At the 16th Lao Business Forum, held at the Don Chan Palace in Vientiane on 3 April, government officials, foreign diplomats, business leaders, and development partners gathered to discuss the state of Laos’ investment climate.
As the country nears graduation from Least Developed Country (LDC) status in 2026, the forum highlighted both the achievements and ongoing challenges the private sector faces in Laos.
The forum reaffirmed the Lao government’s commitment to fostering open dialogue between the public and private sectors, which is seen as essential for continued economic reform.
Over 300 participants, including domestic business owners and international chambers of commerce, met to discuss Laos’ economic future, with a particular focus on how the country is coping with a tough macroeconomic environment.
Despite facing a difficult economic climate, Laos’ economy was projected to grow by 4.1 percent in 2024, with similar growth expected in 2025.
However, inflation surged to 25 percent in 2024, while the Kip continues to lose value and the country faces a growing shortage of foreign currency reserves.
These issues have placed a strain on both domestic and international transactions, raising concerns about economic stability, officials said.
Adding to the complexity of the situation, Laos was placed on the Financial Action Task Force (FATF) grey list in early 2024 due to concerns over its anti-money laundering practices.
Despite these economic challenges, progress has been made in a number of key areas. Vanthong Sitthikoun, Vice President of the Lao National Chamber of Commerce and Industry (LNCCI), pointed out that three out of the twelve priority issues from the previous forum have been successfully addressed.
Among the key reforms are the reduction in the number of controlled business activities, from 44 to 21, which has streamlined investment procedures.
The introduction of a digital tax filing system through the TaxRIS platform has made it easier for businesses to meet their tax obligations.
Additionally, new regulations around standardized invoice usage have made it easier for micro, small, and medium enterprises (MSMEs) to participate in government procurement processes.
However, the road ahead remains challenging. LNCCI President Oudet Souvannavong acknowledged that Laos still faces significant hurdles.
Labour shortages continue to be a major issue, with over 313,000 Lao workers officially registered in Thailand by mid-2024, creating a shortage of skilled workers at home.
MSMEs, which make up nearly 90 percent of all businesses in Laos, continue to struggle with limited access to affordable credit, hindering their ability to grow and innovate.
In addition, business licensing processes remain slow and bureaucratic, despite improvements in digital registration systems.
Mette Boatman, President of EuroCham Laos, warned that Laos is falling behind neighbouring countries such as Vietnam and Cambodia.
She cited unclear regulations, lack of transparency, and difficulties in repatriating profits as some of the key reasons investors are choosing other markets.
Shen Xue Qin, President of the China General Chamber of Commerce in Laos, noted that although Chinese investments in Laos have reached USD 14 billion, expanding into sectors like renewable energy, IT, logistics, and finance, investors still face challenges in navigating Laos’ unpredictable legal environment and complex approval processes.
Looking ahead to 2025, the LBF Secretariat presented a list of priority issues, focusing on business licensing reforms, trade facilitation, promoting domestic production, and boosting tourism.
Among the proposed reforms are plans to simplify business licensing in high-volume sectors, reduce costs at dry ports, streamline cross-border trucking rules, and centralise customs fee collection.
The private sector also called for better access to government support programmes and more reliable electricity transmission.
A key goal for 2025 is the creation of a Tourism Marketing Promotion Board, which is seen as crucial for attracting more visitors and investment into the country’s tourism sector.
Oudet emphasised that a coordinated effort will be key to unlocking the full potential of Laos’ businesses and attracting much-needed investment.