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ECCT trip to Laos

From 6-8 March 2017 an ECCT delegation headed by Vice Chairman Olivier Rousselet and CEO Freddie Hoglund travelled to Vientiane in the Lao People's Democratic Republic (Lao PDR) to visit the chamber's counterpart, the European Chamber of Commerce & Industry In Laos (ECCIL). The visit was part of the ECCT's ongoing interactions with other European chambers in the region. (The ECCT visited the following European chambers that are part of the European Business Organisations Worldwide Network (EBO) in previous years: Myanmar in 2016, Thailand in 2015, Indonesia in 2014, Vietnam in 2013, South Korea in 2012, Beijing in 2011 and Shanghai in 2010.

The trip to Laos included meetings with the ECCIL secretariat, the European Union (EU) delegation in Laos, the Lao National Chamber of Commerce and Industry (LNCCI), DFDL Laos (a law firm), a visit to the Vientiane Industrial and Trade Area (VITA) Park Special Economic Zone, dinner with the ECCIL Executive Committee (equivalent to board members) and visits to the facilities of Mascot International and Lao Tobacco.

Laos has a population of around 6.5 million, most of whom live in rural areas. The country is classified by the UN as a Least Developed Country (LDC) given its early stage of development and a GDP of around US$12.3 billion (although reliable statistics are hard to come by).

Laos ranks fairly poorly (127th out of 189) on the World Bank's Doing Business index. It can take several months to go through the procedures to set up a business. However, setting up operations in one of the country's Special Economic Zones (SEZ) is fairly easy. All administration procedures can be done though single window service centres in the SEZs.

The country receives a fair amount of foreign aid and its status as an undeveloped economy gives its exported products privileged access to developed markets in Europe.

Resources account for almost half of economic output in Laos. A large portion of foreign earnings come from the sale of hydro-electric power to neighbouring countries. Two large hydro power plants were started in 2000 and provide much of the country's electricity and earnings from the sale of electricity. Another project started in 2012 and is close to completion and there is another block in progress, set to come online in 2020. Agriculture and forestry are also important contributors to the economy while there are also a few mines (copper and gold). The service sector in the country is growing strongly, mostly concentrated in tourism and hospitality.

Laos has a young and growing population but education facilities are limited, making it difficult for companies operating in Laos to find skilled employees.

ECCIL was founded in May 2011. It has about 120 members, making it the second largest of 10 foreign chambers in Laos. It is the only representation of European business interest in Laos (there are no national European chambers in Laos). It has 12 employees.

Currently the chamber has three committees: Service development and income generation; Legal and Taxes and Communication. The chamber provides market information & market research, legal information, establishes contacts with government officials, business matching and is working on a recruitment service. It holds networking and training/workshop activities on subjects such as trade and compliance.

On the first day of the trip the delegation visited DFDL Laos, a law firm, where they were given an introduction to the legal aspects of doing business in Laos, presented by Managing Director Kristy Newby.

On the afternoon of the same day the delegation visited COPE (Cooperative Orthotic & Prosthetic Enterprise). COPE is a non-profit organization based in Vientiane that runs rehabilitation centres to provide care and support to unexploded ordinances (UXO) survivors, including orthotic and prosthetic devices and physiotherapy. It was established to help survivors of UXOs left as a result of extensive bombing during the Vietnam War. Laos was a key part of the Vietnam War since parts of Laos were invaded and occupied by North Vietnam for use as a supply route for its war against the South. In response, the United States initiated a bombing campaign against the North Vietnamese positions. Between 1964 and 1973 the US army dropped over two million tonnes of ordnance on Laos, making it the most heavily bombed country per capita in history. Of the more than 270 million sub-munitions, it is estimated that 80 million failed to explode. As a consequence one person is still killed or injured almost every day by (UXO) in Laos. There is an ongoing effort, incorporating improved methodology and a team of 3,000 people working on clearing the bombs.

The morning of the second day started with a visit to the EU delegation. The delegation has had a presence in Laos since the 1990s and now has a staff of 25, which coordinates EU development programmes. Together with Germany, the UK, France, Finland, Luxembourg, Ireland and Switzerland, European aid in Lao is projected to reach €500 million between 2016 and 2020. Around 54% of EU funding is devoted to food and nutrition security, 33% to education and 12% to governance, human rights and the rule of law.

The EU is also supporting initiatives to protect the environment and address climate change, reducing the impact of UXOs and supporting the health sector.

The next visit was to Mascot International, a Danish company, which has operations producing high quality safety wear located in the Vientiane Industrial and Trade Area (VITA) Park Special Economic Zone. The delegation was taken on a tour of the factory, which has 600 employees.

After the factory tour, the delegation met with staff of the VITA Park administration where they were briefed about the benefits of doing business the park. VITA Park is 30%-owned by the Laos Ministry of Commerce, 70% by private investors and managed by Taiwanese staff. The administration serves as a one-stop service window between its tenants and the government, handling all administrative matters on behalf of tenants. There are 48 companies registered in the Park from China, Denmark and Japan.

There are many benefits to operating in FEZs. In VITA Park, these include 75-year land leases, access to stable water and electricity, tax holidays of 2-10 years, followed by reduced tax rates of 8% of 10% for the service sector and 5-10 years, followed by 8% for manufacturing businesses. Expat and local staff can also apply for personal income tax rates of just 5%.

In the afternoon of the second day, the delegation had a presentation and an extensive tour of the main facilities of Lao Tobacco, demonstrating the entire process to produce and package cigarettes. Lao tobacco is a joint venture between Imperial Tobacco, the Laos government and other private investors.

The last meeting of the second day was with Oudet Souvannavong, Vice President of the Laos National Chamber of Commerce and Industry at the ECCIL office. Mr Souvannavong gave an introduction to the LNCCI and shared his insights on the business environment from the point of view of local businesses.

On the final morning of the trip, the ECCT delegation met with their ECCIL counterparts to brief each other on their respective chambers and to share information and best practices.