17 May 2021
Laos

Fostering Laos’ Digital Economy

The digital economy is here. The way people work, learn, shop, transact, and interact is in the midst of a global transformation.

In Laos, like in other countries, this transformation has only been hastened by the ongoing pandemic. Digitalisation continues to grow in unprecedented scope and ways every day and its potential to help the local economy is recognised. However, while considerable progress has been made in recent years, as a developing country, Laos is still trying to catch up with our neighbours in digital adoption.

Aside from much needed ICT and logistics infrastructure, a robust legal and regulatory framework consistent with international agreements is vital to foster digital adoption as well as ensuring the protection of citizens against the perils of technology in the new economy, so as to reap fuller benefits for the country.

The digital framework in Laos

In this regard, Laos has moved in the right direction with the enactment of legislation such as the Law on Consumer Protection in 2010, [1] the Law on Electronic Transaction in 2012, [2] the Law on Cybercrime in 2015, [3] the Law on Data Protection, [4] and the Law on Payment System in 2017, [5] and the Law on Electronic Signature in 2018. [6]

Decisions on consumer protection for financial services, internet services and telecommunications [7] have been issued, as well as some regulations in relation to the internet and telecommunications services. The recently enacted Decree on Public-Private Partnership at the end of 2020 [8] also provides more concrete and transparent process for joint investments with the State, which will hopefully attract new investments in ICT infrastructure and services.

In recent years, we have seen strides in digital financial services through enabling policies from the Lao Government. Some banking institutions are now offering internet banking and cashless payment systems, with one bank embarking on a digital service unit that offers a fully paperless banking experience. While cash payments continue to be the norm for most, there is good indication that as digital financial services matures, more banks will offer and more residents will be able to access these services. [9]

Regulatory improvements still needed

Nevertheless, improvements in our regulatory system is still needed. First, effective and practical implementation of existing legislation is paramount. As an example, while the Law on Electronic Signature is in place, its implementation is still in the development process. Documents submitted to government authorities are still generally required to be signed in “wet ink”. As of writing no entity has yet to be authorised as a certificate authority for electronic signature certificates. Clear implementation and direction for these existing legislation will stimulate a stable business environment that encourages investors to do business in the country.

Given its unique model compared to traditional store-front businesses, specific implementable regulation governing online businesses is needed to encourage entrepreneurship and improve ease of doing business, and in particular facilitate business establishment, recognition of electronic agreements, data protection and privacy, and protection of intellectual property. Regulations should also take into account online platforms geared for education, information, and entertainment, to clarify on the rights and obligations of both users and operators for these platforms.

Consumer protection legislation should also be updated to address challenges brought about by e-commerce for both domestic and cross-border transactions, such as right of withdrawal and online dispute mechanisms. It has been noted that adequate consumer protection regulation boosts trust in digital markets and levels the playing field between business and the consumers, reducing concerns for both sides. [10]

Looking into the labour sector, it is equally essential that Laotians be well-prepared for the digital economy. Laos has to look into institutionalising ICT training at all levels, from primary schools to government agencies. Laotians should be equipped not only to use but also to develop new technologies. In this regard, additional incentives for innovative local technologies is worth serious consideration. Regulations for the labour sector is also needed to recognise the new ways of working, with the emergence of work-from-home set ups, as well as part-time work and independent contractors in the gig economy.

Future outlook

Indeed, the digital economy has the potential to open new opportunities and boost the economy.  However, it also presents many challenges for a developing country like Laos. To be at pace in the onward march of the Fourth Industrial Revolution, it is of vital importance that the country is well-equipped with the policies and backed with implementable legal framework that will reduce existing barriers and foster an environment of digitalisation.

 

If you have any questions or require any additional information, please contact Aristotle David or Cess Principe of ZICOLaw (Laos) Sole Co., Ltd. (a member of ZICO Law).

 

This article is for general information only and is not a substitute for legal advice.

[1] Law on Consumer Protection No. 02/NA dated 30 June 2010.

[2] Law on Electronic Transaction No. 20/NA dated 7 December 2012.

[3] Law on Cybercrime No. /NA dated 15 July 2015.

[4] Law on Data Protection No. 25/NA dated 12 May 2017.

[5] Law on Payment System No. 32/NA dated 07 November 2017.

[6] Law on Electronic Signature No. 59/NA dated 12 December 2018.

[7] Decree on Financial Consumer Protection No. 225/GOV dated 6 April 2020 and Decision on Protection of Consumers using Telecommunications and Internet Services No. 1061/MPT dated 25 May 2020.

[8] Decree on Public-Private Partnership No. 624/GOV dated 21 December 2020.

[9] See Leebouapao, Leeber et al, E-Commerce Development in the Lao PDR: Some Policy Concerns, (April 2020) pp. 224-245 <https://www.eria.org/uploads/media/E-commerce-Connectivity-in-ASEAN/16_Chapter-12_E-commerce-Development-in-the-Lao-PDR_Some-Policy-Concerns.pdf>.

[10] See World Bank Group, Taking Advantage of E-Commerce Legal, Regulatory, and Trade Facilitation Priorities for Lao PDR (4 February 2019) pp. 13-14 <https://www.worldbank.org/en/country/lao/publication/taking-advantage-of-e-commerce-legal-regulatory-and-trade-facilitation-priorities-for-lao-pdr>.