Increases in disposable income, particularly among elites with access to resource-based industries, and a slowly expanding middle class mean that the consumer and services sectors in Laos are likely to experience continued growth in the future. For example, new, Thai-invested private hospitals have attracted customers in Vientiane, automobile sales – particularly for electric vehicles (EVs) – are brisk, new hotels are opening ahead of Laos’s ASEAN chairmanship in 2024, and young Lao are increasingly going overseas for higher education opportunities.
The government is strongly committed to becoming both an important transportation “land link” between China and ASEAN (Laos borders China, Thailand, Vietnam, Cambodia, and Burma) as well as increasing hydropower and, to a lesser extent wind, solar and thermal energy exports throughout the region. The Lao power sector is open to foreign investment, with representation from international firms. Hydropower and transmission and distribution infrastructure will be the focus of increasing investment by the Lao government as it develops its power industry, with opportunities present for developing solar and wind power.
The Lao agricultural sector also shows promise and is a priority for the Lao government which has stated it will focus on increasing domestic processing to accrue more domestic value. Land is underutilized. The low population density in Laos and large markets for agricultural goods and livestock in neighboring markets have attracted new investors to explore agricultural opportunities, including raising livestock, particularly cattle, building dairies, and investing in agribusinesses. Opportunities exist for exports of modern harvesting, planting, processing, and other technologies that would help the sector to grow.
International companies are developing or exploring SEZs in Vientiane, Savannakhet, and Champasak provinces, among others. SEZs offer a range of incentives and tax holidays to investors depending on the industry. International investors have been attracted by the relative abundance of inexpensive electricity, the low cost of labor, Laos’s centralized location in the Greater Mekong sub-region, and the improvement of transportation infrastructure.
The Lao government has targeted tourism, especially ecotourism, as a major area of future growth. Laos is attempting to attract more upmarket tourists by liberalizing its aviation policies, resulting in more frequent and less expensive flights to and from the country.
The Lao government fully liberalized the retail sector in 2015, allowing foreign retail establishments to enter the country. As a result, several American franchises have found success in the Lao market.
The level of infrastructure development in Laos is low but rapidly improving. The Lao-China Railway began operations in December 2021 connecting Vientiane to the city of Kunming in China’s Yunnan province via a medium-high-speed rail. The rail line also connects the northern Lao cities of Boten, Vang Vieng, and Luang Prabang with Vientiane. In August 2023, the government reported that over the Lao-China railway had carried one million tons of goods, including 773,500 tons sent from Laos to China, since the opening of the railway in December 2021. Highways connecting Laos’s major cities with neighboring countries are steadily improving.
Other infrastructure projects include a highway linking Vientiane with Boten on the Laos-China border; improvements to roads that form the East-West Economic Corridor in southern Laos’s Savannakhet province; and possibly a future highway linking Vientiane with Hanoi in Vietnam. The government is working with the private sector and international organizations to develop two new dry ports at along Laos’s borders with Thailand and Vietnam and has announced feasibility studies for a Lao-Vietnam railway that would connect Laos to Vung Ang port in Vietnam. Two other railway lines, including one linking southern Laos to Thailand and one linking the Lao-China railway to Cambodia, are also under consideration.
The minerals and mining sector has been a major driver of growth in Laos, particularly copper and gold. Other mineral resources include bauxite and potash.