Current Status of Import and Export of Goods of Lao People's Democratic Republic in the Period 2001-2010

Thus, all import-export business conditions stated in Decree 180/TTg, dated July 7, 2010 have been determined for working capital and eliminated. However, at this time, enterprises are only allowed to import and export goods according to the registered business lines in the business registration certificate. If they import and export goods other than the registered list, they must apply for permission to expand the field of operation, and must be approved by the Ministry of Industry and Trade before proceeding.

In 2002, Decree 25/TTg dated March 25, 2002 allowed foreign-invested enterprises to participate in import-export activities, but they were only allowed to directly export products produced by the enterprise and import materials and input materials for their own production, but were not allowed to expand into the import-export business sector.

- 2001: Decree 36/TTg, dated July 9, 2001, allowed enterprises (of all economic sectors) to export all goods, regardless of the industry or product line stated in the business registration certificate, except for goods on the list of prohibited exports.

Thus, through the above Decrees, the right to do import and export business has been gradually expanded. Up to now, with Decision No. 78/TT (2002), the right to trade has been freed, enterprises of all economic sectors are truly equal before the law, and have the right to directly participate in import and export activities.

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The expansion of commercial rights has promoted rapid growth in the number of enterprises participating in import and export, in 2001 there were about 160 enterprises, in 2002: 230 enterprises, in 2004: 357 enterprises.

d) Technical control measures.

- Regulations on technical standards.

According to WTO regulations, member countries have the right to use their own technical standards when there are legitimate reasons (not only based on scientific grounds, but also based on customs) such as protecting national security, protecting health, etc.

human health and safety, protection of animals and plants and farming, protection of cultural traditions...

Up to now, a number of documents related to the issue of technical standards and procedures for determining conformity have been issued. Accordingly, Laos has unified the management of goods quality based on standards, according to Lao laws and international treaties that Laos has signed or participated in. Lao standards include mandatory Lao standards and voluntary Lao standards. Up to now, the Lao quality standards system has been applied with over 5,600 general standards, along with about 4,000 standards issued by ministries and branches.

Currently, the draft Law on Goods Quality has been released. The new point of the draft Law compared to the Ordinance on Goods Quality amended in 1999 and Decree 97/TTg-CP dated December 8, 1992 is that the draft Law includes the content of inspecting the quality of foreign goods imported into Laos right at the place of production, and the producer as well as the product trader must take full responsibility for the quality of their products.

- Product label.

In terms of technical measures, the requirements for labeling and packaging of goods for Laos are still a new field. Before 1999, Laos had almost no regulations on the application of this measure as a tool. Decision No. 106/QD-TTG dated January 25, 2002 of the Prime Minister promulgating regulations on labeling of goods. Decree No. 807/ND-CP dated September 2, 1999, protecting domestic production. Regarding labeling of goods, it is required that goods produced abroad when imported into the Lao market must comply with labeling regulations with mandatory contents on: name of goods; name and address of the enterprise responsible for the goods; quantity of goods; composition; main quality indicators; date of manufacture; expiry date; storage instructions; instructions for use; The origin of goods in Lao or a secondary label in Lao attached to the original label of the goods before being put on sale in the Lao market.

2.2.2 Current status of import and export of goods of the Lao People's Democratic Republic in the period 2001-2010

a) Tariff policy.

The export and import tariff policy is one of the important policies of Laos to regulate and manage international trade activities. In 1987, the Law on Export and Import Tax was issued and has been amended, supplemented and perfected many times, becoming increasingly consistent with common standards. The main contents that have been perfected are:

- The list of taxable import and export goods of Laos is built on the basis of fully applying the harmonized commodity description system (HS), the list of goods is detailed according to a minimum 8-digit code. This has helped Laos to be more favorable in expanding trade relations with other countries and integrating into the world economy.

- Tax rate:

At the two points in 1991 and 1993, the tax rates stipulated in the tax schedule were too long and wide. Import tax, due to its many objectives (economic, cultural, social), the tax structure became complicated, with many tax rates being too detailed (0, 5%, 1%; 2%; 3%; 4%; 5%; 6%; 7%; 10%;… 30%; 40%...). The issuance of too many tax rates below 5% limited the tax collection results to the State budget. During this period, import tax included special consumption tax (SCT) and value added tax (VAT), so tax rates were often high (such as alcohol and beer from 100 - 150%, cars from 50 - 200%). Although it was convenient for centralized tax collection, it was not consistent with international practice and could easily be misunderstood as high taxes to protect domestic production, and this was also a difficulty when Laos integrated into the world economy [40].

To overcome these unreasonable aspects, the Special Consumption Tax Law, effective from January 1, 1996, was applied to imported goods. Next, the Value Added Tax Law, effective from January 1, 1999, also included imported goods in the VAT taxable category. Thus, nominally, the import tax rate has decreased, but in reality, when calculating both Special Consumption Tax and VAT, the tax payable may not have decreased, and some goods may even have increased, thereby ensuring revenue for the State budget, providing reasonable protection for domestic production sectors while still being consistent with international practices [35].

To further improve tax policies according to common principles and standards to meet the requirements of international economic integration. The Government issued Decree No. 05/QH-CP dated May 20, 2005 detailing the implementation of the Law amending and supplementing a number of articles of the Law on export and import taxes. In which, Laos' import tax rates are divided into 3 levels:

1. Preferential tax rates apply to exported goods originating from countries that enjoy preferential treatment under the most-favored-nation regime in trade relations with Laos. Currently, there are 89 countries and territories that have MFN agreements with Laos and enjoy this preferential tax rate.

2. Special preferential tax rates apply to imported goods originating from countries or groups of countries that provide special import tax incentives to Laos under the free trade zone, customs union or border trade facilitation regime. This is the tax rate included in the CEPT that Laos committed to for ASEAN countries and China. As of January 1, 2006, Laos has applied import tax rates of 0 - 5% to 10,283 items, accounting for 96% of the total 10,698 items in the import and export tax schedule of the Lao PDR.

3. The normal tax rate applies to imported goods originating from countries or groups of countries that do not provide most-favored-nation treatment or special import tax incentives to Laos. The normal tax rate applied is 150% of the preferential tax rate.

At the same time, to reasonably protect domestic production, the 1998 Law on Export and Import Taxes stipulates additional import taxes in cases where imported goods are dumped in the domestic market and imported goods receive subsidies from the exporting country. This is completely consistent with international practice.

In recent years, tax rates on Lao import and export goods have been gradually decreasing, following the tax reduction schedule in AFTA LAOS and WTO that Laos has committed to.

- Taxable value.

The taxable value for exported goods is the selling price at the export gate (export price).

FOB never includes insurance (I) and transportation costs (F). This method of determining export tax value is appropriate and stable. There are mainly two ways to determine the value of imported goods:

+ Is the customer's purchase price at the import gate, including freight (F) and insurance costs (I), i.e. CIF import price.

+ Apply minimum price list to calculate import tax.

The management of tax calculation prices by minimum price list in the initial stage is necessary because it has the advantage of simple tax management, limiting trade fraud, preventing loss of state budget revenue and contributing to protecting domestic production. However, the application of minimum price list for tax calculation has a very big limitation which is that it does not honestly reflect the actual transaction value of imported goods. To overcome the above limitation, the number of items subject to import price management and must be calculated on the basis of minimum price list is gradually reduced. By December 2003, most of the items of the GATT Valuation Agreement, up to 85 - 90% of import turnover were determined in this way [38].

b) Non-tariff policy.

The policy of managing import-export activities using non-tariff barriers that Laos mainly applies is:

Forms of quantitative restrictions: Quantitative restrictions that Laos has used in the import-export process in recent times include:

+ Prohibited export, prohibited import.

The list of prohibited export and import items was previously announced by the Government annually. Since 2001, it has been prescribed for a period of 5 years, and from 2006 onwards, it has been applied long-term.

The items that Laos prohibits from exporting and importing are to ensure national security, environmental safety, labor safety as well as for cultural reasons, which are basically in accordance with international treaties that Laos has signed and participated in.

Cigarettes and cigars have been banned from import for many years but are still produced and circulated domestically, which is not in accordance with regulations.

MFN, NTR. Therefore, by 2006, finished tobacco products were removed from the list of banned imports.

+ Export and import quotas.

Quotas are one of the quantitative restrictions. Quotas regulate the quantity or value of certain goods that are allowed to be exported or imported within a certain period of time (usually one year). The use of quotas has a certain effect in managing and controlling import and export activities, however, quotas create inequality in business, the distribution of quotas as well as complicated licensing procedures lead to corruption, bribery, and authoritarianism. At the same time, according to the WTO's viewpoint, this measure is not allowed to be applied. Therefore, on April 4, 1994, the Ministry of Industry and Trade issued Circular 04/TM - XNK. The content of the Circular clearly states that "the general spirit is to minimize the number of import and export goods that must be managed by quotas, only applicable to goods that Laos has committed to under the Trade Agreement with foreign countries ". According to Decision No. 864/TTg dated December 30, 1995 of the Prime Minister, the quota management list only applies to two export items:

- Rice (for the reason of ensuring national food security)

- Textiles and garments exported to the EU, Canada, Norway. This is a group of goods that is controlled by the EU and other countries. To avoid competition in these potential markets, Laos must allocate quotas to businesses.

According to Decision No. 46/QD-TTg dated April 4, 2001 of the Prime Minister, the measure called "quota" is only applied to one export item, which is textiles and garments exported according to the quota that Laos has agreed with foreign countries and announced by the Ministry of Industry and Trade for each period.

However, in reality, quota-equivalent measures are still used for imported goods such as import plans, import limits, etc.

Since 2003, Laos has applied tariff quotas to 3 items, 7 items in 2004, 3 items in 2005, and 4 items since 2006: raw medicines, salt, poultry eggs, refined sugar, and raw sugar.

The tariff quota measure applied by Laos is still narrow in scope, not yet popular, the import volume is still small, this is only the initial stage, development

The effectiveness of this measure is poor and should be further encouraged because experience shows that most WTO member countries have applied this measure very effectively.

+ Export and import license

- According to Regulation No. 297/TMDL - XNK dated April 9, 1992, all types of goods when exported or imported must have a license for each shipment issued by the Ministry of Industry, Trade and Tourism.

During this time, companies wishing to import and export need to obtain at least 3 different licenses from the Ministry of Industry and Trade:

+ General license allows import and export business.

+ The export or import plan must be accepted before the company can negotiate with foreign customers or suppliers.

+ After completing the export and import contract, a separate license is required for each shipment.

By January 1994, these regulations were relaxed. Licensing requirements were gradually eliminated. Currently, for common export and import items, there is no need to apply for a permit for each shipment, and export and import plans do not need to be approved.

According to Decree 46/2001/ND-TTg, export and import goods must have a license, which is limited to goods that need import and export control according to the provisions of international treaties that Laos is a signatory to or announced by the Ministry of Industry and Trade for each period.

Currently, the management of import and export of goods is carried out according to Decree No. 205/TTg dated October 11, 2001 of the Government and guiding Circulars of the Ministry of Industry and Trade and specialized management ministries. In general, compared to the previous period, the current regulations on import and export management have been improved in a more open and transparent direction, basically meeting the requirements for managing import and export activities. The current licensing is simply a tool to control conditional imports.

c) Policy to support production and promote export

When Laos implemented the "open economic" policy, the world market was almost

stable. Therefore, the market for Lao exports is always difficult. How to penetrate Lao goods into the world market is not easy. Therefore, in recent times, Laos has had many policies to support production and promote exports.

- Preferential tax policies;

Export incentives through taxes are often implemented in two forms: direct and indirect. Direct incentives for export activities include: export tax and fees and charges related to export. Indirect incentives include import tax, corporate income tax, and special consumption tax. VAT in particular has both direct and indirect incentives.

Since 1995, the Lao tax system has been continuously amended and supplemented, increasingly creating favorable conditions for export enterprises and further encouraging these enterprises to export goods abroad.

+ Export tax: The current export tax schedule issued under Decision 45/QD/BTC has 45 taxable goods lines with 10 tax rates from 1-45% (1, 2, 3, 4, 5, 10, 15, 35, 40, 45%). In which, mainly export goods have tax rates below 5%. Higher export tax rates are usually reserved for goods that are not encouraged to be exported in order to protect natural resources and some of those goods demonstrate that the State has created a great incentive for Lao enterprises in exporting goods abroad.

+ Import tax: According to Article 15 of the current Law on Export and Import Tax, for imported goods that are supplies and raw materials for the production of export goods, the tax payment period is 25 days from the date the taxpayer registers the customs declaration. This period may be extended if deemed appropriate to the production cycle and the reserve of supplies and raw materials for the enterprise. According to Article 19, imported goods that are raw materials and supplies that have paid import tax for the production of export goods will be refunded the paid import tax. This is an export incentive measure for enterprises that process goods for foreign countries and enterprises that import raw materials to make export goods.

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