BRIEF August 28, 2020
Doing Business in Lao PDR
The Lao People’s Democratic Republic has experienced rapid economic growth over the past 25 years. Recent data shows, however, that the impact of this growth on poverty reduction has been low, with inequality widening.
To make growth more sustainable and to increase its positive effects across society, Laos is looking to diversify its economy and create more jobs. A strong private sector will be critical to this and increasing private sector-led growth is a priority of the 8th National Socio-Economic Development Plan (2016-2020).
Laos is ranked at 154 of 190 states on the World Bank Group’s 2020 Ease of Doing Business Index. This reflects the country’s complex and opaque business environment, with barriers to regional trade and integration that limit its attractiveness as an investment destination. Investors complain about the high costs of doing business and the absence of a transparent, dynamic, and streamlined business environment. Overall, the economy remains inward-oriented (only 2.9% of firms export directly), with little investment or innovation among local firms.
To support private sector-led growth and increase Lao competitiveness, it will be necessary to deepen reforms that improve the business environment, advance connectivity with neighboring economies, and raise the productivity of local firms. This requires simplifying regulations and making the business and trade environment more transparent and predictable, thereby levelling the playing field, encouraging entry, and increasing competition.
The Prime Minister has issued a series of orders to improve the business environment, demonstrating a high-level commitment to reform. PM Order No. 2 was issued in February 2018, calling for a significant improvement in the Doing Business indicators. This was followed by PM Order No. 3 in January 2020, which broadens business environment reform by streamlining operating license procedures.
The World Bank Group, including both the World Bank and the International Finance Corporation, is supporting projects, knowledge, and technical assistance that will improve the environment for private sector-led growth in Laos.
Learn more about our work and findings on the links on this page.