Competition scenario in the Lao PDR CUTSNERI Advocacy

Competition scenario in the Lao PDR CUTS-NERI Advocacy and Capacity Building on Competition Policy and Law in Asia (7 Up 2 Project) Alice Pham-Saykham Vodalet

Introduction n n Geographical location, population and other geographical characteristics Economic performance, structure and other characteristics - - n The launching of the New Economic Mechanism (NEM) in 1986 GDP growth rate Other economic indexes Economic policies: Industrial policy, trade policy, Privatisation policy, investment policy

Industrial policy State-Owned Enterprises (SOEs) vs. private sector development n Small and Medium-sized Enterprises (SMEs) development policy n Encouragement of import-substitution industries Implications for competition n

Trade policy n Domestic trade liberalisation - n Decree 12 on “Promotion of goods and money circulation” “One market, one price” principle External trade policy - - Decree 18 on “State monopoly on strategic export and import goods” Tariff regimes after liberalisation Laos’ integration into the regional and global markets Bearings on competition

Privatisation policy Decree 17 of 1990 on the Conversion of SOEs to Other forms of Ownership n The “Disengagement plan” n Current situation: by 2003 there are only round 93 wholly SOEs (of which 32 are considered strategic) n Separate negotiation vs. competitive bidding Competition? n

Investment Policy Foreign Investment Law of 1988 (amended in 1994) n Domestic Investment Law of 1994 n Intended overhaul Implications on competition n

Importance of competition in the economic policy regime n n The NEM The 1991 Constitution of Lao PDR Article 14. The state protects and expands all forms of state, collective and individual ownership, as well as private ownership of domestic capitalists and foreigners who make investments in the Lao People’s Democratic Republic. The state encourages all economic sectors to compete and cooperate with one another in expanding their production and business. All economic sectors are equal before the law. n The Business Law No. 03/NA dated 18 July 1994 “All types of operations conducted by enterprises in all economic sectors are inter-related and competing on an equal footing before the law. ” (Art. 5).

Market structure and competition n Market structure and competition - n Manufacturing sectors Services and Utilities Restructuring trends Barriers to competition - Administrative and other policy-induced barriers Barriers to competition by private anticompetitive behaviours

Market structure and competition n Monopolistic sectors: Beer, insurance, domestic aviation, electricity, water, etc n Oligopolistic sectors: Telecommunications, petroleum, international aviation, banking, logging, cement n Sectors with competitive market structure: Textile and garment, tobacco, steel, pharmaceuticals, etc.

Sectoral policies n n n Electricity: Ed. L Telecommunications: LTC, ETL, LAT, and Millicom Banking: State-owned commercial banks and foreign branches Forestry: 03 SOEs and small sawmills Pharmaceuticals: Class I, Class III pharmacies - Licensing Pricing Operational standards

Consumer Policy n Laws and institutions - n No comprehensive legislation on consumer protection The Prime Minister’s Decree on Goods Price Control (October 2001) Issues related to standards, quality, testing and metrology Food safety The state of consumer welfare in Lao PDR in the framework of 08 fundamental rights: q q q q The right to satisfaction of basic needs The right to safety The right to be informed The right to choose The right to be heard The right to redress The right to consumer education The right to a healthy environment

Anticompetitive practices n Cartels - n n n Definition Examples In Lao PDR Restrictive trade practices (RTPs) Abuse of dominance Unfair trade practices (UTPs)

Perspectives on competition policy amongst stakeholders in the Lao PDR Survey results presented by Dr. Saykham Vodalet (NERI)

Competition Law n The Prime Minister’s Decree on Trade Competition 2004 - Objectives Principles Scope of application The Trade Competition Commission Some critical views

The Way Forward n n n Establishing the Trade Competition Commission Building capacity of national stakeholders to effectively implement the Decree A hybrid approach for both competition and consumer protection