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December 6, 2023

Regulatory Update on Foreign Currency Use and Exchange in Laos

Over the past two years, Laos has experienced a sharp depreciation in the value of the kip (LAK) against foreign currencies. To thwart this depreciation and get its currency back on track, the government took a series of measures and issued the Law on Foreign Exchange Management No. 15/NA of July 7, 2022 (the “FX Law”) to improve management of the foreign currency and reiterate restrictions on foreign currency in the country. The amended law also aimed to strengthen foreign exchange liquidity and increase the reserve of foreign currency held in Laos.

This year, the prime minister of Laos issued the Order on the Implementation of Foreign Exchange Management, which came into force on July 14, 2023. The order addresses foreign currency use, movement, and possession and clarifies administrative roles regarding the FX Law.

This article outlines some of the key points related to the FX Law and the prime minister’s recent order.

Use of Foreign Currency

Other than a major relaxation regarding remuneration for foreign employees, the amended FX Law retains Laos’ strict regulatory approach to the use of foreign currencies. The general rule is that foreign currency payments for goods, services, debt, dividends, or taxes are prohibited; these payments must be in LAK. The amended law also seems to prevent suggestions that a price in LAK may be adjusted based on another currency.

One of the few exceptions to these requirements is for the export of goods and services abroad, in which case it is acceptable to receive payment in foreign currencies. Similarly, the import of goods may allow payment in foreign currency.

Announcements or advertisements of the price of goods or services in a foreign currency are likewise prohibited, as is offering a salary in foreign currency when advertising a job in Laos. Similarly, employees’ remuneration, such as salary, wages, bonuses, welfare benefits, and so on must be paid in LAK.

As noted above, the order introduces substantial flexibility into the Lao regulatory framework for corporations or organizations that are required to hire foreign experts or laborers. In such a case, foreign currency can be used to pay salaries or wages—a significant development in the country’s rules for the employment of foreign workers.

Foreign Currency Possession and Exchange

The order reaffirms that foreign currency can be held in a bank account or in cash. Individuals’ and legal entities’ bank deposits of foreign currency must be into accounts at commercial banks located in Laos.

The FX Law allows only licensed commercial banks, or their representative offices, to be authorized by the BOL to buy and sell foreign currencies. The July 2023 order further states that if foreign currency is bought or sold through unofficial channels, the relevant individuals or entities (seller and buyer alike) may be sanctioned (see the section below on penalties).

Capital Flow: Importers and Exporters

To counteract the import sector in Laos being outpaced by the outflow of currency, the MOIC will limit the number of importers based on the balance of foreign currency. The ministry will provide commercial banks with a list of important and necessary goods for importation in order to regulate excessive movements of foreign currency in the market.

In May 2023, Laos began requiring registration of certain import and export activities with the MOIC. Registered importers and exporters must also report their local bank accounts to the BOL and request permission to open a bank account specifically for import and export activities. Importers are further required to provide payment information for foreign goods and services via the banking system to enable customs declarations in the automated system for customs data (ASYCUDA). Exporters must receive income from exports into Laos via the import-export bank account. With BOL permission, income earned from exports may be kept overseas for loan repayment, but any funds remaining after the loan repayment has been made must be transferred to the import-export bank account in Laos.

The Ministry of Finance is currently researching other customs measures to limit the import of goods that are not necessary to meet Laos’ socioeconomic needs.

Capital Flow: Foreign Direct Investment

The prime minister’s foreign exchange management order assigns the Ministry of Planning and Investment (MPI) to collaborate with the BOL to review concession contracts for foreign investment projects, focusing on financial obligations and capital imports and exports. The MPI is the key ministry overseeing approval of concessionary projects in Laos (e.g., hydropower plants, mining, agricultural projects). Concessionary projects often include authorization and an exception from the Lao government for project developer to use foreign currency for the development of the project.

Once their investment or enterprise license has been approved, foreign investors must notify their commercial bank to open an investment bank account, transfer the total registered capital into Laos by the due date, and request confirmation of receipt from the BOL, and submit the transfer confirmation letter to the official authorized to issue investment permission letters. The registered capital can be used to pay for and receive goods, services, and other expenses in LAK.

Database Management

The prime minister’s order assigns various ministries to improve database management:

  • The MOIC is responsible for creating and developing an importer-exporter management system.
  • The MOF is to develop a customs database.
  • The Ministry of Labor and Social Welfare must develop an international payment system for labor wages to record laborers’ remittances.

These assignments are aimed at monitoring capital imports and exports. The databases will be linked to the BOL, enabling effective tracking and management of financial transactions.

New Bank Account Opening

All bank accounts opened by individuals and legal entities abroad before the FX Law came into force must be reported to the BOL by December 31, 2024. Although the order does not explicitly state whether this applies to all individuals and legal entities in Laos regardless of their nationality, it likely applies to legal entities that, for instance, would open a bank account in the name of the legal entity outside of the country, and to persons residing in Laos, as there is already a requirement to obtain approval from the BOL for these parties to open a bank account offshore. As for enforcement of this requirement, the order appears to allow for those who have not yet informed the BOL to do so before potentially facing sanctions.


Violations of the order’s foreign currency control rules may be subject to fines and administrative measures provided in the FX Law.

The fines range from LAK 10 million to LAK 20 million (approx. USD 488–977) for each violating transaction. For transactions valued at LAK 10 million and over, violators are liable for an additional 10% of the value of the violating transaction exceeding LAK 10 million in cases that involve individuals, legal entities, and organizations, including officers; this covers the following violations:

  • Using foreign currency to pay for goods or services or receive payment in Laos without an allowance (or without fully complying with that allowance) to pay or receive payment in foreign currency (e.g., payment for imported goods or services);
  • Providing unofficial foreign exchange services not authorized by the BOL;
  • Using foreign exchange services (e.g., exchanging one currency for another, transferring money) provided by individuals or legal entities that have not been authorized by the BOL to provide such services.;
  • Using a normal bank account instead of the “specific bank account” required by the BOL for the purpose of supporting a restricted business activity (e.g., import-export activities, transferring money to pay or receive payment in a foreign currency, investing abroad);
  • Keeping income from exported goods, services, or investments abroad without permission from the BOL;
  • Failing to declare, or declaring with undue delay, to the BOL the import of permitted capital import amounts to customs officials;
  • Failing to declare to customs officials the import of cash in foreign currency or failing to obtain permission from the BOL’s Department of Foreign Currency Control to take cash out of Laos in excess of the maximum permitted amounts; and
  • Exporting capital out of Laos for investment purposes without the approval of the BOL.

In addition, a fine of LAK 10–20 million applies to:

  • Setting, announcing, or advertising prices, service fees, salaries, wages, or others in a foreign currency;
  • Advertising or offering unofficial foreign exchange services, training, or marketing related to foreign currency in violation of the law;
  • Determining and announcing an exchange rate not approved by the BOL; and
  • Refusing to cooperate with government officials in foreign exchange control.

Repeat offenses will subject the infringer to a penalty of twice the latest fine amount.

The FX Law provides additional administrative remedies regarding specific infringements. For instance, entities operating an export business are particularly targeted. Exporters that have already had to undergo remedial education or have been assessed fines may have their permission to export goods and services suspended if they fail to:

  • Pay for goods and services via their designated import-export bank account;
  • Transfer the income earned from exports into Laos by the due date; or
  • Sell the foreign currency earned from exports into Laos to a commercial bank.

Permission to import goods and services may be suspended if the importer pays a foreign entity from an account other than the designated import-export bank account. Enterprises can apply for certification of capital importation delays, but they must provide a proposal or report explaining the delay.

For loan agreements contracted with offshore entities, Lao law requires that the loan be approved by the Bank of Lao PDR. The FX Law further provides that if a corporation takes a loan from abroad without proper authorization or does not report the source of the loan, the company may face restrictions on transferring capital out of Laos or suspension of financial transactions via the banking system. The FX Law further provides for suspension of an enterprise’s operations, but it does not specify the grounds for such a suspension and merely states that it may be enforced based on related regulations.

BOL Future Plans

While the government has not deviated from its general policy prohibiting the use of foreign currency, it has shown willingness to consider flexibility as the BOL, along with other relevant ministries, is developing an action plan to control the flow of funds in the future. The BOL has also developed an action plan to regulate foreign currency deposits and use of foreign currency in special economic zones, casinos, and other designated areas. The BOL plans to regulate the flow of foreign currency from imports, exports, and foreign direct investment, and the bank will issue a policy and rules for foreign exchange services in commercial banks.

The BOL is also developing an LAK payment system for e-commerce transactions, in addition to a national electronic payment system that accepts foreign currency to support legal inflows of foreign currency.


This article was prepared with the assistance of Tilleke & Gibbins intern Xaypaseuth Sounthavong.

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