Laos 20240904: Epiphanic, Eloquent, Disinflationary
Laos 20240904: Epiphanic, Eloquent, Disinflationary
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Headlines:
Kip-Only Mandate Shakes Up Foreign Business
Vientiane Vendor Crackdown Reshapes Streets
Mekong River Surge Threatens Thousands
SEZ Project Stalls, Leaving Workers in Limbo
Inflation Dips Slightly in August
Central Bank Tightens Screws on Inflation
Wind Power Project Accelerates Energy Plans
Kip-Dong Cross-Border Payment System
Anti-Corruption Cooperation with Cambodia
Navigating the Laos-Vietnam-China Triangle
Tax Agreement to Grow Cambodia Trade
Hilton Launches First Laos Property
Kip-Only Mandate Shakes Up Foreign Business
Come October, foreign entities must pay salaries exclusively in kip, a change intended to strengthen the local currency and curb dollarization. This directive is expected to especially impact operations in mining and construction. Companies face the challenge of adapting payroll systems and managing currency risks, while employees may need to reconsider their financial strategies in light of the kip's volatility.
Read more: The Star (Salary Payments), Laotian Times (Policy Details)
Vientiane Vendor Crackdown Reshapes Streets
A sweeping initiative to reorganize Vientiane's streetscape kicked off August 23, targeting unauthorized stalls and cluttered pavements. Authorities want to improve pedestrian safety and urban aesthetics by relocating vendors to designated areas. While officials say it’s all about improved organization, long-time stallholders fear losing their livelihoods and the hassle of relocation logistics.
Read more: Laotian Times
Mekong River Surge Threatens Thousands
Laos is closely monitoring the Mekong River as continuous heavy rainfall has pushed water levels above the warning threshold, with the capital Vientiane nearing dangerous flooding levels. Authorities have placed sandbags along riverbanks and warned residents in low-lying areas to prepare. More than 36,000 people have been affected by severe weather across the country since July. The government is focusing on relief efforts and has issued notices to mitigate risks from both flooding and landslides.
Read more: The Star
SEZ Project Stalls, Leaving Workers in Limbo
A $9-billion hotel and casino development in the Sithandone Special Economic Zone has ground to a halt, leaving hundreds of workers unpaid. The Hong Kong-backed project, originally delayed by the pandemic, now is seeing financial hurdles that have stalled construction and resettlement efforts. Workers are reporting mass layoffs and fleeing subcontractors, casting doubt on the future of the venture and its impact on local communities.
Read more: Radio Free Asia
Inflation Dips Slightly in August
August saw inflation ease slightly to 24.3%, offering a glimmer of hope to embattled consumers. Healthcare and housing continue to see sharp price hikes, with increases of 37.6% and 34.9% respectively. While fuel costs have moderated, weak domestic production and currency fluctuations continue to undermine confidence.
Read more: Laotian Times
Central Bank Tightens Screws on Inflation
In another bid to tame rampant inflation, the Bank of Laos has hiked interest rates on kip and foreign currency deposits. This move comes as inflation hit 26.1% in July, driven by currency depreciation and soaring fuel costs. The central bank is also rolling out new systems, including a foreign exchange platform and cross-border payment solutions, in a multi-pronged approach to stabilize the economy and restore confidence in the kip.
Read more: The Star (Interest Rate Hike), VIR (Monetary Policy Tightening)
Wind Power Project Accelerates Energy Plans
The Monsoon wind power project is set for early trial operations this December, a step forward in renewable energy development. The $950 million project, covering parts of Sekong and Attapeu provinces, will generate 600 MW as part of a plan to supply Vietnam with clean energy. With 133 turbines and international backing, the venture is another plank in Laos’ growing platform as a regional renewable energy hub.
Read more: Laotian Times (Project Update), The Investor (Vietnam Connection), Laotian Times (Pricing Adjustments)
Kip-Dong Cross-Border Payment System
Laos and Vietnam will launch a cross-border payment system in September, allowing transactions using kip and dong. The system allows Vietnamese consumers to make payments in Laos via QR codes, supported by 13 Lao and 9 Vietnamese banks. Managed by LAP Net and NAPAS, the interlink will reduce reliance on foreign currencies, lower transaction costs, and (hopefully) increase financial stability.
Read more: Laotian Times
Anti-Corruption Cooperation with Cambodia
Officials from Laos and Cambodia have reaffirmed their commitment to combating corruption, sharing strategies and progress during recent talks in Vientiane. Laos reported disciplinary actions against 209 officials in 2024. The collaboration comes at a time of growing regional efforts to improve governance and build trust in public institutions.
Read more: MENAFN
Navigating the Laos-Vietnam-China Triangle
As China's economic influence in Laos grows, Vietnam is recalibrating its approach to its long-standing ally. Historical military and ideological ties are giving way to infrastructure and economic development support. Both nations must balance their relationships with China to ensure long-term prosperity and security.
Read more: The Diplomat (Strategic Relations), Laotian Times (Military Tie-up)
Tax Agreement to Grow Cambodia Trade
Cambodia is set to sign double taxation agreements with Laos and the Philippines in order to prevent tax duplication and promote cross-border investment. These accords are part of Cambodia's strategy to expand its DTA network, potentially including seven more countries. For Laos, this agreement promises increased trade flows and investment opportunities, further integrating it into the regional economy.
Read more: Laotian Times
Hilton Launches First Laos Property
Hilton has opened its first hotel in Laos, the DoubleTree by Hilton Vientiane, its first foray into the country. Placed in the heart of Vientiane, the hotel offers 188 rooms with amenities including a rooftop pool and multiple dining options. With event spaces for up to 600 guests and a location near key attractions, the hotel is expected to pull in both business and leisure travelers.
Read more: TravelDailyNews
That’s all for this week, thanks for reading.
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