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Laos: Country Overview

Laos Geography and Climate

The Lao PDR is a landlocked country of about 236,800 square kilometres. Bordered by Vietnam, Thailand, Cambodia, China and Myanmar, it stretches 1,700 kilometres from north to south and between 100 to 400 kilometres from east to west.

There is an abundance of rivers, including a 1,865-kilometre section of the Mekong River. The terrain is mostly rugged mountains with its highest point at 2,820 meters, which gives the country tremendous hydroelectric potential. Forest and woodland cover 47% of the land area. The Lao PDR is abundant in natural resources, including coal, hardwood timber, hydropower, gypsum, tin, gold and gemstones. These resources all play a significant part in the economy.

The Lao PDR is divided into 16 provinces, one special zone and the Prefecture of Vientiane. Vientiane, the capital city, is in the west of the country on the Thai border; it is the centre for business and government and has a population of over 560,000. Other cities include Luang Prabang in the north and Champasak and Savannakhet in the south.

The climate is tropical monsoon and has three distinct seasons. The cool season lasts from October to February when the average temperature drops to about 16+ degrees Celsius. The hot season is from the end of February to April when the temperature in the Mekong Delta can reach 40 degrees. The rest of the year is the rainy season. The mountain temperature is more than 10 degrees colder and can become cold during winter.

Laos History and Government

From 1353 to 1828, the Lao PDR was unified as Lane Xang – ‘The Kingdom of a Million Elephants’ – with its capital in the northern town of Luang Prabang. In the 19th Century Thailand (then called Siam) took control of most of the Kingdom, until the French incorporated it into French Indochina, with Vietnam and Cambodia, in 1893.

From 1893 until 1949 the Lao PDR continued as a French colony, apart from a brief period of Japanese occupation in the 1940s. The Lao PDR gained formal independence from France in 1953; this was ratified under the Geneva Convention in 1954, the year normally referred to as ‘Independence Year’.

Although the Lao Patriotic Front gained 13 seats in free elections in 1958 and joined a coalition government, conflict persisted between the various elements of the Government. The US supported the right wing faction as part of its efforts to contain Communism in South East Asia; this exaggerated the Lao PDR’s geopolitical prominence and it suffered heavy bombing, particularly in the eastern part of the country.

In December 1975 the Lao People’s Democratic Republic was proclaimed and officially declared a Marxist-Leninist government. By 1986 the Lao PDR was a country without a constitution and with hardly any legislation. The economy was centrally planned and private ownership limited. These circumstances brought about a general decrease in production that resulted in food shortages.

In 1986 the Lao Government launched the New Economic Mechanism, with the ultimate aim of turning the Lao PDR into an open-market economy. Initial progress was rapid, developing one of the most liberal foreign investment packages in the region. This integration into the region’s political and economic structures has led the Lao PDR to be accepted as a member of the Association of South East Asian Nations (ASEAN) in July 1997. It is gradually lowering its tariff barriers in line with the goal of complying with the tariff reduction schedule of the ASEAN Free Trade Area (AFTA) by 2008.

The Lao PDR also has observer status within the World Trade Organisation and applied for full membership in 1997.

However, the Lao PDR was badly affected by the Asian Economic Crisis in the late 1990s, which resulted in growth almost halving, year-on-year inflation rising to more than 150% in the first quarter of 1999, foreign investment falling by almost 70% in 1997-98 and the Lao currency losing about 90% of its value in the 18 months to August 1999. Since then the rate of economic reform has slowed down. It is only now that country has got itself back on the road to recovery.

Although reforms have not been implemented smoothly or consistently, they have not been reversed, the country remains politically stable and the economy remains relatively open to foreign investment. The Government announced in late 1998 that it intended to privatise more state-owned enterprises and to gain World Trade Organization (WTO) membership. The Government has also been negotiating with the USA to obtain Normal Trade Relations (NTR) status. Although the country’s physical and technical infrastructure would need to improve for WTO or NTR to have a major effect on the economy, they would further facilitate export trade and attract foreign investment, particularly in the labour-intensive industries of clothing and textiles and agricultural processing.

Funding agencies (e.g. the World Bank and IMF) are helping the Lao Government to develop its economy; they are encouraging the Government to improve the transparency of the Lao tax and banking systems in order to attract foreign investors. In April 2001, the IMF released a US$40 million credit line to the Lao Government to help develop economic stability, reduce poverty, maintain growth and encourage the private sector. The mid-term target is to raise the Lao PDR from the list of ‘least-developed’ countries by 2020.

Another key feature of the Government’s response to the regional crisis has been to reduce the country’s economic reliance on Thailand. Although Thailand is still the origin of more than half the imports into the Lao PDR, Vietnam has also become a major trading partner, with more than 40% of Lao exports going there. However, any reduction will take time; moreover, its effects will be limited by the relative size of the Thai economy and the ease of access from Thailand to the main Lao population centres.

The only legal political party is the Lao People’s Revolutionary Party (LPRP). The LPRP is directed by the Party Congress and elects Party Leaders every four or five years. The National Assembly is the legislative branch with 99 members. The Assembly meets once a year to hear, discuss and approve the declarations of the Prime Minister.

Other important party organs include the Political Bureau of the Central Committee and the Permanent Secretariat.

The administration has a Council of Government consisting of 14 ministries. There is also an Office of the Prime Minister, the Central Bank and the Department of Domestic and Foreign Investment (DDFI). The DDFI, formerly known as the Foreign Investment Management Cabinet (FIMC), is the body that approves foreign investment applications.

Laos Population and Language

The Lao PDR has a population of about 5.5 million, growing at approximately 2.8% per annum, with a density of 23 people per square kilometre. Life expectancy at birth is 52 years for men and 55 years for women. The fertility rate is 5.21 children per woman.

Apart from Vientiane and a few other sizeable towns, most of the people live in the countryside; 80% are employed in agriculture. They tend to be concentrated in the main traditional trade routes – the Mekong valley and the roads to China and Vietnam.

The population is divided into three groups: 68% are Lao Luom (lowland Lao), 22% Lao Theung (lower mountain dwellers), 10% Lao Sung (high altitude hill tribes, consisting of the Hmong and 60-100 other minority groups – the number varies according to the method of classification).

Languages spoken are Lao, Thai (Lao and Thai are very similar), Lao dialects and various ethnic languages. English and French are also widely used, particularly in commerce and bodies working with NGOs. Many government officials can also speak Vietnamese.

The main religion is Buddhism (85%), with animist and other spiritualist cults (15%).

About 57% of people between the ages of 15-64 are literate; the literacy rate is much higher in urban areas.

Tourism in Laos

The Lao PDR has been confidently marketing itself as one of the most unspoiled countries in Asia. Some tourist attractions include the following:

• Luang Prabang, the former capital, which was registered by UNESCO as a World Heritage Site in 1998;
• Wat Pho, a ruins site similar to Angkor Wat, which became a World Heritage Site in February 2003
• Vientiane, the capital city and centre of tourism;
• The Plain of Jars in Xieng Khuang.

The number of tourists fluctuates around 500,000 per year.

Public Holidays in Laos

Many festivals are celebrated on dates determined by the lunar calendar. The following are public holidays:

1 January International New Year
8 March Women’s Day
Three days in mid-April Lao New Year
1 May International Labour Day
2 December National Day

Other holidays include:

22 October Boat racing festival (Vientiane)
19 November That Luang Festival (Vientiane)

Boat races occur on different dates in the outlying provinces.

Visa Requirements for Laos

There are two types of visas: tourist and business.

Tourist visa: Valid for 15 days. It is now possible to travel freely throughout the country with this visa. It is possible to buy tourist visas on arrival at Vientiane airport, Luang Prabang airport and the Friendship Bridge; the cost is US$30, payable in dollars or kip.

A tourist visa can also be purchased at a Lao embassy abroad for US$30 and is valid for 30 days.

Note: Although the visa states it is valid for 60 days, these 60 days represent the time available to enter the country. At the border the visa is stamped and is then valid for 30 days from that day on.

It is possible to extend tourist visas. The official cost is US$1 per day. Arranging the extension through a private travel company adds several more US dollars to the daily rate.

Business visa: A business visa is issued to persons investing in or registering a company in the Lao PDR. As the time taken to approve such investments is officially 60 days, a 30-day multiple-entry visa is initially given. In practice approving investments takes much longer and extensions to the initial visa are given.

These visas can be obtained in the Lao PDR only if there is a guarantee from a company set up in the country. The DDFI, the Ministry of Labour and Social Welfare, and the State Employment Enterprise are responsible for this.

Business visas can be granted for three months, six months or one year, costing US$38, US$75 or US$141 respectively, though these rates have a history of changing from time to time.

Currency in Laos

The unit of currency is the kip. Kip are available in denominations of 20,000; 10,000; 5,000; 2,000; 1,000; and 500. Coins are not used.

All transactions are supposed to be in kip; however, in practice Thai baht and US dollars are generally accepted everywhere in the country. Government offices will only accept kip.

Traveller’s cheques are well known and all banks change them, though some charge a commission.

Credit cards (Visa, MasterCard and American Express) are accepted at some of the more expensive hotels, restaurants and shops in Vientiane. Credit card cash advances are also available at various banks in the city. Outside of developed areas, hard currency is the only means of transaction.

Hotels and Entertainment in Laos

First class hotels can only be found predominantly in Vientiane and Luang Prabang. The Lao Plaza Hotel, Novotel, Settha Palace, and Tai Pan can be found in Vientiane. The Phousi Hotel, Phouvao, Souvannaphoum, and Villa Santi are in Luang Prabang. The Champasack Palace is in Champasack. Outside these cities accommodation is provided in very basic hotels or guesthouses. Hotels rates vary from under US$20 to over US$100.

Entertainment includes bars, discos and restaurants. In 1998 a Malaysian-Lao joint venture opened a casino about 70 km from Vientiane. Outside the larger towns the variety of Western-style entertainment available is very limited.

Air Travel to Laos

Vientiane International Airport is connected with a number of cities in Southeast Asia. Although some routes have been curtailed since the regional economic crisis, there are currently regular flights to Hanoi, Ho Chi Minh City, Phnom Penh, Bangkok, Chiang Mai, Kunming and elsewhere. The most frequent flights are to Hanoi and Bangkok. There is a departure tax of US$10.

Flying within the Lao PDR is easy and relatively cheap. There are three flights a day between Vientiane and Luang Prabang, the trip taking about 40 minutes.

At the time of writing, a number of embassies have issued travel advisories, questioning the safety and maintenance procedures of Lao Airlines. These warn personnel to limit domestic travel on Lao Airlines to essential travel only.

Health in Laos

As throughout South East Asia, up-to-date vaccinations and other precautions against diseases such as malaria and typhoid are recommended. The level of health care can be basic, particularly outside the main towns; travellers who need specific brands of medicines should ensure that they bring an adequate supply.
Lao PDR had not been penetrated by the SARS epidemic.

Laos Security and Safety

The Lao PDR is generally a safe country in which to travel. However, there are intermittent clashes between the army and Hmong guerrillas. Overall the Hmong pose no threat to the Government; occasionally, however, these skirmishes make certain areas unsafe for travel. Travellers should check with the local authorities before journeys into the mountainous areas.

A few basic precautions are necessary when travelling. Avoid dark streets at night. Keep hotel rooms locked at night and watch luggage on crowded buses. Avoid keeping money in trouser pockets.

The quality of some of the roads, especially away from the main towns, can be poor. A relatively high number of accidents occur in this and neighboring countries.

Customs in Laos

Tipping is not expected, even in tourist hotels, although the custom is becoming more prevalent. ‘Rounding up the bill’ is a common practice. Tipping is becoming more commonplace in certain service areas, such as massage services at spas and golf caddy services.
Visitors should avoid taking photographs in areas of military importance. The same applies to photographing or videotaping official functions or parades without official permission.


Fiscal Year:

• Public sector 1 October – 30 September
• Private sector 1 January – 31 December

Electricity: 220 V, 50 Hz (Power cuts are not uncommon)

Normal Business Hours Monday to Friday:
08:00-12:00 and 13:00-16:00 (public sector)
08:00-12:00 and 13:00-17:00 (private sector)

Banking Hours Monday to Friday:
08:30 – 15:30

Time Zone: Laos is 7 hours ahead of GMT. 12 noon in Vientiane is 5 am in London (winter time), 12 midnight in New York and 1 pm in Hong Kong.

International telephone code: +856

Telephone codes around the country:
Vientiane Municipality 021
Vientiane Province 023
Bolikhamxai 054
Khammouan 051
Champasack 031
Luang Prabang 071
Savannakhet 041
Salavan 054
Xekong 038
Attapeu 036
Phongsali 088
Luang Namtha 086
Oudomxai 081
Bokeo 084
Houanphan 064
Xiangkhouang 061
Xaignabouli 074