Small-to-Medium Size Businesses Fail in Laos as Tourism Drops Amid COVID Fears

Small to medium-sized enterprises are failing across Laos this year as the country’s economy reels from the impact of drops in tourism caused by the COVID-19 pandemic, sources in the country say.

Up to 36 percent of these businesses have now permanently closed or are on the verge of collapse, the Lao National Chamber of Commerce and Industry said in January, noting that almost a quarter of the country’s estimated 100,000 SMEs operate in the tourism sector.

Another 14 percent of the businesses work in retail sales, the Chamber said.

Speaking recently in interviews with RFA’s Lao Service, small-to-medium sized business owners across the country described a devastating fall in tourism on their livelihood and work.

“I gave up. I sold everything,” the owner of a tour company in Luang Prabang City, a World Heritage Site and major tourist destination, said on March 10, adding that no foreign or domestic tourists have come to the area for almost a year.

“Our business is gone, unable to survive.”

“I need money for our daily living expenses, so I sold my cars and vans at reduced prices,” he said, adding, “Many other businesses in town are facing the same fate.”

“I closed my hotel and laid off almost all my employees beginning in March last year,” added a businesswoman who owns a luxury resort in Luang Prabang. “Only a maintenance worker and a security guard now remain on the property.”

Many other hotels, guesthouses, restaurants, and tourism-related businesses have now closed in Luang Prabang, another area businessman said, adding, “This town’s entire economy depends on tourism. We’re in a serious economic crisis.”

Domino effect

In Vang Vieng, a major tourist attraction in Vientiane province, one small business owner is still unable to open his hotel, he said.

Despite the opening in December of a new Chinese-built and invested expressway connecting Vang Vieng with the capital Vientiane, and a Lao Visit Laos campaign encouraging locals to travel, “not many tourists—not even Chinese—have been coming to Van Vieng,” he said. “So my hotel remains closed.”

“I’m waiting for the border to reopen. The hotel next to mine has also been shut down since May of last year,” he said.

“It’s a domino effect. All restaurants and hotels are empty, so my own business has also stalled,” said the owner of a motorcycle rental company in Vang Vieng, while a local businesswoman said she had once operated two restaurants in Vang Vieng, one serving Korean food and the other serving Lao food.

“I shut down the Korean restaurant because there have been no Korean tourists, and the Lao restaurant is still open but is struggling” she said.

In the capital Vientiane, one restaurant owner told RFA he had had no choice but to close down his restaurant. “Now I am working as a laborer, loading and unloading goods and merchandise at a market in the capital,” he said.

Also in the capital, the owner of a shop selling traditional silk fabrics and clothing said that her sales are now down 80 percent.

“I relied heavily on foreign customers like the Thais and the Lao-Americans. I usually made five million kip [U.S. $500] a day, but now I’m making only around a million kip each day,” she said.

State enterprise Lao managing director Khamla Phommavanh told a news conference in January that revenue dropped last year by 70 percent from the previous year, falling from $31 million to only $9 million.

“As a consequence, the airline has had to lay off half of its 1,000 employees, with those who remain working only half time and earning half their previous salaries,” he said.

Tourism was a $900 million industry in Laos last year, bringing in 4.5 million foreign tourists including one million Chinese in 2019, according to official figures.

Reported and translated by Max Avary for RFA’s Lao Service. Written in English by Richard Finney.

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