Economic System

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Macro-Economic policies and economic system

Economic structure
The economic structure of the Lao PDR consists of many sectors under different forms of ownership and economic organizational system, but these sectors are equal before law and operate under the management of the state with the view to freely cooperate and compete in their business activities.

Legal system
As we have seen the Government wish to encourage competitiveness in the market. This is in line with improving economic relations with other countries; the National Assembly has promulgated a number of laws and regulations with the view of ensuring trade and investment in Laos. At present we have more than 40 laws including investment and business law.

Monetary and banking system
The policy of foreign exchange management is moved to a floating exchange rate system since 1995. In the field of broadening the economic relation with foreign countries, the Government extended business licenses to local and foreign banks with purely conducted commercial banking activities. Up to now the banking system in Lao PDR is comprised of the Central Bank, Lao state owned commercial banks, seven branches of foreign banks and Lao private commercial bank.

Customs regulations
Under the custom law of the Lao PDR the totally of tariff lines is 3552 with tariff rate ranging from 5%-40%. More than 50% covered the major part with 5% tariff rate and others with 10% and 20% tariff rates. The goods imported to Laos and exported from Laos are required to obtain the licenses and must be declared at the custom office. The import duties, which have only a mild protective component, are collected at regional customs posts, based on the valuation method of the GATT (General Agreement on Trade and Tariff).

Trade expansion policy
Since 1986 Lao PDR has implemented a new economic mechanism. Thus plans were set in motion to transform the centrally planned economy to a market economy under the direct management of the state. All economic development and to compete and freely cooperate in their business activities. Therefore since this time Lao PDR has been steadily progressing towards a market economy.

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