Lao PDR Steps Up Reform to Simplify Doing Business in the Tourism Sector
Lao PDR is a popular tourist destination due to its rich history, traditions, and beautiful natural landscapes. Over the years, tourism businesses such as hotels, travel agencies, and restaurants have proven to be profitable. Tourism is one of the country’s top three revenue sources after mining and hydropower. In 2018, Lao PDR attracted about 4.8 million visitors and generated 935 million USD. It is predicted that by 2025, there will be 5.8 million international tourist arrivals, generating 1.21 billion USD in revenue. The Lao tourism industry plays a significant role in driving economic growth and providing job opportunities for local people. However, several regulations and requirements must be met to establish and run a tourism business successfully in the country.
Previously, obtaining a business license in this sector presented significant challenges. Entrepreneurs have faced a complex regulatory environment. Multiple government agencies and ministries are involved in the business process, each with its own set of requirements and procedures. Entrepreneurs must ensure compliance with regulations related to business registration, tax obligations, land usage, environmental impact, and more. Navigating these regulations can be overwhelming, especially for foreign investors who may be unfamiliar with the local legal landscape. Investors have also complained about long delays and complex procedures for registering a business, and the various entry modes.
To address these challenges, the Ministry of Information, Culture, and Tourism (MICT) made a bold move in 2021 to streamline the procedure for licensing accommodation, restaurants, travel agency and tour guide businesses as part of efforts to implement Prime Minister’s Order No. 03, dated January 21, 2020, on the Improvement of the Services for Issuing Investment License and Business Operating License in Lao PDR. The new procedures help to promote a smoother and more efficient approach to licensing in the tourism sector.
Significant reform has been introduced in the tourism sector for accommodations, restaurants, travel agencies and tour guide. As a result, investors seeking operating licenses for the tourism sector now only need to submit three to five documents, a substantial reduction from the previous requirements of 26, 19, 11 and 7 documents, respectively. Furthermore, the time taken to obtain an accommodation, a restaurant, a travel agency business license has been significantly reduced from more than two weeks to only nine days now. These reforms aim to simplify and expedite the business establishment process in the tourism sector, making it more efficient and attractive for investors.
For accommodation, restaurant and travel agency businesses, the procedures also no longer require health certificates, employee CVs, a feasibility study, and an environmental impact assessment report, generating a more efficient licensing process. Lastly, the renewal process for these tourism businesses requires only three documents – an application renewal form, a business operation license and the latest tax return certificate.
Consequently, the smooth licensing process will reduce downtime and complicated procedures for both local and foreign investors. These changes constitute a great milestone for MICT efforts to promote a friendlier and more efficient environment for businesses. The reform not only shows the strong commitment of the Ministry to improve the quality of the tourism sector, but also creates a business-friendly environment that makes it easy for people to invest in, start, and run a business, improving the competitive position of Lao businesses in global markets. Improving the tourism sector will certainly help the country gain much-needed additional revenue. It also benefits the Lao people and thereby boosts economic growth.
Registering an accommodation, a restaurant, a travel agency:
The procedure for registering an accommodation, a restaurant, or a travel agency in Lao PDR may take around two weeks, and involve two main stages: obtaining an enterprise registration certificate; and additional licenses for tourism.
- Enterprise registration certificate
The very first step for any local or foreign entity that wants to conduct business in Lao PDR is to obtain an enterprise registration certificate, which takes only three days after submitting application documents at the Ministry of Industry and Commerce.
- Additional licenses
After obtaining the enterprise registration certificate, tourism enterprises need additional licenses to operate their services for tourists. Investors wishing to combine other services, like a hotel and tour agency, still need an operating license for each business. These licenses are pieces of evidence that show your business is qualified and legal.
Required documents to set up a tourism Business in Lao PDR
An individual or a legal entity must submit the following:
- Application form for operating a tourism business (from the Department of Tourism Management)
- A copy of the application documents for the enterprise registration certificate
2 ID photos, sized 3×4 cm (With white background)
Registering a tour guide in Lao PDR:
An individual or a legal entity must submit the following in person to the Department of Tourism Business Management :
- A 55-day Tour Guide Training Certificate
- A letter from a travel company or a tour guide association confirming your employment as a tour guide (If employed by a travel company, please also include your staff contract or a recent salary certificate)
- 2 ID photos, sized 2.5 cm (No more than three months old)
- A copy of your National ID card or a valid Certificate of Residence
- Criminal Record Clearance
The application forms for each business can be downloaded from: https://e-tmd.com/index.php/legal-standard/download/. To receive an enterprise registration certificate, an investor can apply to the industry and commerce sector authority.
Investing in the tourism sector in Lao PDR can yield a lot of profit because of the high demand for travel and the large number of tourists. The improved reform makes Lao PDR an attractive place to invest in the tourism sector, which will bring in capital, create more and better jobs, and help the Lao economy grow faster, resulting in higher incomes for more people and improving their families’ well-being and lives.
