Setting Up An Export Business In Laos

[Soi105]

I

[Globeliner]

Is that all you need, really?

[Soi105]

r

I

Sorry something went wrong with my first post.

I am thinking of moving a part of my production from Thailand to Laos.

I've visited Laos twice, and I like the place. Next week I go by car to search for location, warehouse, etc..

I have a few questions:

-Is it difficult/possible to own 100 % of an export company based in Laos?

-Investment will almost be nothing 100-200.000 THB

-Purchasing will be +/- 10.000.000 THB / year all local.

-What are the minimum wages for uneducated employees?

-Is there a lot of difficulities to get the finished goods in container over the border to the harbour in Thailand? No need to pay import duty in Thailand when the container goes directly to the harbour?

Thanks,

Soi

[technocracy]

Sorry something went wrong with my first post.

I am thinking of moving a part of my production from Thailand to Laos.

I've visited Laos twice, and I like the place. Next week I go by car to search for location, warehouse, etc..

I have a few questions:

-Is it difficult/possible to own 100 % of an export company based in Laos?

-Investment will almost be nothing 100-200.000 THB

-Purchasing will be +/- 10.000.000 THB / year all local.

-What are the minimum wages for uneducated employees?

-Is there a lot of difficulities to get the finished goods in container over the border to the harbour in Thailand? No need to pay import duty in Thailand when the container goes directly to the harbour?

Thanks,

Soi

Hmmmm, my first question is what are you looking to export?

The answers to your questions are:

- Yes you can own 100% of the company in Laos. However having a foreign name on the company will make life not a comfortable as if it was a Lao name, mainly due to them being far more keen in extracting tax from you!

- Investment doesn't really matter but below there is a few issues with this.

- Purchasing what? Remember you are in Laos if you buy things from Thailand and being it into Laos you will pay import tax (well until this ASEAN tax treaty takes effect).

Minimum wage .. .. hmmm depends on what they are doing! 20,000kip (about $2.10) per day is common for basic labourers, but like I say depends on what you want. Here ingeneral they work 7 days a week but have the 'wan sin' (main Buddhist day) off, basically 2 or 3 wan sin per calendar month. But there isn't a minimum wage as such in Laos.

In regards to shipping anything over the mekong to Thailand - you will pay tax - regardless, same coming into Laos.

Ok, now for the possible show stopper - you talk about looking for a 'location, warehouse' well first thing you need to know is you probably won't find one. Well not one that isn't in use anyway. The basics are if you want to open a company in general you'll need to build the warehouse and offices, Vientiane (I guess this is where you are considering) isn't exactly over brimming with warehouses for rent. Obviously the catch 22 here is if you want to build a warehouse you'll need own the land which you can't do being foreign (although there is some loopholes - I am informed by a solicitor but these aren't fully confirmed).

Land on the Route 1 from Friendship bridge to Vientiane is very pricey (well for Laos) a 2000+ baht per sq metre. Obvious for a 100m2 you talking 2mil baht at a minimum. The road which leads to the ITEC (right turn at the main lights on Rt1) is also prime land at similar prices. If you are looking at this area be careful as ALL the land behind the Beer Lao factory to Nong Nieng (about 3km+) is all earmarked for sale to a Chinese developer who is intending to build a new city there!

On a side note if you need run large machinery then you will need to factor in the cost of a transformer since the standard supply in general has not got much ampage - sure they'll install you a 20/80amp meter but you won't get 80amps!

I am kind of confused as why you would open an export company which relies on raw materials from Thailand in Laos! Surely the added tax here will be too much of an overhead? If you were source and producing Laos then I can understand it.

Anyway have a read of above and if I've got the wrong end of something then let me know or if you need any other clarification let me know also!

[Soi105]

Thank you for you reply.

- I will buy the raw materials in Laos and put a little added value on it in Laos and export worldwide by seacontainer. Sorry maybe I was not clear enough. But it's 100% Lao content.

-I am thinking of paying the labour by piece (so they can end up with +/- 3$ / day).

-I fact a warehouse is not really necesary, A quite big house with big garden is also Ok.

-When I pay by piece the people can work at home, and I alone need some quality control people and people who take care of the stock and load the container at my home.

-Are there big houses for rent in Laos. I am also planning to live there for 6 moths a year.

-Are you sure I have to pay import duty in Thailand when I export from Laos directly to Europe... overland by Thailand in a sealed container... That sounds strange to me.

Thanks again for your reply.

I really enjoyed Laos, and when something is not possible I will find a way around it.

Same like in Thailand. But when I cannot own something 100% I will not buy it, only rent.

Sorry something went wrong with my first post.

I am thinking of moving a part of my production from Thailand to Laos.

I've visited Laos twice, and I like the place. Next week I go by car to search for location, warehouse, etc..

I have a few questions:

-Is it difficult/possible to own 100 % of an export company based in Laos?

-Investment will almost be nothing 100-200.000 THB

-Purchasing will be +/- 10.000.000 THB / year all local.

-What are the minimum wages for uneducated employees?

-Is there a lot of difficulities to get the finished goods in container over the border to the harbour in Thailand? No need to pay import duty in Thailand when the container goes directly to the harbour?

Thanks,

Soi

Hmmmm, my first question is what are you looking to export?

The answers to your questions are:

- Yes you can own 100% of the company in Laos. However having a foreign name on the company will make life not a comfortable as if it was a Lao name, mainly due to them being far more keen in extracting tax from you!

- Investment doesn't really matter but below there is a few issues with this.

- Purchasing what? Remember you are in Laos if you buy things from Thailand and being it into Laos you will pay import tax (well until this ASEAN tax treaty takes effect).

Minimum wage .. .. hmmm depends on what they are doing! 20,000kip (about $2.10) per day is common for basic labourers, but like I say depends on what you want. Here ingeneral they work 7 days a week but have the 'wan sin' (main Buddhist day) off, basically 2 or 3 wan sin per calendar month. But there isn't a minimum wage as such in Laos.

In regards to shipping anything over the mekong to Thailand - you will pay tax - regardless, same coming into Laos.

Ok, now for the possible show stopper - you talk about looking for a 'location, warehouse' well first thing you need to know is you probably won't find one. Well not one that isn't in use anyway. The basics are if you want to open a company in general you'll need to build the warehouse and offices, Vientiane (I guess this is where you are considering) isn't exactly over brimming with warehouses for rent. Obviously the catch 22 here is if you want to build a warehouse you'll need own the land which you can't do being foreign (although there is some loopholes - I am informed by a solicitor but these aren't fully confirmed).

Land on the Route 1 from Friendship bridge to Vientiane is very pricey (well for Laos) a 2000+ baht per sq metre. Obvious for a 100m2 you talking 2mil baht at a minimum. The road which leads to the ITEC (right turn at the main lights on Rt1) is also prime land at similar prices. If you are looking at this area be careful as ALL the land behind the Beer Lao factory to Nong Nieng (about 3km+) is all earmarked for sale to a Chinese developer who is intending to build a new city there!

On a side note if you need run large machinery then you will need to factor in the cost of a transformer since the standard supply in general has not got much ampage - sure they'll install you a 20/80amp meter but you won't get 80amps!

I am kind of confused as why you would open an export company which relies on raw materials from Thailand in Laos! Surely the added tax here will be too much of an overhead? If you were source and producing Laos then I can understand it.

Anyway have a read of above and if I've got the wrong end of something then let me know or if you need any other clarification let me know also!

[sutnyod]

look this up

here the Law on Foreign Investment

There was some discussion three or four years ago to cancel the wholly-owned foreign investment possibility, but I am not sure what became of it. Be careful.

Edited January 18, 2008 by sutnyod

[technocracy]

Thank you for you reply.

- I will buy the raw materials in Laos and put a little added value on it in Laos and export worldwide by seacontainer. Sorry maybe I was not clear enough. But it's 100% Lao content.

Ah ok that makes more sense. There is numerous freight carriers in Laos who ship worldwide, also the DHL here is incredibly reasonably priced in comparison to DHL in other countries.

-I am thinking of paying the labour by piece (so they can end up with +/- 3$ / day).

Sounds ok maybe even generous . . . depends on exactly what they are doing in concerns of labour and skill.

-I fact a warehouse is not really necesary, A quite big house with big garden is also Ok.

Plenty of these for rent! Not problems on that front.

-When I pay by piece the people can work at home, and I alone need some quality control people and people who take care of the stock and load the container at my home.

Again depends on what they are doing but I personally I wouldn't rely too much on home workers - unless they have skills which you need and cannot get to a place of work.

-Are there big houses for rent in Laos. I am also planning to live there for 6 moths a year.

See above . . plenty around - depends on what you want. But don't be expected fully fitted kitchens etc. I am fortunate that I designed and built our house so it's western influenced which is particularly important on the electric front as in general the quality of household electrical work here is terrible - worse than Thailand!

-Are you sure I have to pay import duty in Thailand when I export from Laos directly to Europe... overland by Thailand in a sealed container... That sounds strange to me.

As above as you are shipping/freighting directly out of Laos to Europe no you don't have to pay duty, I was thinking you were shipping materials to Thailand then shipping them then freighting them out from there.

Thanks again for your reply.

I really enjoyed Laos, and when something is not possible I will find a way around it.

Same like in Thailand. But when I cannot own something 100% I will not buy it, only rent.

Also don't be overly concern about people telling you about the big bad communists and all the hassle they'll bring to you. If you are sensible and fit in with the local community you'll get no hassle in general they'll be exceptional helpful.

The one thing here is if you know the right people then things are so much easier! I could help in setting up a company if required - it's something I've been considering starting as a side business kind of a Sunbelt thing in Laos as over time I've amassed a very useful set of contacts ranging from immigration, company set up, police, army, electrical, water and even banks. Basically I know all the potholes along the way that can be avoided!

Anyway good luck with the business.

[carlosacao]

Thank you for you reply.

- I will buy the raw materials in Laos and put a little added value on it in Laos and export worldwide by seacontainer. Sorry maybe I was not clear enough. But it's 100% Lao content.

Ah ok that makes more sense. There is numerous freight carriers in Laos who ship worldwide, also the DHL here is incredibly reasonably priced in comparison to DHL in other countries.

-I am thinking of paying the labour by piece (so they can end up with +/- 3$ / day).

Sounds ok maybe even generous . . . depends on exactly what they are doing in concerns of labour and skill.

-I fact a warehouse is not really necesary, A quite big house with big garden is also Ok.

Plenty of these for rent! Not problems on that front.

-When I pay by piece the people can work at home, and I alone need some quality control people and people who take care of the stock and load the container at my home.

Again depends on what they are doing but I personally I wouldn't rely too much on home workers - unless they have skills which you need and cannot get to a place of work.

-Are there big houses for rent in Laos. I am also planning to live there for 6 moths a year.

See above . . plenty around - depends on what you want. But don't be expected fully fitted kitchens etc. I am fortunate that I designed and built our house so it's western influenced which is particularly important on the electric front as in general the quality of household electrical work here is terrible - worse than Thailand!

-Are you sure I have to pay import duty in Thailand when I export from Laos directly to Europe... overland by Thailand in a sealed container... That sounds strange to me.

As above as you are shipping/freighting directly out of Laos to Europe no you don't have to pay duty, I was thinking you were shipping materials to Thailand then shipping them then freighting them out from there.

Thanks again for your reply.

I really enjoyed Laos, and when something is not possible I will find a way around it.

Same like in Thailand. But when I cannot own something 100% I will not buy it, only rent.

Also don't be overly concern about people telling you about the big bad communists and all the hassle they'll bring to you. If you are sensible and fit in with the local community you'll get no hassle in general they'll be exceptional helpful.

The one thing here is if you know the right people then things are so much easier! I could help in setting up a company if required - it's something I've been considering starting as a side business kind of a Sunbelt thing in Laos as over time I've amassed a very useful set of contacts ranging from immigration, company set up, police, army, electrical, water and even banks. Basically I know all the potholes along the way that can be avoided!

Anyway good luck with the business.

Hi technocracy,

Very interesting subject, I have a very small factory in China and I was thinking about relocating it to Thailand in the future (Thailand is still more expensive than China for now) in order to have easier logistics and less hassle, but I also thought about Laos since it's very cheap. I'm talking about making polyresin figurines and wall plaques. I wonder if Laos has the basic supplies that I would need such as polyresin and the typical packaging such as customized color boxes, packing cartons, styrofoam cushioning for the items in the boxes, etc. I would also take the containers from Laos to Thailand in their way overseas.

I'd like to have your contact info (both of you) and to keep in touch if possible, don't know anybody in Laos and it's always better if farangs gang together in these type of projects. By the way, your idea about offering these type of services it's very good I think.

Thank you and take care

Carlos

[sutnyod]

, but I also thought about Laos since it's very cheap.

Who told you Laos is cheap? Don't fall for that. Lots of friends got burned.

If you want to have an opinion ask foreigners who already HAVE a business in Laos.

[carlosacao]

, but I also thought about Laos since it's very cheap.

Who told you Laos is cheap? Don't fall for that. Lots of friends got burned.

If you want to have an opinion ask foreigners who already HAVE a business in Laos.

Hi sutnyod,

It's good to know, I was just going for what I've heard, but I don't have real experience in Laos, never been there, but I hear many people say that it's very cheap, that's all. Off course, being cheap actually means that the overall conditions are cheap; maybe the labor it's very cheap. but other aspects of doing business there may be much more expensive. That's why I'm gathering input, I'm trying to get a good feel for what's going there before I get into it. I appreciate your opinion very much. Thank you.

Carlos

[technocracy]

, but I also thought about Laos since it's very cheap.

Who told you Laos is cheap? Don't fall for that. Lots of friends got burned.

If you want to have an opinion ask foreigners who already HAVE a business in Laos.

I don't understand - why do you feel the need to just add these kind of negative throw away comments in any thread relating to Laos? So how many is lots then? At least state facts and figures, how long ago etc. to clarify this 'risk'.

I actually HAVE (as you like to emphasise) a business here in Laos and so have many other foreigners who haven't had any problems.

Carlos - yes it is cheap to actually do business here in Laos - the problem is unfortunately as you may have already gathered is the availability of raw products. The packaging side of your requirements would be relatively easy to source. However the chemical side of things unfortunately isn't.

Personally I import the chemicals my company requires from Vietnam via DHL, I've scoured the North of Thailand for any in driveable range of Vientiane and cannot find any. Vientiane has a lack of chemical companies.

Labour is cheap. However like I said to Soi105 there isn't really any industrial estates or the like that have units for let. People opening companies in general buy the land and build what they require. But that said if you can run it out of a sizeable house then there is plenty to let which would make things easier.

If you are using a raw product that is local to Lao then you will have a far easier time.

The fact in Laos is if you are a falang opening a business and you are stupid enough to open a bar or buy into a nightclub or similar then you will invaribly end up having all kinds of hassle (as is Thailand!).

However the fact that there is many falang run restaurants, minimarts, wine importers, car rental, guest houses etc. As in any country choosing the right business and going about it in the correct manner and getting all the paperwork done ensure things run smoothly and the minimal amount of hassle.

[callao]

look this up

here the Law on Foreign Investment

There was some discussion three or four years ago to cancel the wholly-owned foreign investment possibility, but I am not sure what became of it. Be careful.

there is some information on foreign investment laws on the Lao embassy website in the USA, does seem to encourage foreign invvestment with yearly visas break on taxes, especially if you have Lao partners involved, I'm looking into some business ventures there myself (lao silk) for US market