On January 3, 2025, the Bank of the Lao PDR (BOL) issued Decision No. 11/BOL on the Use of Foreign Currency in Lao PDR, taking effect on the same date. This decision sets out the rules for using foreign currency in Laos and ensures the Lao kip (LAK) remains the primary currency while allowing flexibility for international transactions.
Key points in the decision are outlined below.
Permissible Activities for Foreign Currency
The decision provides that authorized entities can use foreign currency as a secondary currency to LAK in the setting of cost and pricing structures, announcing and advertising prices, and making or receiving payments for goods and services that are imported or have manufacturing inputs imported from other countries. Otherwise, LAK is the only permitted currency.
The decision also stipulates that foreign exchange must be conducted only via authorized commercial banks or foreign exchange markets. The exchange rate for setting costs, pricing structures, announcing and advertising prices, and making and receiving payments for goods and services in foreign currency must match the exchange rate announced by commercial banks from time to time.
Businesses Allowed to Use Foreign Currency
The decision allows certain businesses and organizations to use foreign currency. These entities are divided into two groups: those that need approval before using foreign currency, and those that can use it immediately.
Enterprises that can use foreign currency with BOL approval include:
- Businesses that export goods or services and entities that lease or obtain concessions from the government, generating revenue in foreign currency through commercial banks.
- Enterprises that provide international freight and passenger transportation services.
- Enterprises that provide services related to cross-border logistics and warehousing.
- Enterprises located at international borders and airports, such as duty-free shops and restaurants.
- Enterprises that have obligations to make payments in foreign currency to other countries and suppliers of goods and services to exporters that generate income in foreign currency from exporting.
- Enterprises operating international insurance, such as travel insurance, overseas project insurance, transport insurance, and reinsurance.
- Tour agencies.
- Enterprises operating casino businesses that receive service fees within the scope of their business activities.
- Other businesses that may be allowed to use foreign currency after obtaining approval from the BOL.
Entities in the government sector, enterprises providing accommodation services, embassies, consulates, and commercial banks and use foreign currency immediately under certain circumstances:
- Government sector entities
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- Making or receiving donations via commercial banks.
- Collecting state budget revenue at borders and international airports, including service and visa fees and obligatory state fees related to arrivals and departures in Laos.
- Embassies and foreign consulates
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- Receiving payments, setting values, and announcing visa and service fees related to travel to their countries.
- Making or receiving payments, setting values, and announcing or advertising fees, service charges, interest, and other fees related to their transactions through commercial banks.
- Enterprises operating accommodation services
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- Announcing and advertising service fees through online media using foreign languages.
- Accepting payments from other countries via electronic payment tools, with payments made to their bank accounts opened with commercial banks in the Lao PDR.
Requesting Approval to Use Foreign Currency
Entities that are required to obtain approval from the BOL prior to using foreign currency in Laos must submit a request letter stating the reasons, along with supporting documents. These documents include relevant certificates and licenses, a revenue-expense plan in LAK and foreign currency, and a foreign currency exchange plan for a period of one year.
A determination will be made within ten working days of receiving accurate and complete documents and will be valid for a period of one year from the issuance date.
Penalties
The decision prohibits entities from using foreign currency outside the approved scope, setting and announcing foreign exchange rates without obtaining approval from the BOL, making payments in foreign currency via unauthorized systems, rejecting or avoiding selling foreign currency to commercial banks based in Laos, and other behaviors that violate the law. Violators will be reeducated or fined, with fines doubling for repeat offenses. Persistent violations may lead to the revocation of the approval certificate for using foreign currency in Laos or rejection of certificate renewal, with an announcement to the public.
