18 August 2021
Laos

Laos Adopts New E-Commerce Regulation

Amidst the protracted pandemic, more businesses and consumers are turning to e-commerce as part of the “new normal” in Laos. To support the growth of this new way of doing business, the Lao Government has issued the Decree on E-Commerce No. 296/GOV dated 12 April 2021 (“the Decree”). The Decree sets out the regulatory framework for businesses engaged in e-commerce operations, the procedure and requirements for e-commerce contracts, and the management of e-commerce activities by the different government ministries. The Decree came into effect on 14 June 2021.

E-commerce is defined in the Decree as a sale-purchase or exchange of goods or services between traders and customers via electronic platforms. The following activities are considered as e-commerce business operations:

  • trading through one’s own electronic channel/platform;[1]
  • trading through electronic marketplaces; and
  • provision of electronic marketplace services;

This Decree applies to domestic and foreign individuals, legal entities or organisations that operate e-commerce in Laos.

Notification and license requirements

Existing e-commerce businesses that trade through their own platforms or through electronic marketplaces are required to notify the Ministry of Industry and Commerce (“MOIC”) of its business within 90 days from the effective date of the Decree. New businesses that intends to engage in e-commerce trade are similarly required to notify the MOIC.

Under the notification procedure, business operators need to submit:

  • an application form;
  • a copy of enterprise registration certificate for legal entities, ID or family book and certificate of residence for individuals;
  • a copy of business operation license (for business activities that require permission from relevant ministries) for legal entities; and
  • a copy of certification documents to use payment services in Laos.

On submission of the complete documents, MOIC will issue an e-commerce acknowledgement certificate with validity of two years, which may be renewed upon application at least 30 days before the expiry of the certificate.

On the other hand, for electronic marketplace services, the business operator is required to be an incorporated entity and must secure an e-commerce business license from the MOIC. Existing electronic marketplace service providers are instructed to submit the license application within 90 days from the effective date of the Decree.

For the e-commerce business license to be issued, the business operator must submit:

  • an application form;
  • a copy of enterprise registration certificate;
  • a business plan;
  • certificate of conformity with technical standards for the marketplace platform from the Ministry of Technology and Communications; and
  • electronic payment services certificate from the Bank of Lao PDR.

The MOIC will issue the e-commerce business license within five days from submission of complete documents. Nonetheless, the MOIC reserves the right to require additional documents and information from the applicant. An e-commerce business license is valid for a period of three years, with possibility of renewal upon application at least 30 days before its expiration date.

Foreign equity restrictions

For an e-commerce business engaged in electronic marketplace services, foreign shareholding is limited to 90% of the entity’s shares and requires the minimum registered capital of LAK 10 billion. This requirement must be further interpreted in conjunction with other Lao regulations, which remain applicable alongside this Decree.

In particular, for businesses engaged in wholesale and retail trade, the Decision on Wholesale and Retail Business No. 1005/MOIC.ITD dated 22 May 2015 has the following foreign equity requirements:

Investment StructureRegistered Capital Requirement
Joint venture with up to 50% foreign equityAt least LAK 4 billion (to less than LAK10 billion)
Joint venture with >50% up to 70% foreign equityAt least LAK 10 billion (to less than LAK 20 billion)
100% foreign equityAt least LAK 20 billion

 

E-Commerce contracts

The Decree further provides for requirements relating to e-commerce contracts, from its creation to the cancellation.

An e-commerce contract is defined as an agreement between a trader and a customer for the sale, purchase, or exchange of goods or services that is concluded electronically, through either of two means; online ordering function or social media.

An offer for the creation of an e-commerce contract is made by a customer with intent to purchase the goods or services, which is either accepted or rejected by the trader. The offer will be terminated if:

  • the trader rejects the offer;
  • if the trader does not respond within the time period provided by the electronic platform or within 12 hours from the offer if no period is stated; or
  • if the customer cancels the offer before receiving a reply.

Further, the e-commerce platform must also have a mechanism to allow customers to review, add, amend, confirm, or cancel the contents of an offer before submitting the offer in the online ordering function system.

The contract is effective upon acceptance in accordance with the specified conditions and period. Parties may amend the e-commerce contract based on their agreement, which would take effect based on the offer and acceptance process of the e-commerce contract or in applicable laws and regulations.

The e-commerce contracts must contain the following fundamental information:

  • the name, size, type, and other important details of the goods or services;
  • method and time for payment and delivery of goods or provision of services;
  • price and total value of ordered goods or services;
  • conditions for change, breach, and cancellation;
  • conditions and time period for sending or notifying termination of contract;
  • customer’s name, address, phone number, e-mail and other customer information (for e-commerce contracts via the online ordering function).

In the event of a contract cancellation, there must also be a mechanism in the platform to record and display information on the notification of contract cancellation sent by a customer. If the trader does not reply within the time period provided under the contract or the e-commerce platform, the contract is considered terminated. The e-commerce platform must completely, clearly, and transparently display the procedure in cancelling the contract. This must include consequences of contract cancellation, date and time of a contract cancellation, and method of penalty service charge payment.

Required information provision

Traders are required to provide accurate, complete, up-to-date information on goods and services it offers that is easy to understand and is reliable. The following information must be presented:

  • business operator’s information (such as name, address, contact information, enterprise registration certificate, business operation license);
  • specifications of the goods or services consistent with the label (such as color, style, features);
  • price of the goods or services (price per unit or time and other relevant costs);
  • delivery information (method, time, price);
  • payment information (forms and periods of payment);
  • customer satisfaction information (such as content and number of customer comments on the goods and services); and
  • terms and conditions of the e-commerce transaction (such as source of goods and services, return policy, warranty).

The Decree further requires that these data should be stored, printable, and retrievable in the customer’s electronic information system that can be accessed later.

Conclusion

The new Decree supports long-term economic growth in Laos. It gives more clarity for investors to pursue e-commerce strategy to sustain their businesses, offers opportunities for MSMEs to expand their market reach, afford consumers better access to goods and services, and greater confidence to transact online.

Alongside the necessary regulatory framework, the concurrent development of ICT, banking, and logistics sectors are vital to increase e-commerce adoption in greater parts of the country and to maximise the potential of this novel mode of doing business.

 

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] The Decree refers to “electronic channel” in Lao language, although we understand this may refer to “electronic platform” such as websites, phone apps, and social media sites that offer two-way communication.