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Representatives of the Bank of the Lao PDR, ANZ Bank Laos, and AustCham Laos pose for a photo at a meeting in Vientiane on November 24.

Bankers, business leaders give update on Laos’ current economic situation

ANZ Bank Laos in conjunction with AustCham Lao hosted a highly anticipated economic event on November 24, providing an insightful update on the current economic situation in Laos.
The meeting was attended by bank officials, members of foreign business chambers, and stakeholders from the private sector.
The event began with a presentation by ANZ Head of Research Asia, Mr Khoon Goh, who discussed current global and regional economic developments and how these developments may impact Laos in the year ahead.
Mr Goh said the United States is approaching the end of the rate rise environment, but the economy will start to feel the impact of previous rate hikes.
This will contribute to a slowdown of the US economy in the year ahead.  In China, however, the recovery is finally starting to gather momentum and the accumulation of various stimulus measures are starting to take effect.
Mr Goh forecasted that, as confidence returns, consumers will potentially unlock an estimated US$6.2 trillion in excess savings, which is anticipated to trigger a recovery that will generate positive spillover into neighbouring countries including Laos.
Following this presentation, Director General of the Foreign Exchange Management Department of Bank of the Lao PDR, Mr Phetsathaphone Keovongvichith, provided a comprehensive overview on regulatory changes introduced on the back of Prime Minister’s Order No. 10 on the Implementation of Foreign Currency  Management, aimed at maintaining currency stability, strengthening foreign reserves and preserving the value of the kip.

Mr Sheng Lee speaks at the ANZ Economic Update in Vientiane.

Mr Keovongvichith said that despite regulatory changes, residents and non-residents can still hold foreign currency accounts and possess foreign currency in the form of cash and bank deposits.  There are no restrictions on inward or outward funds transfers.
However, in line with current practices and in accordance with the law, outward payments will need to be supported with relevant documents to validate the payment purpose and local payments are required to be paid in kip.
He discussed some of the current changes, including the need for all import and export companies to open dedicated export/import (EXIM) accounts with their respective commercial banks.
As of October 23, some 385 EXIM accounts were registered completely and approximately 1,000 accounts were already registered with the Ministry of Industry and Commerce.
This regulatory change is intended to provide the Bank of the Lao PDR with greater visibility on foreign currency flows.  The due date for this change has been extended by the Bank of the Lao PDR until December 29, 2023.
Post this deadline, it is expected that all companies will be compliant with the regulation and failure to comply may lead to a delay in payments and/or financial penalties.
Mr Keovongvichith said “The regulatory changes have yielded some positive outcomes. To date the Bank of the Lao PDR has seen an increase in foreign currency inflows from export proceeds and expects to reach the target of 50 percent by the end of the year.”
He emphasised the resilience of the economy in the face of global and domestic challenges, and the commitment of the national bank to implement strategic policies and reforms that will help ease the foreign currency shortage.
ANZ Country Head and AustCham Lao President, Mr Sheng Lee, said “This event showcases another successful collaboration between the public and private sectors and emphasises the importance of maintaining and strengthening these partnerships.
As the leading foreign Chamber in Laos, AustCham has succeeded in hosting another quality event which delivers on our commitment to keep members of the private sector up to date with current economic developments in Laos.”

By Times Reporters 
 (Latest Update December 5, 2023)

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