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December 28, 2020

Consumer Protection Associations in Laos Introduced under New Regulations

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The practice of business operators taking advantage of Lao consumers has always concerned Lao authorities, especially because the application of the country’s consumer protection regulatory framework has been restricted and unfamiliar to the country’s civil society. For example, the main piece of legislation, the Law on Consumer Protection no. 02/NA, dated June 30, 2010, enunciates a series of broad principles that are too general to be implemented effectively.

Moreover, Laos has no independent entity to assist the country’s consumers in making informed decisions, namely by advising them on local operators’ malpractices and defective products that may endanger their health. Under Lao law, the powers delegated to the Ministry of Industry and Commerce (MOIC) and the Internal Trade Department are limited to administering consumer protection measures, such as controlling the price of products below the government’s price ceiling (e.g., for daily commodities, such as pork and traditional soups) and ensuring that products and services observe the country’s minimum safety standards. In practice, selected ministries have also overseen such measures for products under their respective areas of expertise; for example, the Ministry of Health monitors complaints related to medicinal products and pharmaceuticals.

For this reason, the Lao authorities have been leading consultations to fill the legal vacuum and better promote consumer protection measures in the country. From these consultations to revamp and enhance the consumer protection legal framework, in mid-2020 the authorities issued recommendations that provide a legal framework for the establishment of consumer protection associations. This guidance was outlined in the Recommendations Concerning the Establishment and Operation of Consumer Protection Associations no. 0707/MOIC, dated July 30, 2020, which were published in the official gazette of the Ministry of Justice on August 3, 2020.

Authority of Consumer Protection Associations

The recommendations were issued to elaborate on the scope of consumer protection associations in the Law on Consumer Protection. According to the legislation, consumer protection associations can do the following:

  • Advise and help consumers with issues relating to goods and services by providing transparent and fair representation for consumers during a settlement dispute.
  • Represent a consumer in a dispute against a supplier, including both amicable negotiations and bringing the dispute before the court by filing a complaint with the Lao People’s Court on behalf of the consumer.
  • Receive and consider consumer complaints and organize mediation between consumers and suppliers.
  • Report infringement of laws by suppliers to the authorities that oversee consumer protection (e.g., the MOIC).
  • Report illegal acts carried out by Lao officials to the relevant authority in charge of consumer protection.
  • Provide opinions on the current legal framework, and suggest amendments or new regulations for consumer protection.

Requirements for Consumer Protection Associations

There are three potential geographical scopes of operation for consumer protection associations, with corresponding membership requirements:

  • Nationwide associations must have 25 or more members;
  • Province-wide associations must have at least 15 members; and
  • District- or city-wide associations must have at least 10 members.

Only Lao nationals can manage the country’s consumer protection associations (e.g., as founders or audit and management committees members), but foreign nationals may be appointed as counsel as this is not prohibited by the recommendations.

Consumer protection associations cannot borrow or secure loans from financial institutions, legal entities, or individuals. On the other hand, the recommendations permit consumer protection associations to receive funds from individuals, legal entities, and Lao or overseas organizations. According to the recommendations, when receiving funds from Laos, such associations must declare them and their sources to the MOIC; when funds are received from overseas, associations must declare them to the MOIC and obtain approval from the Ministry of Foreign Affairs (which will also consult the Ministry of Home Affairs).

The associations must also submit updates to the local authorities every six months, reporting on the status of the association, the operations, and the income and expenditures made. The funds received must be used, and directed toward the object of the association.

The recommendations’ provision on the establishment of consumer protection associations is in line with the previously issued Decree on Associations no. 238/GOV, dated August 11, 2017, which pertains to all forms of associations in the country. The MOIC will review the objectives and the internal governance structures of consumer protection associations, while the Ministry of Home Affairs adjudicates on the applications.

Conclusion

So far, no consumer protection association has been set up; establishment of an association can be a lengthy process in Laos due to administrative constraints. The 2020 consumer protection association recommendations have the potential to ensure a quick and straightforward process for establishing consumer protection associations, and it is hoped that the recommendations will serve as a landmark for consumer protection in Laos, facilitating the involvement of the country’s growing civil society in this important issue.

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