Laos - Country Commercial Guide
Trade Financing
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Depending on the size of the transaction, payment can be made using EFT, cash, or letter of credit.

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.

Banking Systems

New private and foreign banks provide modern banking options to Lao and foreign businesses, with a total of 40 banks licensed in Laos.  Laos does not have a national deposit insurance system and supervisory standards are low.  Technical expertise and the range of services offered at domestic banks are limited, though several local banks are expanding into internet banking, e-wallets, and making efforts to capture the significant “unbanked” portion of the Lao population. While it continues to receive outside assistance, the Bank of Lao PDR engages in weak supervision of the sector.

The Asia/Pacific Group on Money Laundering (APG) visited Laos in September 2022 and found in their report that Laos faces “significant domestic and transnational risks from profit-driven crime.”  The government has undergone some institutional reforms, however major gaps and deficiencies in the legal and institutional framework remain.  Technical compliance weaknesses also raise significant risk concerns.  Laos has taken some steps to strengthen its legal framework for anti-money laundering, with further recommendations from APG outlined in its July 2023 report.

Foreign Exchange Controls

Lao law maintains that payment for goods and services within Laos should be conducted in Lao kip.  However, companies that deal internationally have some leeway to conduct business in foreign currency as well.  Debts should not be paid in foreign currency within the Lao PDR except for cases in which the Bank of the Lao PDR has proposed the Lao government approved such a transaction.  In practice, the Lao economy is highly dollarized and Thai baht or American dollars are frequently used for private transactions involving imported goods.  A holder of foreign exchange who needs to make payments within the Lao PDR can exchange for kip at a commercial bank or at a foreign exchange bureau licensed by the Bank of the Lao PDR.  Those who need to use foreign exchange for any of the objectives stipulated in Lao law, such as payment for imported goods, may purchase foreign exchange at a commercial bank or a foreign exchange bureau.

To facilitate business transactions, foreign investors generally open commercial bank accounts in both local and foreign convertible currency at domestic and foreign banks in Laos.  Australian, Vietnamese, Thai, Cambodian, Malaysian, Chinese, and French banks currently have a presence in Laos.  Bank accounts must be maintained in accordance with the Enterprise Accounting Law.

The law places no limitations on foreign investors transferring after-tax profits, income from technology transfer, initial capital, interest, wages and salaries, or other remittances to the company’s home country or third countries so long as they request approval from the Lao government. These transactions are conducted at the official exchange rate on the day of execution, upon presentation of appropriate documentation.  Supply of foreign exchange has in the past been limited in Laos, which imposed a de facto limit on repatriation of capital.  Foreign enterprises must report on their performance annually and submit annual financial statements to MPI.

Laos’s fiscal and monetary difficulties result in low levels of foreign reserves.  In January 2023, the government closed all commercial currency exchanges, and the Bank of Lao PDR has imposed daily limits on converting funds from Lao kip into U.S. dollars and Thai baht, leading to difficulties in obtaining foreign exchange in Laos and frequent differences between official and unofficial exchange rates. The Bank of Lao PDR has also imposed restrictions on loans made in U.S. dollars and baht, limiting them to businesses that generated foreign currency.  There are no recent reports of restrictions on, or difficulties in, repatriating or transferring funds associated with an investment.

U.S. Banks & Local Correspondent Banks

There are no U.S. banks currently licensed to operate in Laos.  Some Lao banks maintain correspondent banking relationships with U.S. banks; for example, BCEL, the largest privately held bank in Laos, has a relationship with Wells Fargo and Phongsavanh Bank has a relationship with J.P. Morgan Chase Bank.   Several non-Lao banks present in Laos, such as the Australian bank ANZ and First Commercial Bank, among others, also maintain correspondent banking relationships with large U.S. banks.

For additional information, visit the U.S. Department of State Investment Climate Statement website.