Selling to the Government
The Lao PDR government is a leading consumer of goods and services, but procurement procedures are opaque. The national budget is heavily augmented by development assistance, and donors commonly encourage government purchases from their home industries as part of aid deals. Laos is not a party or an observer to the WTO Agreement on Government Procurement.
When business opportunities involving Lao government entities are associated with donors, support contracts are often advertised for bid in local English-language newspapers, Vientiane Times, and Khaosan Pathet Lao (KPL). Major donor-financed deals may include infrastructure projects financed by multilateral development banks including the World Bank and Asia Development Bank.
With some exceptions, government purchases are not typically advertised in advance, nor do they rely on open bidding processes. However, niche opportunities are known to exist for direct private sales to government entities, with past examples such as telecommunications and aviation. The government has issued orders that appear to require open and competitive bidding for all government-financed procurement and projects, but these processes are not followed in practice.
U.S. companies bidding on foreign government tenders may also qualify for U.S. Government advocacy. Within the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters in competition with foreign firms in foreign government projects or procurement opportunities. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agency officials expressing support for the U.S. exporters directly to the foreign government. Consult the Advocacy Center’s program web page on trade.gov for additional information.
Financing Projects
Laos signed an Overseas Private Investment Cooperation (OPIC) agreement with the United States in 1996 and an agreement with the World Bank’s Multilateral Investment Guarantee Agency (MIGA) in 1998. In 1998, the Lao PDR government signed an agreement with the Mekong Project Development Facility (MPDF), a multi-donor fund managed by the International Finance Corporation (IFC). The MPDF is designed to promote the establishment and expansion of privately-owned, small- and medium-sized enterprises, as well as joint venture projects with significant local private participation in Laos, Cambodia, and Vietnam. The World Bank and the Asian Development Bank (ADB) are very active in Laos and are often involved in providing financing or guarantees for major projects. Laos registered as a member of Asia Infrastructure Investment Bank (AIIB) in 2014. Laos was one of the heaviest borrowers under China’s Belt and Road Initiative (BRI) in the 2010s, leading in part to its current unsustainable debt burden. As a result, the Lao PDR government struggles to secure financing for large scale projects.
Multilateral Development Banks and Financing Government Sales
Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from Multilateral Development Banks (MDB). The Guide to Doing Business with Multilateral Development Banks overviews how to work with MDBs. The International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank. Learn more by contacting the Commercial Liaison Offices to the Asian Development Bank and the World Bank.