Govt urges automotive dealers to comply with currency regulations
Govt urges automotive dealers to comply with currency regulations
The government is urging all vehicle dealers in Laos to sell their products for kip, although some dealers are still accepting foreign currencies.
Dealers may receive kip payments from customers, but if they pay by cash in a foreign currency the transaction should be made through a bank.
Since the government issued an announcement to the public and businesses around the country requiring them to buy and sell goods using only kip, many people and businesses have complied with the request, although a large number of others do not accept the ruling.
In particular the most popular automotive dealers are facing a variety of challenges and obstacles in conducting business based on the new requirement.
We agree with the government that use of the kip should be encouraged but we are in the business of providing a service, a senior official at a popular car dealer told Vientiane Times yesterday.
Customers can pay by foreign currency or kip and we accept both forms of payment in a fair and friendly manner, he said.
The dealership is trying to adjust its prices in line with the daily exchange rate for customers who pay in kip.
The company also accepts foreign currency because they have to pay for all imported vehicle parts and car products in foreign currency and cannot predict changes in the exchange rate against the kip.
We have to understand that business management is carefully run at all times to guard against risk and financial shocks, the official explained.
He cited one of the challenges he faced in requiring payment in kip, saying this meant that customers were understandably reluctant to carry the 400-500 million kip needed to purchase a vehicle.
Another problem he encountered was selling a vehicle to someone who did not have a bank account.
Many businesses are adapting to the regulation by using kip but they also accept foreign currency when it is offered.
It would be easier to comply with the regulation if the government could ensure a sustainable exchange rate, the car dealer said.
Deputy Director General of the Domestic Trade Department, Mr Soulinhon Philavong, said the Bank of the Lao PDR and the Ministry of Industry and Commerce monitor the goods on sale in shopping malls, car showrooms, minimarts and retail and wholesale shops to check that vendors are accepting kip.
This system will be difficult to sustain without cooperation or collaboration from every government agency and business owner, but the government will try to encourage car dealers to make transactions through banks if customers pay in foreign currency.
It will take time to adjust to the new system and for all those involved to understand each other if the regulation is to be strictly followed in practice.
According to the Bank of the Lao PDR, it is wrong for people to pay for goods in a foreign currency.
Residents of Laos cannot buy foreign currency at banks in exchange for kip. This is a major step by the government in trying to prevent money laundering and keep the value of the kip stable.
