An article on Laos’ innovative and entrepreneurial environment · One Belt and One Road Entrepreneurship Navigation

  One Belt and One Road Entrepreneurship Navigation is a new series of articles launched by Xinghua Economics Entrepreneur Accelerator. It hopes to help entrepreneurs sort out the profiles of countries along the Belt and Road, understand local culture, business environment and innovation
direction, help entrepreneurs expand overseas and find more diversified international Opportunities, cooperation, talent

1.Overview of Laos

  • Geography

  Laos is the only landlocked country in the northern part of the Indo-China Peninsula. It borders China to the north, Cambodia to the south, Vietnam to the east, Myanmar to the northwest, and Thailand to the southwest. The Mekong River has a land area of ​​more than 1,900 kilometers and a land area of ​​236,800 square kilometers.

  • Administrative division and capital

  There are 17 provinces and 1 municipality in Laos. The country is divided into three regions:Shangyu, Zhongmu and Xiaqi from north to south. The capital Vientiane is the country’s political, economic, cultural and scientific research center. Other major economic centers include Luang
Prabang, the ancient capital of northern Laos, Savannakhet in the central part, and Pakse City in the southern part of the province.

  • Population

  According to the latest census results in Laos, the total population of Laos was 6.49 million by the end of 2015. There are more than 30,000 overseas Chinese.

  • Language

  The official language is Lao, English is gradually becoming popular, and some people speak French. Most of the older government officials speak Russian or Vietnamese. In recent years, with the continuous strengthening of economic and trade cooperation between China and Laos, there has been a boom in learning Chinese in Laos.

  • Economic volume

  According to statistics from relevant authorities in Laos, Laos’ economic growth rate in 2017 was 6.83% (lower than the 7% target of Congress), and the annual GDP was 140.102 trillion kip (about 170.98 billion US dollars, the exchange rate 1 US dollar to 8194 Kip ), GDP per capita is 2,341 US dollars. In the economic structure, agroforestry increased by 2.78%, accounting for
16.34% of GDP; industrial growth was 9.5%, accounting for 30% of GDP; service industry increased by 6.15%, accounting for 42.08% of GDP; import tariff increased by 6.9%, accounting for 11.53% of GDP. , more than 5% of the original plan.

  • Diet

  The daily diet of Laos is mainly based on glutinous rice. The characteristics of the dishes are mainly acid, spicy and raw. Instead of using cutlery and chopsticks, you are used to grabbing rice with your hands.

  • Custom

In Laos, people think that the head is the most sacred part. No one can touch it at will. You can’t use your feet to face people or use your feet to open or move things.

2.The market environment

  • Characteristic industry

[Agriculture]:Lao agricultural products include sweet potatoes, vegetables, corn, coffee, sugar cane, tobacco, cotton, tea, peanuts, rice, buffalo, pigs, cattle and poultry. The two provinces of Ganmen and Shawanaiji are listed as the whole industrial chain base for grain production, processing and
export. According to official Lao statistics, in 2017, the Lao government relied on 98 categories of agricultural materials to generate $1 billion in exports, with the main export markets being Thailand, Vietnam and China. In Laos, there are currently 572 farms raising 284,450 pigs and 180 farms raising 26,605 heads.

[Mining]:In the first nine months of 2017, the trade volume in the minerals sector was US$929 million, of which the mineral export trade volume was US$906 million. Although it was down 1.61% from the same period of last year, it is still the largest export-oriented foreign exchange field in Laos.Domestic mineral trade is mainly concentrated in the fields of gold, silver and copper, and the trade volume is about 22.81 million US dollars. As a government-supported industry, the mining sector in Laos in 2018 is expected to contribute about 119 trillion Kip to the country, with exports expected to reach $1.46 billion.

[Electricity industry]:According to Lao official statistics, Laos is rich in natural resources, and solar energy, bio-energy, coal, wind and hydropower can produce 30,000 MW of energy. If Laos can make full use of its potential, it can develop 200 hydropower projects and produce 26,000 MW of
electricity. There are currently 48 power stations in Laos with a total installed capacity of 6,551 MW and 35,549 GWh of electricity per year. There are also 52 hydropower stations with an installed capacity of 6511MW and a production capacity of 31,395GWH/year. The projects under construction are expected to be completed in 2020-2021. Laos will build 100 hydropower stations with an installed capacity of 13,062 MW and a production capacity of 66,944 GWh/year, of which 85% will be exported.

[Tourism]:Luang Prabang City and Baise Wap Temple in Laos have been included in the World Cultural Heritage List. Famous sights include Vientiane Pagoda and Jade Buddha Temple, which account for the Bosekong Waterfall and the Luang Prabang Waterfall. Since the reform and opening
up, tourism has become an emerging industry in the economic development of Laos.

  • Large enterprise

  Lao Holding State Enterprise (LHSE) is a state-owned enterprise in Laos that deals with energy industry financing. The company holds 25% of the shares of two Nanxun Power Company. Laos holding state-owned enterprises participate in Laos energy infrastructure projects, including South Russia Dam, Nanba Ngiep and Hongsa lignite power plants.

3.The business environment

  • Investment attraction

Laos is rich in natural resources:

  1. Many mineral resources have not been developed. It is an extension of the Sanjiang metallogenic belt in China. The main deposits are gold, silver, copper, potash, bauxite, lead and zinc.
  2. Rich in hydropower resources. Laos is one of the countries with the most abundant hydropower reserves in Southeast Asia. More than 60% of the Mekong River’s hydropower reserves are in Laos.There are more than 20 rivers over 200 kilometers in the country, and more than 60 hydropower- rich hydropower stations are built.
  3. Agricultural resources are in good condition. Laos is rich in land resources and has a population density of 28 people per square kilometer. It has a tropical monsoon climate, long sunshine hours, abundant rainfall and good agricultural development conditions.

    According to the World Bank’s Business Environment Report for 2018, Laos ranks 139th among the 190 economies in the world in 2017. According to the World Economic Forum’s 2017-2018 Global Competitiveness Report, Laos ranks 98th among the 137 countries and regions that are the most competitive in the world.
  • Absorption of foreign capital

  Since Laos opened its doors to foreign investment in 1988, the amount of investment in projects has grown. According to the World Investment Report of 2018 issued by UNCTAD, in 2017, Laos absorbed foreign direct investment flows of 813 million US dollars, down 8.7% from 2016; as of the
end of 2017, Laos absorbed foreign direct investment stocks of 6.56 billion. Dollar. In 2017, Laos’ foreign direct investment flows were US$30 million. As of the end of 2017, the stock of foreign direct investment was US$188 million.

  • China and Laos

[Bilateral trade]:Since the 21st century, the trade between China and Laos has maintained steady growth. According to China Customs statistics, the bilateral trade volume between China and Laos in 2017 was US$3.02 billion, a year-on-year increase of 28.6%, and the growth rate ranked second among ASEAN countries.

[Investment in the old]:According to the statistics of the Ministry of Commerce of the People’s Republic of China, in recent years, Chinese companies have been enthusiastic about investment in Laos. China’s important investment projects in Laos involve economic cooperation zones, railways, power grids, hydropower stations, real estate and communications satellites. According to the Laos Ministry of Planning and Investment’s annual report, China surpassed Vietnam in 2016 and became
the largest source of foreign direct investment in Laos. China’s investment in Laos soared from US$88.9 million in 2015 to more than US$1 billion. As of the end of 2017, Chinese investors have invested in approximately 771 projects in Laos with a total investment of US$7.43 billion.

  • Chinese enterprises’ investment status in Laos

  According to the statistics of the Ministry of Commerce of China, in 2017, China’s labor service to Laos under the contracted project exceeded 15,000, an increase of 82.4% year-on-year, ranking first among ASEAN countries and second among Asian countries. The newly-signed large-scale project contracting projects include China Heavy Machinery Co., Ltd. to build the Nan Ngum4 hydropower station in Laos; China Railway International Group Co., Ltd. to build the China-Laos Railway; and China Power Construction Group to undertake the EPC contract for the construction of the Nanma River Cascade Hydropower Project. The newly signed large-scale project contracting projects include the South Russia 4 Hydropower Project undertaken by China National Heavy Machinery Co., Ltd.; the Luang Prabang Conch Cement Project of Laos, implemented by China State Construction Engineering Co., Ltd.; the 10th Bureau of China Water Resources and Hydropower Corporation and the 15th Bureau of China Power Construction Laos Dongsahong Hydropower Project; China Power Construction Survey and Design Institute Co., Ltd. mainly contracted the Laopu Nanpu Hydropower Project in EPC mode; China Aviation Technology International Holdings Co., Ltd. mainly contracted the Nam Dik Phase I Hydropower Project in Laos by EPC.

4.The innovation environment

  Relatively to neighboring countries such as Thailand and Malaysia, Laos is in the primary stage of industrialization. Now it is accelerating the process of urbanization construction. In the aspects of industrial system establishment, new technology application, industrial cultivation and innovative concept learning, there is an urgent need for cooperation and broad. Development space. Therefore, in order to actively integrate and serve the “Belt and Road” construction, Laos and China have jointly
established a number of industrial parks or special economic zones to promote the country’s economic development, among which the Saitata Economic Development Zone is the most famous.

  Vientiane “Seceta Comprehensive Development Zone” is the first national economic zone built by China’s “One Belt, One Road” in Laos. It is located in the core area of ​​Vientiane New City (planning), covering an area of ​​11.5 square kilometers, and is owned by Yunnan Jiantou Group. Investment platform – Yunnan Haitou and the Vientiane Municipal Government jointly funded the construction. The development zone supports the entry of high-tech enterprises and the innovation and
entrepreneurship of small and medium-sized enterprises, and leads the promotion of the competitiveness of local industries. The Secita Development Zone has the highest level and largest area among the 12 development zones in the country. It has completed the construction of the first phase of 4 square kilometers of infrastructure and supporting facilities, with 35 enterprises entering the park, with a planned investment of 350 million US dollars. It mainly involves energy and chemical industry, agricultural and livestock products processing, power product manufacturing, feed processing, tobacco processing and other industries. By 2030, it plans to achieve a cumulative investment of 5 billion US dollars.