The Government of Lao has issued guidelines for the use of the state budget for public service expenditure. The guidelines were contained in the Prime Minister's decree on purchasing, construction and maintenance costs and services. Under the decree, Government agencies must favour locally-produced goods over those made by foreign companies when allocating budgets. Moreover, they should give priority to goods which are produced by state-owned firms, rather than private enterprises.

Under Article 26, Chapter 5 of the Prime Minister's decree No. 94 it states that "If foreign companies are also competing in the process of purchasing merchandise, and if the prices quoted by foreign companies are the same as local companies, the latter must be answered. If the quoted process of state-owned companies are the same as other competing companies, the former must be awarded".

Apparently, even although the price of local products may be up to 25 per cent higher than foreign made products, the rule remains valid. An index of prices, based on the price of goods most commonly bought by government offices, must be complied with to ensure state agencies are not paying different amounts of money for the same goods.

Under Article 27 of the decree, it also stipulates that the ministries must make a list of names of individuals or companies which they consider to be worthy enough to be involved in purchasing merchandise with state monies. The next list of names will be published in September this year and, in the middle of year, numbers and names of individuals or companies may be added to the list.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information please contact:- Sakda Mattayasuwan, Lawyer, Johnson Stokes & Master Bangkok - T: (662) 231 0960-4 F: (662) 231 0965.