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Services by Sector: Transport Services

 

A. OVERVIEW OF TRANSPORT AND LOGISTICS SERVICES IN LAO PDR

Background Information

Transport services and logistics services are complementary in nature, as logistics services are considered to be an auxiliary service to all modes of transport services. The scope of services covered therefore includes cargo handling services, storage and warehouse services, freight transportation agency services including other supporting and auxiliary transport services.

The transport and logistics sectors represent two pivotal pillars of any developing economy, particularly so for the People’s Democratic Republic of Lao (Lao PDR), as Lao PDR rests at the Centre of the Greater Mekong Sub-region (GMS) countries: Cambodia, Myanmar, Thailand, Vietnam, and the Yunnan Province of China. This geographical positioning best equips Lao PDR to service the GMS nations as a transportation hub.

Lao PDR possesses just one active railroad, which spans approximately 3.5 kilometers a short spur line from Nong Khai, across the river from Thailand. The railroad began its operations in 2009 and commenced freight facilities in 2016. A railway line that will link Kunming in China’s Yunnan Province with Vientiane is under construction and it appears on track to open in 2021, which is a part of the China Belt and Road initiative.  The Lao and Vietnamese governments have also agreed in principle to develop an expressway and railway line to link Vientiane with a seaport at Vung Ang in Vietnam. [1]

The transport services sector can be broadly categorized under three classifications:

  • Land

Land transport involved several operators within Lao PDR which provide a very essential service, connecting logistics activities.

  • Air

Air transport is typically used for both commercial and other activities. These services are used both to transport passengers and cargo.

  • Maritime

Maritime transport plays an important part in trade facilitation, particularly in respect of international freight of large volumes of goods and products.

B. KEY IMPERATIVES AND INFORMATION FOR SERVICE PROVIDERS AND INVESTORS

I. Legal and Regulatory Environment of the Transport Services Sector

The legal and regulatory environment governing the transport services sector defines the institutional arrangements, laws, regulations and international agreements, which regulate the transport services sector. The various dimensions of the legal and regulatory environment collectively promote stability and spur the expansion of economic and commercial activity in the sector, while maintaining cultural norms, respecting law and order and protecting the heritage and environment of Lao PDR.

II.Regulatory Entities governing the Transport Services Sector

Ministry of Public Works and Transport is the primary Governmental entity with responsibility and oversight for the Transport Services Sector. Other related entities include:

  • Public Works and Transport Division in Provinces
  • Public Works and Transport Office in Districts and Municipalities
  • The Ministry of National Defense
  • Ministry of Public Security
  • Multi-transport Tasks Inspection Authority
  • Village Protection Organization
  • Land Transport Task Inspection Organization
  • Economic Dispute Resolution Organization
  • The Government Inspection and Counter-corruption Organization
  • National Transport Committee
  • National Search and Rescue Committee

III.Transport Services Sector Associations

Key Associations governing the Transport Services Sector include:

  • Support Safety on Road Association
  • Land Transporters Association
  • International Freight Forwarder and Goods Dispatch Association
  • Association of Road Engineers                                                                                                                                                                      

IV.  Legislation (Laws and Regulations) governing the Transport Services Sector

Relevant legislations which impact the Transport Services Sector include:

 

PRIMARY LEGISLATION

SECONDARY LEGISLATION

Decrees

Decisions

Instructions

Regulations

Guidelines

Other

Law on Civil Aviation 01/NA

 

Decree on Implementation of National Transportation Committee 03/PM

Ministerial Decision on Facilitating the Transport of Goods in Transit 2184/MCTPC

 

 

Instructions on Inspecting Vehicles 849/MCTPC

Regulations on Driving Licenses 907/ MCTPC

Guidelines on Changing Driving Licenses 905/ MCTPC

Standards on Ship and Ferry Technical  Inspection 0030/ MCTPC

Law on Land Transport  (Amended) 24/NA

 

Decree on the National Committee on Road Safety 252/PM

Decision to establish Weight Stations 20480/MPWT

 

Instructions on Vessel Technical Inspection 0052/MCTPC

Regulations on Working Methodology of National Transportation Committee 118/ MCTPC

Guidelines on Requirements of Driving License Applicants 906/ MCTPC

Law on Multimodal Transport  28/NA

 

Decree on the Punishment of Land Traffic Law Violators 188/PM

Decision on the Maximum Weight of Trucks with 22 Wheels or 6 Axles 5064/MPWT

 

 

Regulations on the Principles of Trucks Inspection

 

Guidelines on Driving License Examination 3416/ MCTPC

Law on Public Roads 04/99/NA

 

 

Decision on public roads protecting and maintenance 17179/MPWT

 

Regulations on the Maximum Weight Approval of Trucks 13848/MPWT

Law on Land Traffic  23/NA

 

 

Decision on management of air transport income and expenses 1183/MOF

 

Regulations on the Establishment and Operation of Driving Schools 2426/ MCTPC

 

Decision on implementation and management of air transport 5618/MPWT

 

 

Regulation on the Technical Specification of Vehicles and Spare Parts 4312/MCTPC

 

 

 

Regulations on Ship Registration 00177/MPWT

 

 

 

Regulations on Ship Extension 1442/ MCTPC

 

 

 

Regulations on Maritime Transport 104/ MCTPC

 

 

 

Regulations on the Management of Foreign Trucks entering Lao PDR on a Temporary    Basis 09539/MPWT
 

 

 
 

 

Lao PDR Commitments in Transportation Services under Regional and International Agreements

Core regional and international agreements which Lao PDR is party to in respect of the transportation services sector include:

  • WTO General Agreement on Trade in Services (GATS)
  • ASEAN Framework Agreement on Services (9th Package of Commitments)
  • ASEAN Agreement on the Movement of Natural Persons

WTO General Agreement on Trade in Services (GATS)

Under the WTO General Agreement on Trade in Services, the scope of transport services covers air transport services.  These services are further classified into:

  • Maintenance and repair of aircraft (part of CPC 8868)
  • Selling and marketing of air transport services - Computer reservation system (CRS) services

In relation to limitations on market access for Maintenance and repair of aircraft services (part of CPC 8868), Lao PDR placed no limitations in relation to modes 1 and 2, cross border supply of services and consumption abroad. In respect of mode 3, Foreign equity participation is limited to 51%, whereas in relation to mode 4, Lao PDR is unbound, except as indicated in the horizontal section.

In respect of limitations on national treatment, Lao PDR placed no limitations in relation to modes 1,2 and 3. Specific to mode 4, Lao PDR is  unbound, except as indicated in the horizontal section.

Specific to Selling and marketing of air transport services - Computer reservation system (CRS) services, both in respect of limitations on market access and national treatment, Lao PDR placed no limitations on modes 1,  2 and 3, but is however unbound, except as indicated in the horizontal section.

ASEAN Framework Agreement on Services (9th Package of Commitments)

The ASEAN Framework Agreement on Services covers some core sub sectors:

 

  • Maritime Transport Services
  • Internal Waterway Transport Services
  • Rail Transport Services
  • Road Transport Services
  • Services auxiliary to all modes of transport
  • other services not included elsewhere

For Maritime Transport Services, which include:

  • Passenger transportation (CPC 7211)
  • Freight transportation (CPC 7212)
  • Rental of vessels with crew (CPC 7213)
  • Pushing and towing services (CPC 7214)
  • Maintenance and repair of vessels (CPC 8868)
  • Vessels salvage and re-floating services (not applicable in harbor) (CPC 7454)

And Internal Waterway Transport Services, which include:

  • Passenger transportation (CPC 7221)
  • Freight transportation (CPC 7222)
  • Rental of vessels with crew
  • Maintenance and repair of vessels (CPC 8868** )

Lao PDR has placed no limitations on market access and national treatment for the provision of these services under modes 1, 2 and 3 (cross border supply of services, consumption abroad and the establishment of commercial presence).

Rail Transport Services, cover:

  • Passenger transportation (CPC 7111)
  • Freight transportation (CPC 7112)
  • Pushing and towing services (CPC 7113)
  • Maintenance and repair of rail transport equipment (CPC 8868**)
  • Supporting services for rail transport services(CPC 743)

For these services, Lao PDR placed no limitations on market access and national treatment for the provision of services under modes 1, 2 and 3.

Road Transport Services cover:

  • Freight transportation (CPC 7123)
  • Rental of commercial vehicles with operator ( CPC 7124 )
  • Supporting services for road transport services ( CPC 744)
  • Maintenance and repair of road transport equipment(CPC 6112+8867)

In relation to freight transportation, Lao PDR has placed no limitations on market access and national treatment for the supply of these services under modes 1 and 2, cross border supply and consumption abroad respectively. Specific to mode 3, the establishment of commercial presence, foreign equity participation is 100% for domestic transportation. For Cross border transportation: joint venture with local service provider(s) is required, with foreign equity limited to 49%. These are specific to limitations on market access. There are no limitations on national treatment.

For Rental of commercial vehicles with operator services (CPC 7124 ) and

Supporting services for road transport services (CPC 744), Lao PDR placed no limitations on market access and national treatment for modes 1 and 2, cross border supply of services and consumption abroad. For the provision of these services utilizing mode 3, Joint venture with Lao services providers is required. In addition foreign equity participation is limited to 70%. These are in respect of market access. Specific to national treatment, there are no limitations placed on national treatment.

In providing services for the Maintenance and repair of road transport equipment, Lao PDR placed no limitations on market access and national treatment under modes 1, 2 and 3.

Services auxiliary to all modes of transport comprise Storage and warehousing services related to maritime transportation (Part of CPC 742), Freight agency services (CPC 748), Maritime cargo handling (CPC 741) and Other auxiliary services (CPC 749). For Storage and warehousing services related to maritime transportation and Freight agency services, Lao PDR placed no limitations on market access and national treatment for modes 1, 2 and 3.

In relation to the provision of Maritime cargo handling services and Other auxiliary services, no limitations were made by Lao PDR in respect of national treatment and market access for modes 1 and 2. In respect of mode 3, Lao PDR made no sector specific commitments.

ASEAN Agreement on the Movement of Natural Persons

The scope of this agreement covers these core transport services areas:

  • Maritime Transport
  • Internal Waterways Transport
  • Air Transport Services
  • Rail Transport Services
  • Road Transport Services
  • Services auxiliary to all modes of transport
  • Other services not included elsewhere

Within the scope of the Agreement on the Movement of Natural Persons, Maritime transport services comprise:

  • Passenger transportation (CPC 7211)
  • Freight transportation (CPC 7212)
  • Rental of vessels with crew (CPC 7213)
  • Maintenance and repair of vessels (CPC 8868**)
  • Pushing and towing services (CPC 7214)
  • Supporting services for maritime transport (CPC 745**)
    • Vessels salvage and re-floating services (not applicable in harbor) (CPC 7454)

Lao PDR did not make any sub-sector services commitments in respect of these maritime services. Horizontal commitments are however applicable.

The Agreement on the Movement of Natural Persons defines the scope of Internal Waterways Transport services to cover:

  • Passenger transportation (CPC 7221)
  • Freight transportation (CPC 7222)
  • Rental of vessels with crew (CPC 7223)
  • Maintenance and repair of vessels (CPC 8868**)

Lao PDR has made no sub-sector specific commitments in respect of these internal waterways transport services; horizontal commitments will however apply in respect of limitations on national treatment and market access.

The limitations on market access and national treatment are to be applied for the provision of Air Transport Services in keeping with the horizontal section. These services cover:

  • Aircraft repair and maintenance services
  • Selling and Marketing of Air Transport services
  • Computer reservation system services (CRS)
  • Aircraft leasing without crew
  • Aircraft leasing with crew
  • Air freight forwarding services
  • Aircraft catering services
  • Aircraft line maintenance

The Agreement on the Movement of Natural Persons defines Rail Transport Services to include:

  • Passenger transportation (CPC 7111)
  • Freight transportation (CPC 7112)
  • Pushing and towing services (CPC 7113)
  • Maintenance and repair of rail transport equipment(CPC 8868**)
  • Supporting services for rail transport services (CPC 743)

For these sectors, Lao PDR has made no sub-sector specific commitments in respect of the above, but limitations as contained in the horizontal section apply both in respect of market access and national treatment.

Road Transport Services comprises:

  • Freight transportation (CPC 7123)
  • Rental of commercial vehicles with operator (CPC 7124)
  • Maintenance and repair of road transport equipment(CPC 6112+8867)
  • Supporting services for road transport services (CPC 744)

 

As it relates to Freight transportation (CPC 7123) and Rental of commercial vehicles with operator (CPC 7124), the limitations on market access and national treatment are applied as listed in the horizontal section of the commitments made under this agreement.

Specific Maintenance and repair of road transport equipment services (CPC 6112+8867), no sector specific commitments were made, although horizontal commitments are applicable.  In relation to the provision of supporting services for road transport services (CPC 744), the only applicable commitments are those listed in the horizontal section of the Agreement on the Movement of Natural Persons.

Services auxiliary to all modes of transport include:

 

  • Storage and warehouse services
  • (CPC 742)
  • Storage and warehousing services related to maritime transportation (Part of CPC 742)
  • Freight transport agency services (CPC 748)
    • Freight forwarding services
    • Shipping brokerage services

 

For these services, no sub sector specific commitments were made by Lao PDR, but applicable horizontal commitments apply.

 

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