Overview of best prospect sectors, major infrastructure projects, significant government procurements and business opportunities.
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 are being built in Vientiane, automobile sales are brisk, Laos’ first five-star hotel opened in 2017 (with more expected to follow), 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 “the battery of Southeast Asia” by harnessing hydropower and, to a lesser extent wind, solar and thermal energy resources to export electricity 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 power.
The Lao agricultural sector also shows promise and is a priority for the Lao government. 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, 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’ 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 to its market 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. Highways connecting Laos’ major cities with neighboring countries are steadily improving. Other proposed infrastructure projects include a highway that will connect Boten in northern Laos with Thailand in northwest Laos; a new highway linking Vientiane with Boten on the Laos-China border; improvements to the roads that form the East-West Economic Corridor in southern Laos’ Savannakhet province; and possibly a future highway linking Vientiane with Hanoi in Vietnam.
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.