Central bank plans new measures to limit foreign currency transactions
Central bank plans new measures to limit foreign currency transactions
The Bank of the Lao PDR has a policy to limit circulation of foreign currencies in domestic transactions as part of measures to keep the value of the national currency stable.
Widespread circulation of foreign currencies such as Thai baht and US dollars in Laos is undermining the role of the central bank in keeping the value of Lao kip stable, which in turn is posing huge challenges for the government to keep the country's macro economy stable.
The central bank has completed a draft law on currency and valuable items management and is now seeking comment from sectors concerned before proposing a draft of the legal documents to the cabinet and National Assembly to consider for approval this year.
According a draft of the law, one of the new measures, which the Bank of the Lao PDR will impose if it receives a green light from the cabinet and National Assembly, is that all local, foreign companies and international organisations in Laos must pay wages of their employees in Lao kip.
At present, foreign companies and international organisations pay salaries in foreign currency, forcing the employers to open a bank account in foreign currency. The employers also use foreign currencies to purchase goods and pay off debt in Laos.
The central bank has already banned businesses in Laos from advertising prices of goods in foreign currencies but the measure is still insufficient to curb their widespread circulation throughout the country.
Deputy Governor of the Bank of the Lao PDR, Mr Sonexay Sithphaxay said at the opening ceremony of a meeting last week in Vientiane, designed to open opportunities for sectors concerned to discuss the proposed draft law, that the bank wanted people and businesses in Laos to use Lao kip.
At the meeting, a number of people expressed concerns the Bank of the Lao PDR will face challenges to enforce the law as most international organisations have gotten use to paying their salaries in foreign currencies for a long time.
They also said that many state agencies such as immigration offices must advertise visa fees and fines for expired visas in US dollars as part of efforts to facilitate tourists paying revenue to the government, adding that tourists will find it inconvenient to have their currency exchanged.
Many people have also expressed concerns that a majority of Lao people who live along the Thai border are in the habit of using Thai baht as a tool for transactions, adding that without widespread campaigns, these people will break the law every day.
They also said the central bank m ust kick off a campaign on the use of Lao kip, paving the way for it to limit foreign currency transactions. The bank must also secure a stable currency exchange rate and make the exchange of money in accordance with official rates easier as part of efforts to build confidence in the value of Lao kip among local people and foreigners.
vientiane times
