A company in Bokeo, which holds a garbage collection concession from the government, was recently found to be collecting fees in Thai Baht. This incident highlights the challenges faced by the Lao government in controlling the use of foreign currency within the country.
Government agencies and various companies have been often seen to accept foreign currency as payment for various services, despite ongoing discussions and efforts to address the problem.
During the 5th Ordinary Session of the Ninth National Assembly in Laos, this issue has been repeatedly raised. However, the regulations and recommendations put forth by constituents are yet to be implemented.
Early this year, the Bank of Lao PDR reestablished the Foreign Currency Control Department to manage trade, services, investment, debt, and international trade loans, as well as monitor the local currency and reduce the use of foreign currency in the country.
The Central Bank also reformed its regulations regarding foreign currency exchange rates for commercial banks, allowing them more flexibility in setting them, so as to reduce the gap between official and unofficial bank exchange rates.
Despite these efforts, the regulations implemented by authorities have failed to affect foreign currency exchange rates, which continue to rise daily. As a result, public confidence in the Lao kip (LAK) has been declining steadily.
Valy Vetsaphong, a constituent from Vientiane Capital, addressed this issue during the 5th Ordinary Session on 29 June and emphasized the urgent need for the Lao government to address the use of Chinese yuan and other foreign currencies within the country, as it undermines public confidence in the LAK. She further stressed that this matter requires immediate and decisive action, rather than turning a blind eye or remaining passive about the situation.
The problem of foreign currency usage in the face of a weakening LAK is quite prevalent in Lao society, but it is particularly noticeable in the border provinces. Bokeo, the northernmost province of Laos, shares a border with China and has been specifically noticed for its use of the Chinese yuan instead of local currencies.
To combat this issue, the Dok Ngiew Kham Group, which operates the Golden Triangle Special Economic Zone, has implemented regulations requiring store owners to accept payment in the local currency.
However, these enforcement measures have not yielded much results. Recently, a company in Bokeo, responsible for garbage collection in the Ton Pheung district, was observed collecting fees in Thai baht. This action is likely a result of the ongoing depreciation of the LAK.
When questioned about this practice, the company’s representative stated that they collect fees not only in Thai baht but also in LAK. However, the exchange rate used is fixed at LAK 55,000 to THB 100.