Provincial Facilitation for Investment and Trade Index

Measuring Economic Governance for Business Development in the Lao People's Democratic Republic-Second Edition

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• Publisher: Asian Development Bank
• Year: 2022
• Print ISBN: 9789292694371
• eBook ISBN: 9789292694388
• Topic: Social Sciences
• Subtopic: Government & Business
• Index: Social Sciences

This report presents the findings of the second Provincial Facilitation for Investment and Trade (ProFIT) survey in the Lao People's Democratic Republic (Lao PDR). It provides a comparative picture of the experiences and perceptions of the business community in complying with government regulations by gender. The report shares analysis in six key areas: (i) ease of starting a business, (ii) transparency and access to information, (iii) regulatory burden, (iv) informal charges, (v) consistency in policy implementation, and (vi) business friendliness of the provincial administration. It notes that women entrepreneurs reported that their business registration takes longer and costs more. The report urges the government to train staff to overcome hidden gender biases and make it easier for women to create and run businesses.

Chapter 1

Introduction

It is widely recognized that gender equality can lead to improved development outcomes for families, communities, and nation states.¹ Gender equality is one of the Sustainable Development Goals (SDGs) and is endorsed by the Lao People’s Democratic Republic (Lao PDR). The Asian Development Bank (ADB) is committed to this end and has stated that it will support targeted operations to empower women and girls and that at least 75% of its operations will promote gender equality by 2030.²

Women make up 49.9% of the population in the Lao PDR and are active participants in the 133,995 businesses that operate in the country. They often run micro and small enterprises concentrated in services, trade, and manufacturing. They operate across all provinces with the largest number of women-led enterprises based in Khammouan, Xekong, and Salavan. The need to empower women has been recognized by the Lao PDR, which has introduced laws and regulations to promote the advancement of women. This includes the 2020 promulgation of the Law on Gender Equality, which states that women and men should have economic equality. The government has committed to the objectives of the Committee on the Elimination of Discrimination against Women and has established the Lao National Commission for the Advancement of Women, Mothers and Children. The Lao Women’s Union also attests to the commitment of the government to gender equality. While these efforts have seen the Lao PDR improve its position in the Global Gender Gap Index, climbing to 43rd from 52nd place in 2020, it has been noted that the implementation of equality laws and regulations remains weak.³

Women are more likely to operate informally, pay relatively more for registering their business, and are less likely to grow their companies relative to their male counterparts. There is a significant gender gap in enterprise ownership, with 63.5% of enterprises having male majority ownership and only 36.5% with women majority ownership. It is evident that women’s effective participation in the private sector is challenged by sociocultural norms and practices that cannot be addressed by laws and regulations alone. Further, the coronavirus disease (COVID-19) has more adversely impacted women who are concentrated in tourism industries.

Since 2018, the Government of the Lao PDR has been focused on improving its business environment to facilitate investment and enterprise growth through regulatory reform. One such reform has been the Prime Minister’s Order No. 02/2018 (PMO 02/2018) that aims to streamline business procedures to reduce time and costs for a more speedy, transparent, effective business climate. Such reform has the potential to promote both women-led and male-led enterprises equally. This report assesses the way this reform has impacted on enterprises. It relies on data collected for the Provincial Facilitation for Investment and Trade (ProFIT) survey that was carried out in 2017 and 2019. In 2019, a set of questions was introduced to the survey to collate select gender-disaggregated data, which has been analyzed to assess the impact on women in business and the experience of women in enterprises. This marks the first step in identifying the gendered impact of regulatory initiatives and points to ways of addressing the hidden bias that shapes policy and institutional practice. It is only by ensuring that both women and men’s businesses prosper that the Lao PDR can achieve inclusive economic growth and sustained private sector development in accordance with its SDG commitments.

Chapter 2

Women’s Participation in Business: A Contextual Background

This section examines the legal, economic, and cultural context in which women engage with business activities. It sets the scene for the analysis of the ProFIT 2019 survey results. The discussion is carried out under three subheadings: an analysis of the laws promoting gender equality and their impact on women’s enterprises; the key constraints which impinge on women’s engagement in business activities; and the shape of women’s enterprises in the Lao PDR. Comparable economic governance surveys and their limited focus on women’s enterprises is also discussed in this section.

A. Laws and Institutions for Gender Equality

The Lao PDR has ratified the Convention on the Elimination of all Forms of Discrimination Against Women and has adopted several laws that promote gender equality and economic participation as described in Table 1.⁴

Table 1: Summary of Gender Equality Laws

Lao PDR’s Constitution of 2015 (Amended)	Article 22: States that citizens, irrespective of their sex, social status, education, faith, and ethnic group, are all equal before the law Article 37: Provides that citizens of both genders enjoy equal rights in political, economic, cultural, and social fields and in family affairs Article 7: Recognizes the Lao Women’s Union as an important representative organization
Law on Development and Protection of Women, endorsed in 2004	Article 13: Gives equal rights for women and men, which means equality in self-development, including in politics, economy, society and culture, and family affairs
Decree on the Building and Development of Labour Skills No. 036/PM of 2010	Article 3: States that every Lao worker, both female and male, regardless of ethnic group, has an equal right to have their labor skills developed
Law on Labour of 2013	Article 96: Provides for gender equality in employment in which women have the rights to work and have a career in all manufacturing and service businesses that do not conflict with the law
Law on Combatting and Preventing Violence Against Women of 2015	Article 2: Recognizes the need to prevent violence that is likely to result in physical, psychological, sexual, or economic suffering to women
2020 Promulgation of the Law on Gender Equality	Article 10: States that women and men have economic equality such as in terms of access to economic resources, labor market, employment, training, and welfare benefits Article 23: States that gender equality is the empowerment of women through providing opportunities for their education, training, and development, ensuring that they shall receive equal benefits to men in the same conditions

Lao PDR = Lao People’s Democratic Republic.

Source: Compiled by Asian Development Bank staff based on the Lao Official Gazette, Ministry of Justice (laoofficialgazette.gov.la).

It has been recognized that the introduction of these laws demonstrates that significant progress has been made toward meeting the SDGs, in particular SDG 5 on gender equality.⁵ As reported by the World Economic Forum, progress toward gender parity has been made on several fronts. Women’s share in the National Assembly increased to 27.5% in 2019, which was above the global average of 24.5%; gender parity at primary school level has been tracking well for both girls and boys; and women are occupying more senior and managerial roles.⁶

However, the gender gap remains in many areas, particularly in relation to economic participation and paid employment. The same World Economic Forum study recognized the gender gap in enterprise ownership, noting that while 63.5% of enterprises had male majority ownership, only 36.5% had female majority ownership.⁷ It also noted that women receive 10% lower earnings on average than their male counterparts in similar occupations and locations, and with similar qualifications, in the private sector.⁸ It has also been reported that 61% of women work with their families for no pay, compared with 25% of males, which means that women have less time to commit to paid activities.⁹ Furthermore, while women’s share in the National Assembly increased, they only hold a small fraction of leadership positions at the provincial level, making up only 2.4% of village chiefs and 11.8% of deputy village chiefs. Likewise, women hold fewer decision-making positions in government, reported at 31% and constituting merely 17% of directors general of departments within ministries.¹⁰

The need to promote private sector activities in the Lao PDR has seen the introduction of laws and policies on enterprise development. But these regulations do not make any reference to women’s businesses or make special provision for their needs.¹¹ Of note is PMO 02/2018, aimed at the improvement of regulations and coordination mechanisms on doing business by streamlining registration procedures through the simultaneous issue of the enterprise certificate and TIN.¹² This has been an important reform requiring government at all levels to simplify the issuance of registration certification to start business activities. In addition to the announced reforms, the government has been reviewing regulations for business operating licenses and considering risk-based approaches to licensing reform.¹³ Streamlining the administration and procedures of business certifications, licenses and permits, is noted as an important priority in the coming years.¹⁴ To date, the impact of these initiatives on women’s businesses has not been assessed, with the exception of the ProFIT 2019 survey, analyzed in Chapter 3 of this report.

An institutional framework for promoting gender equality has been established with the Lao National Commission for the Advancement of Women, Mothers and Children, which has responsibility for monitoring the implementation of gender-related strategies and action plans at national, provincial, district, and village levels, while the Lao Women’s Union is charged with promoting gender equality within the family structure. This institution has advocated for a policy to mandate that 30% of leadership positions should be occupied by women. The government has applied temporary special measures to promote gender equality in all fields of decision-making and is advised by the National Commission for the Advancement of Women on how to fulfill its obligations under international treaties.¹⁵ In October 2020, the vice-president of the Lao Women’s Union, Her Excellency Bouachanh Syhanath, affirmed the government’s commitment to the Beijing Declaration and Platform for Action and the 2030 Agenda for Sustainable Development, pointing to building women’s entrepreneurship and women’s enterprises as one of the top five...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Contents
• Tables, Figures, and Box
• Foreword
• Acknowledgments
• Author Profiles
• Abbreviations
• Executive Summary
• 1 Introduction
• 2 Women’s Participation in Business: A Contextual Background
• 3 ProFIT Survey
• 4 Selected Issues
• 5 Conclusions and Policy Implications
• Appendix 1
• Appendix 2
• References
• Footnotes
• Back Cover