Most Place Group

Laos, the landlocked country, shares borders with China, Myanmar, Thailand, Cambodia and Vietnam. It covers 235,000 sq. km, an area slightly larger than Great Britain. All of Laos lies within the tropics, between latitudes 14 degree N and 23 degree N and longitudes 100 degree E and 108 degree E. Rivers and mountains dominate the topography, and their interaction accounts for most of the country’s geographic variation. Four biographic zones are recognized: the northern Indochina hilly subtropical sector (most of the north); the Annam Trung Son mountain chain (bordering Vietnam from Bolikhamsai Province in the north to Attapeu in the south); the central Indochina tropical lowland plains (along the Mekong River flood plain from Sainyabuli to Champasak); and a small section forming the Indochina transition zone (at the northern tip of Phongsali Province). Starting 4,350 km from the sea, 5,000 m up on the Tibetan Plateau, the Mekong River is known as Lancang Jiang (Turbulent river) in China, Mae Nam Khong in Thailand, Myanmar and Laos, Tonle Thom (Great Water) in Cambodia and Cuu Long (Nine Dragons) in Vietnam. Half its length runs through China, after which more of the river courses through Laos than through any other South-East Asian country. The Mekong River valley and its fertile floodplains form the country’s primary agricultural zones as well,

including virtually all of the country’s wet-rice lands. The two largest valley sections surround Vientiane and Suvannakhet, the major population centers. The Mekong and its tributaries are also an important source of fish, a mainstay of the Lao diet. A 1995 census of Laos recorded a total population of 4.5 millions, with an average annual growth rate of 2.4%, meaning that in 2001 Laos has an estimated population of 5.5 millions. The nation’s population density is one of the lowest in Asia, around 20 people per sq. km, and Thailand 120. Roughly 85% of the population lives in rural areas.

Social environment

According to the World Bank definitions, an estimated one half of Lao

citizens are living below poverty line. The annual per capita income in

2001 was US$263 (down from US$370 in 1998), which place Laos head of Nepal and Afghanistan, but below both Cambodia and Vietnam. Gross National Product (GNP) growth in 2001 was estimated to be a moderate 4% per annum. Laos has one of the lowest foreign debts in Asia, mainly because of the heavy international aid. Export s of goods and services grew from 4% GDP in 1985 to 23% in 1996, followed by an inexplicable decline to single-digit levels in 1997 and 1998 despite the lower price tags (in dollar terms) for export goods.

Transportation and Communication

The road system in Laos is very underdeveloped. The French built only one road of any significance, Rte Colonial 13 along the lower Mekong River, plus the less impressive Rtes Colonials 7 and 9 through two Annamite mountain passes. Laos currently boasts around 22,500 km of classified road.

An estimated 20% are tarred; approximately 40% are graded and sometimes covered with gravel; the remaining 40% are ungraded dirt tracks. The Pakse-Salavan road has been upgraded and is now one of the best roads in Laos. Thailand, Myanmar, China and Laos also agreed in May 1993 to develop road links in the area bordering the upper reaches of the Mekong River, thus linking Thailand’s Chiang Rai Province with Xishuangbanna District (Yunnan) in southern China via Laos’s Bokeo and Luang Nam Tha Provinces.

Telephone service in Laos has improved substantially in the last couple of years and International Direct Dialing finally became available for businesses and private residences in Vientiane in 1993. With the arrival of satellite telecommunications via IntelSat and AsiaSat, you can now dial 155 countries from Vientiane. The Lao government controls the only legal access to the Net through two government Internet service providers (ISPs), LaoTel and LaoNet. Both struggle for a very limited amount of available bandwidth, so can be excruciatingly slow.


Deforestation is the major environmental issue in Laos. Although the

official export of timber is tightly controlled, no one really knows how

much teak and other hardwoods are being smuggled into Vietnam, Thailand and especially China. Tourism, growing steadily in post-1975 Laos, has had no major impact on the environment thus far. Until recently the government has avoided giving contracts to companies wanting to develop large-scale resorts. One of the more disturbing aspects of the hydroelectric industry is the way in which companies deliberately apply for concessions in areas zoned for dams, confident in the knowledge that – even if the facility is never constructed – they can usually stall for time long enough to log the valleys intended for inundation. Temperatures vary according to altitude. In the humid, low-lying Mekong River valley, the highest temperatures occur in March and April (approaching 38*C), and the lowest in December and January (as low as 15*C). In the mountains of Xieng Khuang,

however, December to January temperatures can easily drop to 0*C at night;

in mountainous provinces of lesser elevation, temperatures may be 5*C to 10*C higher. During most of the rainy season, daytime temperatures average around 29*C in the lowlands and around 25*C in mountain valleys.


About a third of the population live in the Mekong valley, where trade with Thailand is vital. Another 10% or so live in recently emerging economies in the extreme north (primarily Udomxai, Phongsali and Luang Nam Tha), where trade with China is dominant but where there has been little Lao government economic intervention since 1989. A similar situation exists along the Suvannakhet-Lao Bao corridor between the Thai and Vietnamese borders, where a three-way trade between Laos, Vietnam and Thailand goes on with little Lao government intervention. A slim but significant 3% of all Lao people participate in the insulated Luang Prabang economy, where production is growing but self-limited because of the area’s isolation from exterior markets. Rising incomes in Luang Prabang are heavily infused with foreign-aid money and tourism receipts. Once Rte 13 is extended all the way from Luang Prabang to the Chinese border, the area will become a major trade crossroads. Between 50% and 60% of the nation’s population still live at a subsistence level, largely autonomous from all government involvement, in small villages catered throughout the country. Laos has 60,400 cu m of renewable water resources per capita, more than any other country in Asia. The Nam Ngum dam, 70 km north of Vientiane, generates most of the electricity used in the Vientiane valley. In addition, Thailand buys about 850 millions kilowatt-hours per year from Laos, via high power lines that stretch across the Mekong to as far away as Udon Thani. Near Tha Khaek, the Nam Theun-Hin Bun dam project exports all of its 210-megawatt output to Thailand, and is connected to Thailand’s main grid via a 95 km transmission line. Tourism is the country’s fourth most important source of income, although Laos still lag far behind many countries in Asia.

Government policy

Laos has one of the most liberal foreign investment codes in the world. Unlike in Thailand, where foreign companies are legally limited to a maximum 49% ownership in any enterprise, the Lao government allows 100% foreign ownership in approved projects. Two major conditions apply;

investors must operate through a broker to obtain all permits (including business visas) and 100% foreign ownership is limited to 15 years unless an extension is approved. Standard profit taxes run at 35%, though a lower 20% to 30% rate is available in certain promoted sectors (mostly infrastructure projects). Personal income tax is limited to a low 10%. As of the beginning of 1998, the government had granted foreign investment licenses totaling US$6.8 billions – over a tenfold increase since 1993. Around three-quarters of this investment was in energy, followed by much smaller investments in tourism, mining, garments/textiles, wood products, import/export and agribusiness. Foreign investment in Laos typically out-distances domestic public investment by a ratio of three to one. Of the more than 30 countries with companies operating in Laos, the top five foreign investors are Thailand, USA, Australia, Malaysia and France. The government has plans to develop Khammuan Province in Central Laos – an area rich in mineral and forest resources with easy access to markets in both Thailand and Vietnam – as an industrial center. The regional economic downturn of 1997 has put the breaks on the expansion of manufacturing exports, however, and so far Khammuan has been spared most industry.


The official national currency in Laos is the Lao kip (LAK). Although only kip is legally negotiable in everyday transactions, in reality the people of Laos use three currencies for commerce: kip, Thai baht and US dollars. In cities such as Vientiane, Luang Prabang, Pakse and Suvannakhet, baht and US dollars are readily acceptable at most businesses, including hotels, restaurants and shops. In smaller towns and villages kip or baht may be preferred. The rule of thumb is that for everyday small purchases, prices are quoted in baht, while just about anything costing US$100 or more is usually quoted in US dollars. This is largely due to the relative portability of each currency. In spite of the supposed illegality of foreign currency usage, a three-tier currency system remains firmly in place. Kip notes come in denominations of 100, 500, 1,000, 2,000 and 5,000 kip. Kip coins were once available but have been withdrawn form circulation since anything below 100 kip is virtually worthless. It’s high time the government printed at least a 10,000 or 50,000 kip note. Laos has no restrictions on the amount of money you can exchange upon entry. One US dollar equates around 8,780 kip in 1998.