On May 25, 2023, Laos published Decision on the Registration of Importers and Exporters of Goods No. 0752, which requires importers and exporters to register their activities and the related goods with the Ministry of Industry and Commerce (MOIC). The MOIC’s goal is to create a database to monitor imports and exports and collect data on the flow of goods in and out of Laos. The decision also aims to regulate the import and export of goods to and from Laos by foreign traders who do not have a local presence.
Once the decision takes effect on July 6, 2023, import and export of goods will be possible only upon registration by the importers or exporters with the MOIC. This registration requirement is in addition to the current mandate that importers and exporters operating in Laos obtain a Business Operating License from the MOIC.
Activities Subject to the Decision
Under the decision, the obligation to register applies to individuals and entities that import or export goods for which the revenues and payments are controlled by the government as well as “goods that have a quick impact on the lives of the population.” Although it is not yet clear which products the MOIC has in mind, further clarifications are expected.
Under the current regulatory framework in Laos, some goods need an import-export permit prior to crossing the Lao border, in accordance with a 2022 regulation listing goods subject to the permitting requirement. It is possible that the goods regulated by the new decision could be the same as those defined in the 2022 list (see here for a Lao-language list)—such as drugs, medical products, land vehicles, petrol, and hazardous chemicals—but further confirmation and clarification will be necessary to determine this.
Importers and Exporters Subject to the Decision
The decision applies to both local and foreign operators, and it does not replace or amend the 2019 regulation requiring certification of foreign traders with no registered business establishment in Laos. Therefore, such foreign traders will need to show proof of this certification before registering with the MOIC pursuant to the decision.
The decision stipulates that all importers and exporters registering with the MOIC must also submit copies of their Enterprise Registration Certificate and Business Operating License along with their application form. It is likely that more documents will be requested for certain specialized goods (e.g., relevant license for medical products, etc.).
Registration Validity
Under the decision, the registration certificate is valid for one year and can be renewed for the same period. This is in line with the authority’s intention of collecting up-to-date data on annual imports and exports and controlling imported and exported goods.
The list of goods permitted for import and export will be specified on the registration certificate based on the business operator’s application. The business operator will only be allowed to import or export these goods.
Penalties and Enforcement
Breaches of the decision deemed minor or first-time violations are punishable by warnings or education (usually a warning along with relevant training to ensure compliance with the law). Further disciplinary actions may include civil claims (if damages are caused) and criminal charges depending on the nature of the infringement. The decision, however, does not provide more information, such as a sliding scale for fines.
Implementation and Outlook
The decision will allow the Department of Import-Export (DEMEX) in the MOIC to centralize information and maintain a comprehensive database of all local and foreign operators conducting import-export activities, along with the exact types of products being imported or exported. If the information in the registration certificate does not match the declaration of goods to be imported or exported, the trader may not be authorized to import or export the unspecified or incorrectly specified goods. In this regard, the DEMEX acts as the central point in managing the information in order to simplify verification carried out by separate administrations as necessary (e.g., Customs Department, Ministry of Health, etc.).
Another objective of the decision is to control the liquidity of foreign currency coming into and going out of Laos. Under the amended Law on Management of Foreign Currency, locally established businesses must have a bank account for the purpose of handling all business transactions. The purpose is to have greater oversight of foreign currency coming into the country by ensuring that all transactions are processed through the national banking system. Laos’ foreign currency holdings are notably low, with approximately only two months’ worth of imports, according to the World Bank and the Lao PDR Economic Monitor of May 2023.
In addition, the decision may be the next step toward thwarting parallel imports through improved implementation of existing measures. Although legal provisions exist to impede parallel imports for most types of goods, interpretation by the authorities has been tolerant of most imported goods due to the lower prices that this practice can offer consumers. Nonetheless, some goods are better protected and regulated than others, such as drugs that require a registration license.
For more information on this import-export decision, or on any aspect of trade involving Laos, please contact Tilleke & Gibbins at laos@tilleke.com or +856 21 262 355.
