Laos, officially the Lao People's Democratic Republic (LPDR), is a landlocked country in Southeast Asia, bordered by Myanmar (Burma) and China to the northwest, Vietnam to the east, Cambodia to the south, and Thailand to the west. Since 1975, it has been ruled by a Marxist and communist government. Its population was estimated to be around 6.8 million in July 2014. Laos traces its history to the kingdom of Lan Xang, which existed from the 14th to the 18th century when it split into three kingdoms. In 1893, it became a French protectorate, with the three kingdoms—Luang Phrabang, Vientiane and Champasak — uniting to form what is now known as Laos. It briefly gained independence in 1945 after Japanese occupation but returned to French rule until it was granted autonomy in 1949. Laos became independent in 1953, with a constitutional monarchy under Sisavang Vong. Shortly after independence, a long civil war ended the monarchy, when the Communist Pathet Lao movement came to power in 1975. Laos is a one-party socialist republic. It espouses Marxism and is governed by a single party communist politburo dominated by military generals. The Socialist Republic of Vietnam and the Vietnam People's Army continue to have significant influence in Laos. The capital city is Vientiane. Other large cities include Luang Prabang, Savannakhet, and Pakse. The official language is Lao.
The Lao banking sector can be described as small in absolute terms, with total assets in the system amounting to approximately US$400 million. It is also relatively small when compared to the size of the Lao economy: the ratio of total assets of the banking system to GDP is about one-fourth. This is particularly low for an economy with a non-diversified financial system (i.e., with no alternative but banks for the supply of loans) and it evidences a system in its early stage of development. The loan-to-deposit ratio stood at a low 50 percent. Three-quarters of loans were in foreign currencies and share of loans to the private sector stood at 50 percent. State-owned commercial banks dominate the market with more than two-thirds of the total assets. The three largest banks (BCEL bank, Lao May bank, Lane Xang bank) are fully owned by the government; BCEL maintains a dominant position accounting for approximately half of total deposits, and almost 40 percent of total loans in the system. There are only a few non-bank financial institutions (NBFI) in Lao PDR, evidencing a narrow, i.e., undiversified financial system where there is still a limited alternative to banks for access to financial services. The microfinance system is starting to emerge; there is only one insurance company, and the Social Security system is still in its infancy with little or no accumulated financial surpluses. The Ministry of Finance could have contributed more with its budget deficit financing program, and by unambiguously allowing an adequate tax deduction for provisions and losses. The Ministry of Finance is also responsible for accounting laws, regulations and procedures and establishment of financial disclosure requirements. An adequate accounting framework is an essential element of the infrastructure without which no financial sector development can take place. Since January 1997, a new chart of accounts was introduced to modernize Lao bank accounting and bring it closer to IAS standards. But enforcement and compliance has lagged.
|Agriculture||Sweet potatoes, vegetables, corn, coffee, sugarcane, tobacco, cotton, tea, peanuts, rice & cassava (manioc, tapioca).|
|Manufacture||Copper, tin, gold, and gypsum mining, timber, electric power, agricultural processing, construction, garments & cement.|
|Services (Including financial)||34.5% (2013 estimate)|
|Lao Brewery company||Beverages|
|Boum Oum Airways||Aviation|
|Electricite du Laos||Utility|
|Lao Holding State Enterprise||Utility|
Lao Securities Exchange (LSX) is the only stock market of the Lao PDR in place as an efficient investment alternative, effective long-run fund mobilization and excellently back as another “leg” of the Lao Financial Market pushing on the most remarkable performances of the nation’s development. Inaugural gateway towards the ASEAN Economic Community (AEC), the LSX is going forward together with other member exchanges to implement numerous reliable measures for free movement of goods and services, investment, skilled labor, and most particularly the “free flow of capital”. LSX is firmly assured to be the growth driver of Lao business entities in the most transparent and just competition, and the hub of the region in the nearest future. In 2010, the Lao government sought technical and financial support from South Korea (Korea Exchange has a 49-percent stake in the LSX), as well as advice from neighboring Thailand, to help build the exchange. The glass-building cost $10 million to build. It began operations on 11 January 2011. Lao securities market began to calculate and make public the Lao Securities Exchange Composite Index (LSX Composite Index) that is based on the market capitalization in 2011.
The 2008 economic crisis
The first foreign policy crisis faced by President-elect John F. Kennedy was not centered in Berlin, nor in Cuba, nor in the islands off the Chinese mainland, nor in Vietnam, nor in any of the better-known hot spots of the Cold War, but in landlocked, poverty-stricken Laos. This was the major issue Kennedy and his foreign policy team— Secretary of State Dean Rusk, Secretary of Defense Robert S. McNamara, and National Security Advisor McGeorge Bundy— focused on during the days leading up to Kennedy’s inauguration on January 20, 1961. The Eisenhower administration had worked for years to create a strong anti-Communist bastion in Laos, a bulwark against Communist China and North Vietnam. While attractive on a map, this strategy was completely at odds with the characteristics of the Laotian state and people. By 1961, Laos was fragmented politically, with three factions vying for control. The United States had thrown its support behind General Nosavan Phoumi, whose forces were engaged in combat with a neutralist force under Kong Le. Soviet aircraft were conducting resupply missions for Kong Le’s forces. Neutralist leader and former Prime Minister Souvanna Phouma had gone into exile in Cambodia but remained influential and active in Laotian politics. His half-brother, Souphanouverong, led the Communist-dominated Pathet Lao, which had established control over an extensive area along the Laos-North Vietnam border. Phoumi’s forces had little popular support, had proven ineffective in combat, and appeared to be well on their way to a military defeat. The Eisenhower administration had led the creation of the Southeast Asia Treaty Organization for precisely this sort of contingency. In this first major test, however, the United States was unable to secure the alliance’s support for intervention. Its major European powers, Great Britain and France, considered Phoumi an illegitimate ruler and supported Souvanna Phouma; they were adamantly opposed to taking military action in Laos. Kennedy faced a choice between two unpromising strategies: pursue a military solution, very likely demanding a unilateral intervention by U.S. forces; or adopt a major shift in policy, seeking a cease-fire and a neutralization of Laos. He rejected the military option, though he encouraged an offensive by Phoumi designed to strengthen his negotiating position. It failed abjectly. Kennedy opened his press conference on March 23, 1961, with an extended discussion of Laos, calling for an end to hostilities and negotiations leading to a neutralized and independent Laos. The Pathet Lao accepted the ceasefire offer on May 3. This delay gave the North Vietnamese Army (NVA) the time to conduct an offensive in southern Laos, capturing the crossroad village of Tchepone and the terrain necessary to extend the Ho Chi Minh Trail to the western side of the Annamite Mountains on the border between Laos and South Vietnam. These agreements provided for a coalition government in Laos under Souvanna Phouma, with cabinet positions distributed among the three factions. The Declaration on the Neutrality of Laos and its associated protocols called for the withdrawal of all “ foreign regular and irregular troops, foreign para-military formations and foreign military personnel” under the supervision of the International Commission for Supervision and Control in Laos (ICC), comprised of representatives of India, Poland, and Canada. The ICC would operate on the principle of unanimity, a change from its practice from 1954 to 1958, when it operated under majority rules. Integration and demobilization of the three Laotian armies would be conducted by the coalition government, with neither the ICC nor other international parties overseeing or enforcing these critical activities. These agreements broke down quickly, with lasting consequences for Laos and its neighbors. The NVA conducted a symbolic withdrawal of 15 troops on August 27, and on October 9 North Vietnam notified the Laotian foreign ministry that their troops had been withdrawn in accordance with the Geneva agreement. However, North Vietnam continued its advisory, logistics, and combat in support of the Pathet Lao in violation of the accords. North Vietnam also continued to extend its territorial control in southern Laos to secure its logistics lines to the battle areas in South Vietnam. The United States withdrew its military advisory teams in compliance with the Geneva agreement, but in its aftermath responded to the North Vietnamese violation by supporting Meo and Thai forces, and by providing economic and military support to the Phouma government and its army.
Laos is a multi-ethnic country with the politically and culturally dominant Lao people making up approximately 60% of the population, mostly in the lowlands. Mon-Khmer groups, the Hmong, and other indigenous hill tribes, accounting for 40% of the population, live in the foothills and mountains. Laos' strategy for development is based on generating electricity from its rivers and selling the power to its neighbors, namely Thailand, China, and Vietnam. Its economy is accelerating rapidly with the demands for its metals. It is a member of the Asia-Pacific Trade Agreement (APTA), Association of Southeast Asian Nations (ASEAN), East Asia Summit and La Francophonie. Laos applied for membership of the World Trade Organization (WTO) in 1997; on 2 February 2013, it was granted full membership. Per the anti-corruption non-governmental organization Transparency International, Laos remains one of the most corrupt countries in the world. This has deterred foreign investment and created major problems with the rule of law, including the nation's ability to enforce contract and business regulation. This has contributed to a third of the population of Laos currently living below the international poverty line (living on less than US$1.25 per day). Laos has a low-income economy, with one of the lowest annual incomes in the world. In 2014, the country ranked 141st on the Human Development Index (HDI), indicating lower medium development. According to the Global Hunger Index (2015), Laos ranks as the 29th hungriest nation in the world out of the list of the 52 nations with the worst hunger situation(s). Laos has also had a poor human rights record.
The kip (LAK) is the currency of Laos since 1952. One kip is divided into 100 att (???), however, due to their low value, coins, in general, are very hard to come by in circulation. In 1945–1946, the Free Lao government in Vientiane issued a series of paper money in denominations of 10, 20 and 50 att and 10 kips before the French authorities took control of the region. The kip was reintroduced in 1952, replacing the French Indochinese piastre at par. The kip (also called a piastre in French) was sub-divided into 100 att (Lao: ???) or cents (French: Centimes). Coins were issued in denominations of 10, 20 and 50 att or cents with French and Lao inscriptions. All were struck in aluminum and had a hole in the Centre, like the Chinese cash coins. The only year of issue was 1952. In 1953, the Laos branch of the Institut d'Emission des Etats du Cambodge, du Laos ET du Vietnam issued notes dual denominated in piastre and kip. At the same time, the two other branches had a similar arrangement with the riel in Cambodia and the ?? ng in South Vietnam. There were notes for 1, 5, 100 and 100 kip/piastres. In 1957, the government issued notes denominated solely in kip. The notes were for 1, 5, 10, 20 and 50 kip printed by the Security Banknote Company, 100 kip printed by the Banque de France and a commemorative 500 kip printed by Thomas De La Rue. 1 and 5 kip notes printed by Bradbury & Wilkinson, and a 10 kip by De la Rue were introduced by 1962.
In 1963, 20, 50, 200 and 1000 kip notes were added, all printed by De La Rue. These were followed by 100, 500 and 5000 kip notes in 1974–75, again by De La Rue. A 1975 10 kip by Bradbury & Wilkinson and a 1000 kip by De la Rue were printed but not circulated. The Pathet Lao kip was introduced sometime before 1976 in the areas which were under the control of the Pathet Lao. Banknote denominations of 1, 10, 20, 50, 100, 200 and 500 kip were issued. The notes were printed in China. In 1976, the Pathet Lao kip replaced the Royal kip throughout Laos following the Pathet Lao's takeover of the country. The exchange rate between the two kips was 1 Pathet Lao kip = 20 royal kip. On 16 December 1979, the old Pathet Lao “Liberation” kip was replaced by the new Lao kip at a rate of 100 to 1. Coins were again issued in Laos for the first time in 28 years in 1980 with denominations of 10, 20 and 50 att, with each being struck in aluminum and depicting the state emblem on the obverse and agricultural themes on the reverse. These were followed by commemorative 1, 5, 10, 20 and 50 kip in 1985 for the 10 year anniversary of the Lao People's Democratic Republic. However, due to the economic toll of the Soviet collapse in 1991 and the persistence of chronic inflation, there are no coins currently in circulation in Laos. In 1979, banknotes were introduced in denominations of 1, 5, 10, 20, 50 and 100 kips. 500 kip notes were added in 1988, followed by 1000 kip in 1992, 2000 and 5000 kip in 1997, 10,000 and 20,000 kip in 2002 and 50,000 kips on January 17, 2006 (although dated 2004). On November 15, 2010, a 100,000 kip banknote was issued to commemorate the 450th anniversary of the founding of the capital, Vientiane and the 35th anniversary of the establishment of the Lao People's Democratic Republic. Kaysone Phomvihane is pictured on the obverse of the 2,000, 5,000, 10,000, 20,000, 50,000, and 100,000 kip banknotes. The Bank of Laos governor has made an announcement on January 25, 2012 that Bank of Laos is going to issue 100,000 Kip banknotes as a regular issue on February 1, 2012 (although dated 2011) as the measure to encourage Lao people to use the national currency instead of U.S. dollars and Thai baht.
|National Song||"Pheng Xat Lao"|
|Currency||Lao kip (LAK)|
|GDP||40.898 Billion USD|
|GDP Growth Rate||7 Percent|
|GDP Per Capita||$5709.6 (PPP)|
< 1.0% Muslims
< 1.0% Hindus
< 1.0% Jews
< 1.0% Other Religions
Other (Over 100 Minor Ethnic Groups) 26%
General Secretary of the Communist Party – Bounnhang Vorachith
President – Bounnhang Vorachith
|Website||Go to the web|
|Public Debt||67.323 Percent|
|Unemployment Rate||1.484 Percent|
|Labor Force (Occupation)||-|