Lao PDR’s New E-commerce Decree – What to Look Out for?October 29, 2021
As online sales of goods and services continue to grow in the Lao PDR, accelerated by the impact of the COVID-19 pandemic, which has kept most of us confined to our houses and pushed in-person businesses to move online in a bid to survive, the Lao government reacted swiftly to provide a legal framework to regulate the online sale of goods and services by issuing the Decree on E-Commerce No. 296/GOV dated 12 April 2021 (the “E-Commerce Decree”), which went into effect on 4 June 2021.
Key Provisions of the E-Commerce Decree
E-commerce business forms
The E-Commerce Decree broadly classifies e-commerce business activities into three forms:
- Selling goods and services through one’s own electronic means (a website, mobile application, or other program)
- Selling goods and services on electronic marketplaces
- Operating electronic marketplaces
Both domestic and foreign persons (individuals, entities, and organizations) are allowed to operate all of the above forms of e-commerce businesses in the Lao PDR.
Requirements for operating a form 1 or form 2 e-commerce business activity
- Sellers must notify the Ministry of Industry and Commerce regarding their e-commerce operations and obtain an acknowledgement certificate from the ministry to lawfully operate an e-commerce business in the Lao PDR. Existing operators must notify the ministry within 90 days from the effective date of the E-Commerce Decree.
The acknowledgement certificate issued by the Ministry of Industry and Commerce is treated as an official permit to engage in such operation electronically in the Lao PDR. It is valid for up to two years and can be renewed by applying to the authority at least 30 days before the expiration date.
- Sellers must comply with any sector-specific legal requirements (e.g. enterprise registration, licensing, minimum equity capital requirements) applicable to their business as per the Lao laws and regulations.
For instance, the Decision on Wholesale and Retail Businesses No. 1005/MOIC dated 22 May 2015 requires wholesale and retail sellers to incorporate an enterprise to sell any products in the Lao PDR on a wholesale or retail basis. The decision also provides for specific requirements to be met by foreign traders if they would like to operate a wholesale or retail business in the Lao PDR.
Requirements for operating an e-commerce marketplace service (form 3)
- Must be an incorporated legal entity in the Lao PDR
- Foreign equity shareholding of the legal entity cannot be more than 90% and the minimum registered capital required in case of foreign ownership (irrespective of the foreign ownership percentage) is LAK10 billion (US$1 million).
- Must apply for an e-commerce business license from the Ministry of Industry and Commerce, which is valid for a period of three years and can be renewed for another three years by applying to the authority at least 30 days in advance of the expiration date.
Chapter IV of the E-Commerce Decree deals with the creation, conclusion, and termination of sale and purchase agreements between a seller and a customer created: (i) through an “Order Online Function” – defined as a program installed on and connected to any electronic means to allow the customers to conclude the contract based on the terms and conditions published by the owner of the electronic means; or (ii) through an electronic marketplace, including social media platforms that facilitate the sale and purchase of goods and services.
Once a customer makes an offer to purchase a good or service, it has to be accepted by the seller to make a binding e-commerce contract. However, the e-commerce contract will terminate:
- Automatically, if the seller does not respond within 12 hours of receiving the offer (in case no response time is specified in the contract); or
- If the customer cancels the contract before receiving the seller’s acceptance; or
- If the seller rejects the offer.
Since the terms and conditions of the e-commerce contracts are to be provided by the seller/marketplace operator, such stakeholders must ensure that the terms and conditions of the e-commerce contracts also comply with the applicable provisions under the Law on Electronic Transactions No. 20/NA dated 7 December 2012 and the Civil Code No. 55/NA dated 6 December 2018.
Information to be published by the seller
Sellers must provide the following information when selling any product or service by electronic means:
- Seller’s details – name, permanent address, contact, business registration certificate, and business license
- Details of the good or service such as size, color, shape, other specifications following a certified label
- The price of the good or service
- Delivery details, such as mode, time, and any delivery fee applicable
- Payment details, such as payment mode and time
- Information on customer feedback, such as comments and the number of comments on the good or service, which must be published on the electronic platform
- Terms and conditions of the seller’s sale, return, and warranty policy
All sellers and electronic marketplace operators are strictly required to adhere to personal data protection requirements as stipulated under the Law on Electronic Data Protection No. 25/NA dated 12 May 2017. The collection, use, or disclosure of personal information without the owner’s authorization is considered a criminal offense under Lao law.
Certain legal issues are not addressed in the E-Commerce Decree, for instance, it is silent on cross-border e-commerce issues, particularly regarding registration of foreign traders who want to sell their goods on licensed marketplaces in the Lao PDR and the tax treatment in such cases. The E-Commerce Decree also doesn’t provide any provision regarding e-commerce marketing activities.
Nevertheless, the E-Commerce Decree is a progressive step by the Lao government to regulate the online trading space, in line with its commitment to implement the e-ASEAN framework and ASEAN Work Programme on Electronic Commerce (AWPEC) 2017- 2025. The Lao government has declared the development of e-commerce as one of its 10-year development strategic aims for 2016–2025.
The Lao PDR has also enacted the Law on the Prevention and Combating of Cyber Crime No. 61/NA dated 15 July 2015 and the Law on Payment Systems No. 32/NA dated 7 November 2017, which have strengthened digital financial service regulations and thus, improved the ease of doing electronic transactions in the Lao PDR.
The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. If you need any specific legal advice or opinion regarding e-commerce regulations, please contact the VDB Loi Laos office: Daodeuane Duangdara ([email protected]), Sornpheth Douangdy ([email protected]), Sibasish Mohapatra ([email protected]).
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