How would Lao PDR as a small
landlocked and least developed country
embrace competition law and policy ?
Presented by Dr. Leeber Leebouapao
NERI, Lao PDR
Workshop in Bangkok, 27-28 June 2006
Overview on Lao PDR
Characteristics of the Country:
 Landlocked and mountainous country (picture)
Geographical Location:
 South East Asia
Country Area:
 236.800 km2
Population(2005):
 5.6 million people
Economic System:
 Transition from the centrally planed economy to a market oriented
economy since 1986
GDP per capita(2005): US$ 491
Economic Integration:
 1997: Member of ASEAN
 Currently: Preparation for Joining WT
Constraints and Challenges
Land locked and mountainous country
- Difficulty in infrastructure development.
- High transportation cost, enterprises often monopolize
their business where they are established.
 Small population
- Inefficiency in developing many enterprises producing
and serving the same in a region (imperfect competition).
- Inefficiency in developing many heavy industries
 Lack of knowledge and understanding
on importance of business competition
 Inadequate or lack of financial sources
- Reduces business competition level
Constraints and Challenges (Cont.)
 Business associations and cooperation
- Collective price fixing
 Joining AFTA
- Member countries are more developed and more
competitive
- More competitors of member countries in domestic
market
 WTO Accession
- Low product quality and product standards
- Low negotiation skills
- Hard international business competition
Competition Policy/Regulation Regime
 The NEM (1986)
IV th Party Congress: Moving from the Centrally Planned Economy to
A Market Oriented Economy since 1986
 Party Congresses(V 1991, VI 1996, VII 2001) stress the importance
of multi-economic sectors including private sector.
 The Constitution (1991)
The state protects and expands all forms of state, collective and
individual ownership, as well as private ownership of domestic
capitalists and foreigners who make investments in the Lao People’s
Democratic Republic. The state encourages all economic sectors to
compete and cooperate with one another in expanding their
production and business. All economic sectors are equal before the
law. (Article 14. )
 The Business Law (1994)
“All types of operations conducted by enterprises in all economic
sectors are inter-related and competing on an equal footing before the
law.” (Art.5).
Competition Policy/Regulation Regime (Cont.)
 The Decree No. 15/PO on Trade Competition (2004)
The objective of the Decree is to “define rules and measures to
regulate monopolisation and unfair competition in trade of all forms,
aiming to promote fair trade competition, protect the rights and legal
interests of consumers and to encourage business activities in the Lao
PDR to function efficiently in the market economy mechanism as
determined by the Government of the Lao PDR” (Art. 1 – Objectives).
“All types of operations conducted by enterprises in all economic
sectors are inter-related and competing on an equal footing before the
law” (Art.5). This principle is further reflected by the Decree in that
“Business activities of all sectors are equal under the law; they
cooperate and compete with each other in a fair manner in
compliance with this Decree and concerned laws and regulations”
(Art.3 – Fundamental principle in competition). .
Competition Policy/Regulation Regime (Cont.)
 Industrial Policy
Decree No. 19/PO(1988) on “Management and Administration of
SOEs”
- Autonomy of SOEs.
- Elimination of subsidy system
The Party Resolution(1988) , the Constitution(1991), the Business
Law(1994) encourage private sector development
Decree No.42/PO on Promotion and Development of Small and
Medium-sized Enterprises (SMEs) (2004) identifies as priority areas:





(i) Creating an enabling regulatory and administrative environment for SMEs;
(ii) Enhancing competitiveness of SMEs
(iii) Expanding domestic and international markets for SMEs;
(iv) Improving access to finance by SMEs;
(v) Encouraging and creating favourable conditions for the establishment of
business organisations; and
 (vi) Encouraging entrepreneurial attitudes and characteristics within the society
Competition Policy/Regulation Regime (Cont.)
 Trade policy:
 Domestic Trade Liberalization:
Decree 12/PO(1987) on “Promotion of goods and money
circulation” “One market, one price” principle, e.i
elimination of the dual price system
Decree No. 14 /PO( 1988) on goods price determination,
prices of most goods determined by market, except
for logs, basic utility and mineral prices
Competition Policy/Regulation Regime (Cont.)
 External Trade Policy:
Decree 18 on “State monopoly on strategic export and import
goods”:
- Reduction of restricted items, private sector participation in
export/import, abolition of quantitative restrictions of import
goods in substance
Order/PO No. 24,(2004) on the facilitation for exportation and
importation:
To establish one stop services at border points and to
abolish export-import licenses, except gold and copper
export and except vehicles, spare parts, petroleum, gas
and diamond and other prohibited goods
Lao PDRs’ integration into the regional and global
markets(AFTA, AFTA+1, +2, +3, preparation to Join WTO by
2008, …)
Competition Policy/Regulation Regime (Cont.)
 Privatization Policy:
Decree No.17/PO on Privatization of SOE (1990)
( Current situation: by 2003 there are only round 93 wholly
SOEs of which 32 are considered strategic)
 Investment Policy:
 Foreign Investment Law of 1988
(amended in 1994)
 Domestic Investment Law of 1994
 Government’s Yearly and Five Years Plans for SocioEconomic Development
 Promotion of Private Investment
Other Sectoral Laws/Regulations Related to Competition
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Enterprise Accounting Law
Labor Law
Business Law
Custom Law
National Budget Law
Law on Bankruptcy
Secured Transaction Law
Law on Government of the
Lao PDR
Law on the Military Service
Law on -Promotion of Domesti
Investment
Tax Law
Law on The Bank of the Lao
PDR
Forestry Law
Water and Water Resources
Law
Electricity Law
16. Road Transport Law
17. Mining Law
18. Law on Agriculture
19. Law on the ProcessingIndustry
20. Environmental Protection
Law
22. Urban Planning Law
23. National Road Law
24. Law on Drugs and Medical
Products
25. Road trafficking Law
26. Education Law
27. Law on Hygiene, Prevention
and Health Promotion
28. Telecommunications Law
29. State Assets Law
Market Structure and Competition
• Market structure and competition
- Manufacturing Sector
- Services and Utilities
- Agriculture Sector
Market Structure and Competition(Cont.)
Business in
Manufacturing Sector
1. Textile and garment
Number of Companies
59 enterprises (with 43 subcontractors)
Domestic
Market shares
Import
13%, 34%, 51.9%
n.a.
Types of Market
Competition
2. Cement
3
44%
19.8%
Oligopoly
3. Beer
1
98%
2%
Monopoly
4. Tobacco
2
40%
40%
Competition
5. Motorcycle assembly
2
75%
n.a.
Competition
6. Steel
11
15-20%
n.a.
Competition
7. Electricity generation
EdL, IPPs, Provincial authorities
n.a.
n.a.
Monopoly
8. Pharmaceuticals
15 enterprises, 05 of which are major
players
n.a.
n.a.
Competition
9. Wood processing
- Logging : 3 Central SOE & pro.SOE,
FDI
- Primary wood industry : 182
- Secondary wood industry: 1269
100 %
100 %
99%
Oligopoly
-
Competition
Market Structure and Competition(Cont.)
Business of Service
and Utility
Banking
Insurance
Number of Companies
-
04 State-owned banks
03 Joint-venture banks
07 foreign bank branches
01 foreign bank representative office
1 SOE
Market Shares
Types of Market
70.7%
20.9%
8.3%
0%
Oligopoly
( 98 % )
Monopoly
Transport
- Trucking
Many providers
Competition
- Inter-provincial
bus transport
Many providers
Competition
Competition
- Aviation
Domestic: 1 SOE
100%
State monopoly
International:
Lao Aviation
Vietnam Airlines
Thai International Aviation
China Yunnan Aviation
53%
23.5%
20.5%
3%
Oligopoly
Market Structure and Competition(Cont.)
Business of Service and
Utility (Cont. )
Number of Companies
Domestic
Market shares
Types of Market
Telecommunications
PSTN (Public switched
telephone network)
- Cellular
- Internet Access
- Cable television
LTC
ETL
LAT
86.5%
12%
1.5%
LTC
ETL
Millicom
LAT
66.6%
19.6%
10.2%
3.4%
LTC
PlaNet Online
GlobeNet
75%
n.a.
n.a.
-Electronic Yiang Jin Cheng Du
Company of China
-Thailand’s UBC pay Direct-toHome service
n.a.
n.a.
Oligopoly
Oligopoly
Oligopoly
Oligopoly
Market Structure and Competition(Cont.)
Where are competition and monopoly ?
• High competition levels are in particular in SME
such as: education services, tourism industry,
garment industry, drinking water industry,
construction industry, trade and any ago-processing
industry.
• Monopoly/oligopoly are in particular in large
industries such as: cement industry, hydro
electricity industry, beer industry etc.
THE WAY FORWARD
 Establishing the Trade Competition Commission
 Implementing the Decree on Trade Competition
 Building capacity of national stakeholders (Business
Sector, Consumer, Government, Academic Research
Institutes, NGO, Donors ) to understand the concept of
competition and effectively implement the Decree on
Trade Competition
 Discussing the possibility of transforming the Decree
on Trade Competition to a competition law( 5 year
plan(2006-2010), draft ).
THANK YOU
Questions & Comments