This article includes two sections: Selling to the Government (with advocacy language) and Project Financing (with Multilateral Development Banks and Project Finance standard language added).
Selling to the Government
The Lao Government is a leading consumer of goods and services, but procurement procedures are opaque. The national budget is heavily augmented by development assistance, and donors commonly encourage government purchases from their home industries as part of aid deals. Laos is not a party or an observer to the WTO Agreement on Government Procurement.
When business opportunities involving Lao government entities are associated with donors, support contracts are often advertised for bid in local English-language newspapers, Vientiane Times, and Khaosan Pathet Lao (KPL). Major donor-financed deals may include infrastructure projects financed by multilateral development banks including the World Bank and Asia Development Bank.
Government purchases are not typically advertised and bid upon openly. However, niche opportunities are known to exist for direct private sales to government entities, with past examples such as telecommunications and aviation. The government recently issued orders that appear to require open and competitive bidding for all government-financed procurement and projects.
U.S. companies bidding on foreign government tenders may also qualify for U.S. Government advocacy. Within the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters in competition with foreign firms in foreign government projects or procurement opportunities. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agency officials expressing support for the U.S. exporters directly to the foreign government. Consult the Advocacy Center’s program web page on trade.gov for additional information.
Financing of Projects
On June 12, 2009, President Obama issued a Presidential determination that Laos and Cambodia would no longer be classified as “Marxist-Leninist countries” as defined in the Export Import Act. This determination opened the door for Export-Import Bank activity in those two countries, although the U.S. Ex-Im Bank is not currently financing any projects in Laos.
An OPIC agreement was signed in 1996, and an agreement with the Multilateral Investment Guarantee Agency (MIGA) in 1998. In 1998, the government signed an agreement with the Mekong Project Development Facility (MPDF), a multi-donor funded operation managed by the International Finance Corporation (IFC). The MPDF is designed to promote the establishment and expansion of privately owned, small and medium-sized enterprises, as well as joint venture projects with significant local private participation in Laos, Cambodia, and Vietnam. The World Bank and the Asian Development Bank (ADB) are very active in Laos and are often involved in providing financing or guarantees for major projects. Laos was registered as a member of Asia Infrastructure Investment Bank (AIIB) in 2014.
The U.S. Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the Asian Development Bank and the World Bank. These institutions lend billions of dollars in developing countries to projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development.
Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from Multilateral Development Banks (MDB). The Guide to Doing Business with Multilateral Development Banks overviews how to work with MDBs. The International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank. Learn more by contacting the Commercial Liaison Offices to the Asian Development Bank and the World Bank.
Resources
- Commercial Liaison Office to the Asian Development Bank
- Commercial Liaison Office to the World Bank.
Trade Finance Guide: Trade Finance Guide — Quick Reference for U.S. Exporters, published by the International Trade Administration’s Industry & Analysis team
Export-Import Bank of the United States
Development Finance Corporation
U.S. Trade and Development Agency
SBA’s Office of International Trade
USDA Commodity Credit Corporation