Laos orders closure of all money changing shops, import limits

[reader]

From Radio Free Asia

To rein in accelerating inflation that has reached nearly 40 percent, authorities in Laos have ordered all money changing shops to close and allowing only banks to exchange foreign currencies and bans on the import of some kinds of foods that are produced domestically.

The country’s National Statistics Bureau reported year-to-year inflation of 39.3% in December 2022, up from 38.5% the month before, making it the highest among the Association for Southeast Asian Nations members.

Authorities said they would ban the import of some kinds of pork, beef, fish and vegetables.

Trade officials told RFA that authorities were forced to take harsh economic measures because Laos has been suffering a massive trade deficit, hitting a whopping $926 million in 2022.

“We are planning to reduce the import of goods and to promote domestic production,” a trade official from Savannakhet province told RFA’s Lao Service on the condition of anonymity. “We already have a lot of goods produced here in the country, but the problem is that our consumers prefer imported goods to domestic ones.”

Rising inflation presents a test for new Prime Minister Sonexay Siphandone, who began his new term this year promising to “raise the spirit of the revolution to the highest level.” Top economic officials are hoping for a recovery in tourism and a loosening of travel restrictions, particularly from China

Authorities have banned imports of cabbage, garlic, lettuce, broccoli, onion, chilly, celery, eggs, pork, duck, beef, tilapia, and all other freshwater fish. Laos’s cabinet agreed on the import ban during a Dec. 24 meeting, the Lao Pattana newspaper reported.

Meanwhile, Laos’ central bank issued a notice on Jan. 13 revoking all permits for money exchangers in the country.

Impact on citizens

Many lower-income earners in Laos’s capital Vientiane and across the country have grown even poorer and have less to spend on food, healthcare and education.

More young Laotians are moving to Thailand to find work, with the  Migrant Working Group, a Thai-based NGO, estimating that more than 50,000 people moved from Laos to Thailand for work in the last year, with about 250,000 Laotians working in the country legally.

Nearly half a million Laotians are estimated to be working in Thailand without permits. Several workers RFA spoke with said that they moved because they couldn’t find work in Laos.

“The [import] ban will be affecting our livelihoods, but we have to have some domestic production,” one Lao economist told RFA. “If our prices are lower than imported goods, then our people will consume our products.”

Similarly, an employee of an import-export company based in Vientiane told RFA that the company has been “suffering from low sales because products are getting more and more expensive, too expensive for many Laotians.”

While the import ban is going into effect, it is unclear if domestic production of the banned goods will be enough to supply Laos’s market. 

https://www.rfa.org/english/news/laos/laosrisingcostsinflation-01132023173517.html

[spoon]

How does import ban help with inflation?

Shouldnt it be the other way around? 

For example, recently, prices of chicken in malaysia increases multiple fold due to shortage of supply. It turns out that many local supplier prefer to sell to singapore for much higher revenue. So export ban were introduce. 

All import ban will do is to introduce shortage and increase the price further as supply were cut. Anyone can shade light to this?

[vinapu]

what we can expect and soon is black currency market in Laos and possibly also mandatory exchange quota at official rates  for foreign tourists.

It looks nation will pay heavy price for having most modern railways in all ASEAN , necessary but hardly affordable for such a poor country

[PeterRS]

17 hours ago, reader said:

Authorities have banned imports of cabbage, garlic, lettuce, broccoli, onion, chilly, celery, eggs, pork, duck, beef, tilapia, and all other freshwater fish. Laos’s cabinet agreed on the import ban during a Dec. 24 meeting, the Lao Pattana newspaper reported.

Just what gay tourists are likely to import 🤣

[vinapu]

11 hours ago, PeterRS said:

Just what gay tourists are likely to import 🤣

eggs for sure

[fedssocr]

21 hours ago, vinapu said:

what we can expect and soon is black currency market in Laos and possibly also mandatory exchange quota at official rates  for foreign tourists.

It looks nation will pay heavy price for having most modern railways in all ASEAN , necessary but hardly affordable for such a poor country

It's OK, I'm sure the PRC will be happy to loan them some money to bail them out. Oh wait.

[vinapu]

4 hours ago, fedssocr said:

It's OK, I'm sure the PRC will be happy to loan them some money to bail them out. Oh wait.

sure , no better fire damper than pouring gasoline

[caeron]

On 1/15/2023 at 6:11 AM, spoon said:

How does import ban help with inflation?

Shouldnt it be the other way around? 

For example, recently, prices of chicken in malaysia increases multiple fold due to shortage of supply. It turns out that many local supplier prefer to sell to singapore for much higher revenue. So export ban were introduce. 

All import ban will do is to introduce shortage and increase the price further as supply were cut. Anyone can shade light to this?

 

Very simple, really.  You need to pay for imports with foreign currency. Therefore the demand for foreign currency goes up, and you have to pay more local currency to get the foreign currency you need to buy those imports.  So all the goods you just bought with more local currency now must necessarily cost more local currency when you sell them. Inflation.

I'm not an economist, but it does seem to me that such regulations are likely to have unintended consequences.

[vinapu]

10 hours ago, caeron said:

 

Very simple, really.  You need to pay for imports with foreign currency. Therefore the demand for foreign currency goes up, and you have to pay more local currency to get the foreign currency you need to buy those imports.  So all the goods you just bought with more local currency now must necessarily cost more local currency when you sell them. Inflation.

I'm not an economist, but it does seem to me that such regulations are likely to have unintended consequences.

thank you  for clear explanation.

any attempt of currency control may bring black market, even in police state