Public-Private Dialogue on Decree 333: International Chambers of Commerce’s Support in Shaping Laos’ Foreign Currency Policy.

The European Chamber of Commerce and Industry in Laos (EuroCham) participated in the recent Public-Private Consultative Meeting hosted by the Lao National Chamber of Commerce and Industry (LNCCI), acting as the secretariat of the Lao Business Forum (LBF) on August 27, 2024. The meeting focused on the implementation of Decision No. 333/BOL concerning the managing of foreign currency revenue from exports. This topic is of significant interest to many members of the business community in Laos, including many of our members.

The consultative meeting focused on analyzing the new decree and developing practical solutions to help the private sector overcome regulation implementation challenges. Attendees from EuroCham included Mr Lukasz Nitka, EuroCham Vice President and Partner & Director of the J&C Group, Mr Stefano Pighin, EuroCham Executive Director and Ms Mingngakham Pangnasak, EuroCham External Relations Officer.

In his speech, Mr Nitka presented feedback gathered through a survey among the members of several international Chambers of Commerce, including EuroCham Laos, the Australian Chamber of Commerce (AustCham), the American-Lao Business Association, the British Business Group and the Japanese Chamber of Commerce (JCCIL). This feedback underlines significant concerns over Decree 333. A striking 87% of respondents indicated the decree would negatively impact their businesses, with 77% believing it would harm the Lao economy on longer terms.

Critical issues raised include misalignment of bank exchange rates with actual currency values, which could lead to financial losses and bankruptcies. Limited access to foreign currency also increases risks for international transactions, prompting many companies to halt new investments and redirect resources away from Laos. If not addressed, these trends pose serious challenges to economic growth.

Mr Nitka continued that the decree's implications may go beyond individual businesses, threatening the broader Lao economy. One concern is capital flight, as companies may keep foreign currency outside Laos, weakening local banking systems. Additionally, Lao companies could see reduced competitiveness on the international stage due to higher operational costs and limited currency availability. This financial uncertainty may also drive inflation, as rising commodity prices become more likely in such a volatile environment.

In light of these findings, Mr Nitka shared thoughts for the government to consider alternative interventions:

• Enhanced Transparency: Establishing clear communication regarding foreign currency regulations and their impacts.

• Review of Decree Implementation: Proposing a time-limited review period for the decree to restore investor confidence.

• Incentives for Compliance: Introducing attractive rates for exporters to encourage the use of official channels for remittances.

EuroCham remains committed to advocating for the interests of the international business community in Laos. By engaging in constructive dialogue with the Lao government, the chamber aims to ensure policies are conducive to a stable and prosperous business environment. The insights gathered from the recent meeting will be instrumental in shaping future discussions and potential reforms regarding foreign currency management in Laos.