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Title: Competition Scenario in the Lao PDR


1
Competition Scenario in the Lao PDR
  • CUTS-NERI
  • Advocacy and Capacity Building on Competition
    Policy and Law in Asia
  • (7Up2 Project)
  • Presented by Dr. Leeber Leebouapao

Workshop in Hanoi(16-17 Aaugust 2005)
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GENERAL BACKGROUND
  • Characteristics of the Country
  • Landlocked and mountainous country
  • Geographical Location
  • South East Asia
  • Country Area
  • 236.800 km2
  • Population(2005)
  • 5.6 million people
  • Economic System
  • Transition from the centrally planed economy to
    a market oriented economy since 1986
  • Economic Integration
  • 1997 Member of ASEAN
  • Currently Preparation for Joining WTO

4
MACROECONOMIC PERFORMANCE
5
GDP per capita 1996-2004 in US
6
Share in GDP by Sectors in 2004
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Export and Import Value(million US) between
1992-2004
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Competition Policy/Regulation Regime
  • The NEM (1986)
  • IV th Party Congress Moving from the Centrally
    Planned Economy to A Market Oriented Economy
    since 1986
  • Party Congresses(V 1991, VI 1996, VII 2001)
    stress the importance of multi-economic sectors
    including private sector.
  • The Constitution (1991)
  • The state protects and expands all forms of
    state, collective and individual ownership, as
    well as private ownership of domestic capitalists
    and foreigners who make investments in the Lao
    Peoples Democratic Republic. The state
    encourages all economic sectors to compete and
    cooperate with one another in expanding their
    production and business. All economic sectors are
    equal before the law. (Article 14. )
  • The Business Law (1994)
  • All types of operations conducted by
    enterprises in all economic sectors are
    inter-related and competing on an equal footing
    before the law. (Art.5).

12
Competition Policy/Regulation Regime (Cont.)
  • The Decree No. 15/PO on Trade Competition
    (2004)
  • The objective of the Decree is to define rules
    and measures to regulate monopolisation and
    unfair competition in trade of all forms, aiming
    to promote fair trade competition, protect the
    rights and legal interests of consumers and to
    encourage business activities in the Lao PDR to
    function efficiently in the market economy
    mechanism as determined by the Government of the
    Lao PDR (Art. 1 Objectives).
  • All types of operations conducted by
    enterprises in all economic sectors are
    inter-related and competing on an equal footing
    before the law (Art.5). This principle is
    further reflected by the Decree in that Business
    activities of all sectors are equal under the
    law they cooperate and compete with each other
    in a fair manner in compliance with this Decree
    and concerned laws and regulations (Art.3
    Fundamental principle in competition). .

13
Competition Policy/Regulation Regime (Cont.)
  • Industrial Policy
  • Decree No. 19/PO(1988) on Management and
    Administration of SOEs
  • - Autonomy of SOEs.
  • - Elimination of subsidy system
  • The Party Resolution(1988) , the
    Constitution(1991), the Business Law(1994)
    encourage private sector development
  • Decree No.42/PO on Promotion and Development of
    Small and Medium-sized Enterprises (SMEs) (2004)
    identifies as priority areas
  • (i)  Creating an enabling regulatory and
    administrative environment for SMEs
  • (ii)   Enhancing competitiveness of SMEs
  • (iii)  Expanding domestic and international
    markets for SMEs
  • (iv)  Improving access to finance by SMEs
  • (v) Encouraging and creating favourable
    conditions for the establishment of business
    organisations and
  • (vi) Encouraging entrepreneurial attitudes and
    characteristics within the society

14
Competition Policy/Regulation Regime (Cont.)
  • Trade policy
  • Domestic Trade Liberalization
  • Decree 12/PO(1987) on Promotion of goods and
    money circulation One market, one price
    principle, e.i elimination of the dual price
    system
  • Decree No. 14 /PO( 1988) on goods price
    determination,
  • prices of most goods determined by market,
    except
  • for logs, basic utility and mineral prices

15
Competition Policy/Regulation Regime (Cont.)
  • External Trade Policy
  • Decree 18 on State monopoly on strategic
    export and import goods
  • - Reduction of restricted items, private
    sector participation in export/import, abolition
    of quantitative restrictions of import goods in
    substance
  • Order/PO No. 24,(2004) on the facilitation for
    exportation and
  • importation
  • To establish one stop services at border points
    and to abolish export-import licenses, except
    gold and copper export and except vehicles,
    spare parts, petroleum, gas and diamond and
    other prohibited goods
  • Lao PDRs integration into the regional and
    global markets(AFTA, AFTA1, 2, 3, preparation
    to Join WTO by 2008, )

16
Competition Policy/Regulation Regime (Cont.)
  • Privatization Policy
  • Decree No.17/PO on Privatization of SOE
    (1990)
  • ( Current situation by 2003 there are only
    round 93 wholly
  • SOEs of which 32 are considered strategic)
  • Investment Policy
  • Foreign Investment Law of 1988
  • (amended in 1994)
  • Domestic Investment Law of 1994
  • Governments Yearly and Five Years Plans for
    Socio-Economic Development
  • Promotion of Private Investment

17
Other Sectoral Laws/Regulations Related to
Competition
  • Enterprise Accounting Law
  • Labor Law
  • Business Law
  • Custom Law
  • National Budget Law
  • Law on Bankruptcy
  • Secured Transaction Law
  • Law on Government of the Lao PDR
  • Law on the Military Service
  • Law on -Promotion of Domesti Investment
  • Tax Law
  • Law on The Bank of the Lao PDR
  • Forestry Law
  • Water and Water Resources Law
  • Electricity Law

16. Road Transport Law 17. Mining Law 18. Law on
Agriculture 19. Law on the ProcessingIndustry 20.
Environmental Protection Law 22. Urban Planning
Law 23. National Road Law 24. Law on Drugs and
Medical Products 25. Road trafficking Law 26.
Education Law 27. Law on Hygiene, Prevention and
Health Promotion 28. Telecommunications Law 29.
State Assets Law
18
Policy/Law Related To Consumer Protection
19
Market Structure and Competition
  • Market structure and competition
  • Manufacturing Sectors
  • Services and Utilities

20
Market Structure and Competition(Cont.)
21
Market Structure and Competition(Cont.)
22
Market Structure and Competition(Cont.)
23
Market Structure and Competition(Cont.)
  • Barriers to competition
  • Barriers by Law/Policy/Regulation
  • Barriers by private anticompetitive behaviours
  • Barriers by Nature

24
Anti-competitive Practices
Market Structure and Competition(Cont.)
  • Transformation of public monopoly into private
    monopoly
  • Price fixing and other cartel arrangements
  • Bid rigging
  • Tied selling
  • Predatory behaviours by dominant enterprises

25
Perspectives on Competition Policy
  • Field Survey Results

26
  • Findings of SME survey (72 manufacturing
    enterprises 42 food processing enterprises and
    30 non-food) in the Vientiane Municipality
  • 12.7 of the surveyed enterprises thought that
    they dont have any competitor in the city
  • 28.2 said they have some competitor
  • 59.1 said they have many competitors.
  • 66.2 of the surveyed enterprises thought that
    the number of competitors is on the increase,
    i.e. the market structure becomes more
    competitive
  • 5.6 though that there are now less competitors.
  • 28.2 thought there have been no changes.
  • A majority thought that competition from
    domestic rival enterprises is strongest, rather
    than competition from Thai, Chinese and
    Vietnamese products.

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THE WAY FORWARD
  • Establishing the Trade Competition Commission
  • Building capacity of national stakeholders
    (Business Sector, Consumer, Government, Academic
    Research Institutes, NGO, Donors ) to understand
    the concept of competition and effectively
    implement the Decree on Trade Competition
  • Discussing the possibility of transforming the
    Decree on Trade Competition to a competition law(
    5 year plan(2006-2010), draft ).

36
  • Thank You
  • For
  • Your Attention
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