiatives to build a more connected and resilient ASEAN amidst widespread concerns about the unresolved crisis in Myanmar, which continues to pose a significant challenge for the region. Nevertheless, Laos remains committed to contributing to the collective efforts aimed at strengthening ASEAN.

21 Dec, 2023

Hong Kong Stands Ready to Cooperate With Laos on Yuan Trading, Green Financing

Hong Kong has identified three areas for cooperation with Laos and Vietnam during the Secretary for Financial Services and the Treasury’s visit to the two ASEAN members on 11-14 December.According to his official blog, Christopher Hui stated that Hong Kong is ready to cooperate with Laos and Vietnam on yuan trading, talent exchange, and green finance, as the city leverages on its key strengths as Asia’s third-largest stock exchange based on market capitalization.Hong Kong is the largest offshore yuan trading market outside of China, handling approximately 75 percent of global offshore yuan transactions, totaling around 1.1 trillion yuan (USD 115 billion). In this regard, Hui urged the governments of Laos and Vietnam to “consider the benefit of issuing yuan bonds to enjoy lower-interest rate costs [and to consider] issuing offshore yuan [sovereign] bonds in Hong Kong.” In October of this year, Beijing allowed Laos to operate a yuan clearing center, making the country the fifth largest market in Southeast Asia.Hong Kong also plans to negotiate a comprehensive double taxation avoidance agreement (DTAA) with Laos, bringing tax clarity to cross-border investments between the two countries. The DTAA is a pact signed by two countries that encourages trade and investment by circumventing international double taxation.“Laos is an emerging market in the region. Politically, it will take over from Indonesia as the rotating chair of ASEAN next year. Economically, the completion of important infrastructure such as the Laos-China Railway has transformed it from a land-locked country to a land-linked country. The socio-economic benefits are obvious,” Hui stated.The collaboration between Laos and Hong Kong extends to the talent sector, with the Hong Kong Special Administrative Region (HKSAR) government relaxing visa policies in October, allowing Lao individuals to travel for employment, training, and study in UGC-funded institutions.Furthermore, Hong Kong aims to foster cooperation in green and sustainable finance with Laos and Vietnam. The special administrative region has taken strides in green financing, planning amendments in January 2025 to enhance climate-related disclosures by listed companies. Hui expressed Hong Kong’s readiness to share experiences and collaborate with Laos and Vietnam in this critical area.The country has also expressed its commitment to supporting Laos’ ASEAN Chairmanship, as “Hong Kong stands ready to provide solutions for Laos and ASEAN to attract international capital to support their projects and development,” Hui said during his visit to Laos on 11 December.