Is the contract arrangement for establishing Lao National Single Window adequate to facilitate trade in Lao PDR?

Updated on : 24-02-2015

Is the contract arrangement for establishing Lao National Single Window adequate to facilitate trade in Lao PDR?

Trade Facilitation Division
Department of Import and Export
Ministry of Industry and Commerce
5 January 2015
This paper analyzes the contract arrangement for establishing the Lao National Single Window (LNSW) based on two indicators, namely contract participation and norm of business entrepreneurship. The research findings demonstrate that the concessionary contract between the Government of Lao PDR (GoL) and Bureau Veritas (BIVAC) on the development of LNSW is a good strategy with the potential to facilitate trade in Lao PDR and to integrate the Lao economy into economies of the Association of Southeast Asian Countries (ASEAN). The cost-benefit analyses of the approval of goods imports and exports under the manual-based system and LNSW show that the implementation of LNSW reduces costs of export and import approval for the private sector by $248,527,448 over the period of 10 years, from $356,647,975 under the manual-based system to $108,120,527 under the LNSW. The implementation of LNSW increases government revenue by $4,636,417 over the period of 10 years (excluding loyalty fee and profit tax that are received from the joint-venture company). The service fee of LNSW is, however, higher than other countries which is estimated to be about $18,545,667 or 17.15% of total costs for getting approval of exports and imports under LNSW over the period of 10 years. High service fee of LNSW can impede the competitiveness of domestic entrepreneurs and limit the country’s participation and diversification in the global value chain. The major shortcoming of the concessionary contract is the determination of LNSW’s service fee which is mainly based on investment conditions (i.e., loan for investment, costs of developing and implementing LNSW, expected profit, concession period). Such fee may not reflect the willingness to pay of entrepreneurs. Therefore, the Lao Custom Department (LCD) should have a measure to compensate for excessive charge of LNSW service incurred to the private sector for a certain period, say the first five years of the concession. Then, the LCD should re-negotiate with BIVAC to determine a reasonable service charge of LNSW.    
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