On Friday the 30^th of October 2020 at LNCCI Building, under the Lao PDR Competitiveness and Trade Project (LCT Project),

the Lao Business Forum (LBF) has provided a private sector working group meeting to address issues related to the policy improvement and mechanism to create a good environment for doing business and investment activities in Lao PDR. The objective of the meeting is to follow-up the issue of financial service sector raised at 12^th LBF as well as discussing new issues that may have occurred after the 12^th LBF.

The meeting was led and facilitated by the Australian Chamber who initiated to take lead on the problems relating to the financial service sector (2020) in Lao PDR. This meeting was co-chaired by Ms. Valy Vedsaphong, Vice President of LNCCI and Carli Renzi, AustCham Lao Treasurer, ANZ Country Head. Most of the participants were the top-line managers and managing directors from both local and international banks, leasing services, insurance companies, micro finance institutions in Lao PDR such as ANZ Bank, BFL Bank, ICBC Bank, Maruhan Japan Bank, Phongsavanh Bank, Joint Development Bank, Lao Development Bank, Lao-China Bank, Sacom Bank, Indochina Bank, Krungsri Leasing Services, AEON Leasing Services, Toyota Tsuho, KB Kolao Leasing, AGL Insurance, Lane Xang Assurance and Forte Toko Insurance. Apart from these financial service providers there were the Foreign Chamber of Commerce in Lao PDR which are American Chamber of Commerce, Australian Chamber of Commerce, and European Chamber of Commerce and Industry.

In the meeting the issues that were discussed were the followings:

1. Legitimization of the parallel market and enforcement of regulations
2. Legal procedures for resolving disputes
3. Dematerialization and Digital Agenda
4. Transparency, Simplicity and Equity in Tax Regulation
5. Improving consumer protection for vulnerable persons
6. Strengthening Industry Associations

Apart from these main issues there were three other specific issue raised as follows:

1. Banking: Deposit Insurance fees in excess of insured volumes and Transparency on investment of reserves

1. Leasing: COVID-19 relief considerations to widen SME access to leasing
2. Insurance: Reserve requirements substantially in excess of risk-based capital calculations

During the discussion, particularly the main issue on the large parallel market affecting the inconvertibility of USD which thus, affects the businesses in Lao PDR that involves in foreign currency, Carli Renzi mentioned that – if you want foreign investment to come in, you have to make it look like a better bargain for them than elsewhere.  The problem that we have is that because this (USD) is not a freely traded currency, there are a lot of restriction and because there is a large parallel market, the options (for the government to use) for fiscal policy to improve these issues are very limited.

Mr. Anthony Chin, CEO of Maruhan Japan Bank Lao, admits that the problem they have at the moment will probably take several years to resolve. He suggested that every party should bite the bullets and take the hits while striving for a ‘fair level playing field’ which is to reduce the gap between the parallel and the official market, so that eventually all parties involved are satisfied.

Nonetheless, insurance and leasing companies continued to raise their issues they face and gave real business case examples in the meeting for the Lao Business Forum Secretariat to proceed with the relevant government sector later this year.