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Services by Sector: Financial Services
A. OVERVIEW OF FINANCIAL SERVICES IN LAO PDR
Background Information
The financial services sector is primarily concerned with the facilitation of transactions that result from the exchange of goods and services; the mobilization of savings; allocation of capital funds and other similar activities. [1] The importance of the financial sector is seen in the daily lives of nationals, citizens, visitors, service providers and investors of Lao PDR; the financial sector is the bedrock of economic activity, both in terms of facilitation and value addition. Banking and other financial services, as well as insurance and related services represent some of the core services provided within the financial services sector of Lao PDR.
The Government of the Lao PDR remains committed to ensure that adequate legal and regulatory frameworks are implemented and provide requisite oversight to build investor and market confidence and protect the rights of consumers. The objective is to encourage sector expansion and increased economic activity in this key sector of the economy.
B. KEY IMPERATIVES AND INFORMATION FOR SERVICE PROVIDERS AND INVESTORS
I. Legal and Regulatory Environment of the Financial Services Sector
The legal and regulatory environment of the financial services sector comprises institutional and legal frameworks which collectively contribute to the monitoring and enforcement of international standards in the financial services sector. The legal framework is directed by policies which govern and guide the financial services sector, which in turn dictates administrative and operational guidelines. These various facets contribute to the harmonious regulation of the financial sector, in an effort to promote system market stability, sector growth, innovation and development. In addition, the implementation of a robust regulatory framework directly contributes to the promotion of competition and innovation, the by-product of which would be increased sector efficiency and economic value addition.
II. Regulatory Entities governing the Financial Services Sector
- Ministry of Finance
- Bank of Lao PDR
- Lao Securities Commission
- Provincial divisions and district offices
III. Financial Services Sector Associations
Key Associations governing the Financial Services Sector include:
- Lao Microfinance Association
- Lao Bankers’ Association
- ASEAN Bankers Association
IV. Legislation (Laws and Regulations) governing the Financial Services Sector
Relevant legislations which impact the Financial Services Sector include:
| PRIMARY LEGISLATION | SECONDARY LEGISLATION | |||||
| Decrees | Decisions | Instructions | Regulations | Others | ||
| Law on Commercial Bank 03/NA | Decree on Accounting for Commercial Bank and Financial Institutions under the Bank of Lao PDR 03/PM | Decision on International Money Transfer of Commercial Bank 433/BoL | Instruction on the Declaration of Cash, Precious Metals and Bearer Negotiable Instrument while Entering/Exiting the Lao PDR 06/NA | Regulation on Organization and Operation of Securities Companies 002/LSC | Guideline on Organization of Shareholders' Meeting of Listed Companies 0001/SECO | |
| Decree on the Implementation of the Law on Commercial Bank 275/PM | Decision on the Establishment of Commercial Bank and Branch of Commercial Bank 42/BoL | Additional Instruction for Implementation of Some Articles of the Instruction 02/BoL | Regulation for Non-Deposit Taking Microfinance Institutions 02/BoL | Charter of Depositor Protection Fund 03/DPF | ||
| Law on Foreign Exchange Management 55/NA | Decree on Microfinance Institution 460/GoL | Decision on the Additional Information for Microfinance Institution 45/BoL | Instruction on Implementation of Decree on Management of Foreign Currency and Precious Metal (01/PC) 01/BoL |
Regulation for Saving and Credit Union 03/BoL | Guidelines on the Implementation of Decision on the Loan Classification and Provisioning 541/DCM | |
| Law on Anti-Money Laundering and Counter-Financing of Terrorism 50/NA | Decree on Financial Leasing 11/PM | Decision on Sale-Purchase Foreign Currency Forward Contract 619 | Instruction of the Minister of Finance on Management of Lottery Business 1332/MoF | Regulation for Deposit-Taking MFIs 04/BoL | ||
| Law on Bank of Lao PDR 05/95/NA | Decree on Cheques 386/Gov | Decision on the Membership Fees and Fees for Credit/Loan Information Services 927/BoL | Additional Instruction on Foreign Currency Withdrawal 11/BOL | Regulation on Depositor Protection Fund 283/BoL | Notification regarding the Instruction on Name and Code of Enterprise 0064/MOIC | |
| Law on Insurance (Amended) 06/NA | Decree on Government Procurement of Goods, Works, Maintenance and Services 03/PM | Decision on the Over limit Money Transfer Transaction 963/BoL | Ministerial Instruction on Implementing the Law on Insurance 539/MOF | Notification on the List of Reserved Businesses for Lao Citizens 1328/MOIC.ERMD | ||
| Decree on National Treasury 259/PM | Decision on Measure against Violation of Law on Commercial Bank 811/BoL | Additional Instruction on Enterprise Registration and Amendment 1786/MOIC | Presidential Ordinance on Profit Tax and Fees for Business Operation on Securities 001/PO | |||
| Law on Investment Promotion (Amended) 14/NA | Decree on Adoption and Implementation of Strategy on Capital Market Development (2016-2025) 79/Gov | Decision on Service fees of Bank of Lao PDR 664/BoL | Ministerial Instruction of on the Business Registration 0995/MOIC | Final Draft of the Microfinance Regulation for the Lao PDR | Notification on the List of Business for Foreign Investor 1327/MOIC.ERMD | |
| Law on state Investment (Amended) 72/NA | Decree on the Implementation of the Investment Promotion Law 119/PM | Decision on Fees, Service Charges and Annual Regulation Fees 378/BoL | Instruction on Accounting of Commercial Banks and Financial Institution on Securities 207/AFD | Regulation on Loan Classification Requirement for Commercial Bank which are under the Supervision of the Bank of the Lao PDR 06/BoL | Notification on the List of Prohibited Businesses 1592/MOIC | |
| Law on Enterprises (Amended) 46/NA | Decree on Adoption of the List of Controlled Business (Negative list) 68/PM | Decision on Reporting Credit Transaction/Loan Information 928/BoL | Ministerial Guideline on Enterprise Branch Establishment 1619/MOIC.ERMD | |||
| Law on Business Competition 60/NA | Decree on Pawning 248/GOV | Decision on Collateral 752/BoL | Notification on Enterprise Name and Code 0064/MOIC.ERMD | |||
| Law on Securities 21/NA | Decree on the Notification and Enquiry of Trade Related Information 363/PM | Decision on Determination of Commercial Bank Interest Rate 529/BoL | Notification on IT system of Securities Company 317/SECO | |||
| Decree on Promotion and Management of Foreign Investment in Lao PDR 46/PM | Decision on Protecting Soundness Practices among of the Commercial Bank and Financial Institution which are under the supervision of the Bank of the Lao PDR 340/BoL |
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| Decree on Structure and Operation of Lao Securities Commission 188/PM | Decision on Sale-Purchase Securities of Foreign Investor in Lao PDR 012/LSC | Regulation on the Reservation and Approval of the Enterprise Name 0924/MOIC | ||||
| Decision on the Calculation of Loan Interest and Penalties/Fine of Commercial Bank 361/BoL | Regulation on Accounting and Auditing in Securities Related Business 001/LSC | |||||
| Decision on One Stop Service for Investment Promotion on General Businesses 1631/MOIC.DTD | Regulation on Issuance of Corporate Bond 019/LSC | |||||
| Decision on Foreign Chamber of Commerce In Lao PDR 1006/MOIC.DTD | Regulation on Issuance of Stock 018/LSC | |||||
| Decision on Money Exchange Business Operation 529/BoL | ||||||
| Decision on Information Disclosure 014/LSC | ||||||
| Decision on Securities Investment of Commercial Bank and Financial Institution 160/BoL | ||||||
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[1] https://www.wto.org/english/tratop_e/serv_e/finance_e/finance_e.htm
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