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Services by Sector: Tourism and Travel-Related Services

 

A.OVERVIEW OF TOURISM AND TRAVEL RELATED SERVICES IN LAO PDR

Background Information

Tourism represents a major contributor to gross domestic product, employment generation and foreign exchange for many nations globally; Lao PDR is one such nation. The inter-linkages with other sectors are numerous and the sector continues to thrive in a rapidly changing environment.

As was evidenced by the 2007/2008 financial crises, the tourism sector is highly dependent on the economic performances of source market countries; this is principally due to the nature of the sector, as it depends on external factors.

The scope of the tourism and related travel services covers services provided by hotels and restaurants (including catering), travel agencies and tour operator services, tourist guide services and other related services. Given the nature of tourism and travel related services, one of the inherent factors is that there is cross border movement of consumers to enjoy the tourism and travel related services abroad.

The WTO classification covers:

  • Hotels and restaurants (including catering)
  • Travel agencies and tour operators' services
  • Tour guides' services

The government and people of Lao PDR regard the tourism and travel related services sector as one of its main economic pillars. The Strategy defines the policy framework for the development and promotion of tourism aligns with national objectives and development goals.  The strategy seeks to strengthen and develop the tourism sector to become an industrial sector and generate foreign exchange revenue for the country.

 As such, it has developed the Lao PDR Tourism Strategy 2006-2020. The focus of the strategy includes among other things, strategic plans to develop tourism sites, Participatory Eco-Tourism; Advertisement and promotion of tourism marketing; Tourism Interlinkages; Tourism business management and investment in tourism activities; Human Resource development and international cooperation. These represent some of the core areas of focus for the government and people of Lao PDR.

The total contribution of Travel & Tourism to GDP (including wider effects from investment, the supply chain and induced income impacts, see page 2) was LAK13,717.2bn in 2014 (14.7% of GDP) and an estimated by 8.1% to LAK14,825.5bn (14.8% of GDP) in 2015. It is forecasted to rise by 5.7% per annum to LAK25,759.2bn by 2025. [1]

 

B. KEY IMPERATIVES AND INFORMATION FOR SERVICE PROVIDERS AND INVESTORS

I. Legal and Regulatory Environment of the Tourism and Travel Related Services Sector

The legal and regulatory environment of the tourism and travel related services sector comprises institutional and legal frameworks, which seek to regulate the services provided. Key to the legal and regulatory environment are the interlinked institutions, rules, laws and regulators which collaboratively ensure that the development objectives of the tourism sector are being pursued and effectively achieved and further that the requisite standards and regulations are being complied with.

II. Key Institutions in the Tourism and Travel Related Services Sector

Key institutions in the tourism and travel related services sector include:

  • Ministry of Information, Culture and Tourism
  • Ministry of Foreign Affairs
  • Lao Trade Promotion Center
  • Provincial divisions and district offices

III. Key Associations include:

  • ASEAN Tourism Enterprise Association
  • ASEAN Association on Restaurant and Hotel
  • ASEAN Aviation
  • Lao Hotel and Tourism Association

IV. Legislation (Laws and Regulations) governing the Tourism and Travel Related Services Sector:

Relevant legislations which impact the Tourism and Travel Related Services Sector include:

PRIMARY LEGISLATION

SECONDARY LEGISLATION

Decisions

Decrees

Regulations

Other

Law on Tourism (Amended) 32/NA

Decision on the Management of Restaurant and Café 059/LNTA

Decree on Museum 159/Gov

Regulation on the Management of Hotel and Guesthouse159/PMO 

Application Form to establish Services Business in Lao PDR

Law on National Heritage  (Amended) 44/NA

Decision on Hotel and Guesthouse Classification Standard in Lao PDR 060/NTO

Decree of the President of the Lao PDR on the Reservation of Cultural, Historical and Natural Heritage 03/PR

Regulation on the Establishment and Management of Tour Operator Service 1150/PMO 

Lao PDR Tourism Strategy 2006 - 2020

Decision on the Management of Air Ticketing and Travel Agencies 2526/MPWT

Regulation on Guesthouse Fundamental Standard 1107/MICT

 

 

 

 

 

 

 

 

[1] World Travel and Tourism Council,  Travel and Tourism –Economic Impact 2015, Laos

https://www.wttc.org/-/media/files/reports/economic-impact-research/archived/countries-2015/laos2015.pdf

Lao PDR Commitments in Tourism and Travel Related Services under Regional and International Agreements                       

Key agreements that the Lao PDR has signed in respect of the tourism and travel related services sector are the:

  • WTO General Agreement on Trade in Services
  • ASEAN – Australia/New Zealand Free Trade Agreement
  • Agreement on the Movement of Natural Persons
  • ASEAN Framework Agreement on Services (9TH Package of Commitments)

WTO General Agreement on Trade in Services

Under the WTO General Agreement on Trade in Services, the tourism and travel related services are classified under:

  • Hotels and restaurants (including catering) (part of CPC 641 (excluding guesthouses11 and 6419), CPC 642, and CPC 643)
  • Travel agencies and tour operators services (CPC 7471)
  • Other: - Tourism consultancy services

In respect of hotels and restaurants (including catering) (part of CPC 641 (excluding guesthouses11 and 6419), CPC 642, and CPC 643), Lao PDR placed no limitations on market access in relation to modes 1 and 2, cross border supply of services and consumption abroad. In respect of mode 3, establishment of commercial presence, Lao PDR limits market access by stipulating that for lodging services only establishments with three stars rating or higher will be allowed. In relation to mode 4, movement of natural persons, Lao PRD is unbound, except as indicated in the horizontal section.

As it relates to limitations on national treatment, Lao PDR placed no limitations on modes 1, 2 and 3. Lao PDR is however unbound except as indicated in the horizontal section.

For travel agencies and tour operators services (CPC 7471), in relation to limitations on market access, Lao PDR placed no limitations in relation to modes 1 and 2. Under mode 3, foreign equity participation is limited to 70%. However for mode 4, Lao PDR is unbound, except for executives and managers as per conditions in the horizontal section.

In relation to limitations on national treatment, Lao PDR placed no limitation on market access for modes 1 and 2, whereas mode 3 is limited by requiring foreign service supplying enterprises to only provide inbound services. Lao PDR is unbound under mode 4, except for executives and managers as per conditions in the horizontal section.

In relation to Other: - Tourism consultancy services, Lao PDR placed no limitations on modes 1, 2 and 3. However for mode 4, Lao PDR is unbound, except for executives and managers as per conditions in the

horizontal section. This is in respect of both limitations on market access and national treatment.

ASEAN – Australia/New Zealand Free Trade Agreement

This agreement covers the following tourism and related services:

  • Hotel and other lodging services (CPC 64110)
  • Beverage serving services without entertainment (CPC 64310)
  • Travel agencies and tour operators services (Part of CPC 7471)
  • Meal serving services with full restaurant services (CPC 64210)

For Hotel and other lodging services (CPC 64110), as well as Beverage serving services without entertainment (CPC 64310), Lao PDR has placed no limitations on market access and national treatment for the supply of services under modes 1 and 2.

For mode 3, the establishment of a commercial presence, there are no limitations on market access except in situations where a joint venture is being established, the foreign partner or partners must contribute at least 30% of the total equity investment.  In addition, should a hotel be developed, it must meet the standard of attracting at least 2 stars.  No commitments were made in respect of national treatment.

For Travel agencies and tour operators services (Part of CPC 7471), there are no limitations placed on market access and national treatment for modes 1 and 2. Market access in respect of mode 3, the establishment of a commercial presence attracts the following restrictions:

  1. Wholly foreign owned enterprises are not permitted
  2. Business cooperation by contract is permitted
  3. Joint ventures with domestic Lao investors are permitted but foreign JV partner or partners must contribute at least 30% and no more than 70% of the total equity investment
  4. Foreign investment must be in the form of a travel agency

In relation to limitations on national treatment in respect of mode 3, Lao PDR is unbound, except as indicated in the horizontal section.

For Meal serving services with full restaurant services (CPC 64210), there are no limitations on market access and national treatment for modes 1 and 2. In respect of mode 3, there are no limitations on market access, except that should a joint venture be established, the foreign partner or partners must contribute at least 30% of the total equity investment. No sector specific commitments were made in regard to mode 3; horizontal commitments however apply.

Agreement on the Movement of Natural Persons

Under this agreement, the scope of services covered is:

  • Hotels and restaurants (including catering)
  • Hotel lodging services, with 3 stars or more (Part of CPC 641)
  • Meal serving services with full restaurant service (CPC 64210)
  • Beverage serving services without entertainment (CPC 64310)

 

  • Travel agencies and tour operators services
  • Travel agencies services, in-bound services only (Part of CPC 74710)
  • Other - Tourism consulting services

For Hotels and restaurants (including catering); Hotel lodging services, with 3 stars or more (Part of CPC 641); Meal serving services with full restaurant service (CPC 64210); and Beverage serving services without entertainment (CPC 64310), no commitments were made in relation to market access, except for intra-corporate transferees of general manager and managers. No sector specific commitments were made in respect of national treatment except those horizontally applied.

No commitments, with the exception of managers were made for travel agencies and tour operators service, specifically travel agencies services, in-bound services only (Part of CPC 74710), in respect of market access. Specific to national treatment, the only applicable commitments are those horizontally applied.

For Other – Tourism consulting services, no specific commitments, except for managers, were made in respect of market access. In relation to national treatment, no specific comments were also made, horizontal commitments however apply.

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

The tourism and travel related services covered under this agreement include:

  • Hotel lodging services, with 3 stars or more (Part of CPC 641)
  • Meal serving services with full restaurant service (CPC 64210)
  • Beverage serving services without entertainment (CPC 64310)
  • Travel agencies and tour operators services (CPC 7471)
  • Travel agencies services, in-bound services only (Part of CPC 74710)
  • Other: Tourism consulting services

There are no limitations on market access and national treatment placed on the following sub sectors for the supply of services under modes 1, 2 and 3 (cross border supply, consumption abroad and commercial presence respectively):

  • Hotel lodging services, with 3 stars or more (Part of CPC 641)
  • Meal serving services with full restaurant service (CPC 64210)
  • Beverage serving services without entertainment (CPC 64310)

For Travel agencies and tour operator services (CPC 7471) and Travel agencies services, in-bound services only (Part of CPC 74710), there are no limitations on market access and national treatment for the provision of these services utilizing modes 1 and 2. For mode 3, there is a limitation placed in respect of market access; foreign equity participation is limited to 70%, however, no limitation applied to national treatment.

For Other: Tourism consulting services, no limitations were placed on national treatment and market access for modes 1 and 2. Specific to mode 3, no limitations were made on both market access and national treatment, however, economic needs tests are to be undertaken as it relates to market access.