Lao PDR tourism enterprises participate in the first awareness event on international cashless payments acceptance
25 October 2019
- Lao PDR's growing economy is playing a crucial part in helping it graduate from Least Developed Country status. While its main economic engines, hydro-power and minerals, have a limit of jobs that they can offer, tourism is the third contributor to the national economy (13.7 percent of GDP). The industry employs 54,400 people (62.5 percent women) mainly in micro, small & medium enterprises (MSMEs).
But the tourism sector faces difficulties. After uninterrupted growth since 1990 the number of tourist arrivals in Lao PDR has plateaued with per visitor spending just US$ 215. This is much lower compared to US$ 640 in Cambodia, US$ 751 in Myanmar, US$ 1,497 in Thailand and US$ 824 in Viet Nam.
The Government of Lao PDR (GoL) declared “Visit Laos-China Year 2019” and set the objective of one million Chinese tourists to the country. This number is forecast to skyrocket to 2.5 million by 2025, benefiting from the completion of the Lao-China railway from Kunming (Yunnan province) to Vientiane in June 2021. This creates a huge opportunity for the Lao PDR tourism industry.
However, many Chinese tourists on group tours rely on the service providers they are familiar with and stay in Chinese-run facilities like hotels and restaurants. Some of their payments – if not restrained – credit Alipay / WeChat Pay accounts based in mainland China rather than Lao PDR bank accounts, which could have contributed to Lao PDR foreign exchange reserves.
The challenge is to urge Lao PDR tourism MSMEs to accept the payment means preferred by Chinese tourists, for instance Alipay / WeChat Pay / UnionPay. In addition, these local businesses need to connect to digital platforms used by foreign tourists, like Fliggy.com (Alibaba online travel booking service) or Alipay Discover (the mapping service embedded in the Alipay super-app).
By improving online visibility and accepting common payment methods, MSMEs in the Lao PDR tourism sector can increase their occupancy rates and revenues. That translates to more growth and jobs for MSMEs in Lao PDR.
Piloting an opportunity for the Lao PDR tourism sector
The United Nations Capital Development Fund (UNCDF) in Lao PDR devised a pilot intervention to increase revenues from Chinese tourists to Lao PDR owned-businesses. The “Lao PDR Tourism Women MSMEs raising revenues from foreign tourists through cashless payments & online presence” initiative is supported by:
- the Institute of Mass Media, Culture & Tourism (IMCT), which is the training arm of the Ministry of Information, Culture & Tourism (MICT);
- the Lao PDR National Chamber of Commerce & Industry (LNCCI);
- the Bank of Lao PDR (BoL);
- the “Skills for Tourism” project (co-funded by the Government of Luxembourg and the Government of Switzerland) dedicated to vocational training of the Tourism Industry.
Under this pilot, UNCDF will organize awareness events in the tourism hotspots of Vientiane Capital, Vang Vieng and Luang Prabang. These events will be tailored to the specific needs of two segments of tourism MSMEs:
- Larger & formalized businesses such as hotels, guesthouses, restaurants, and tour operators;
- Small & informal businesses such as handicrafts and small services (tuk-tuks, taxis, snack shops, etc.).
At these events:
- the banks authorized to pilot Alipay / WeChat Pay acceptance along with the Joint Development Bank (JDB) and the Lao Development Bank (LDB) pitch their services side by side;
- the fintech KiwiPay introduce Fliggy.com to hotels/guesthouses;
- a professional photographer explains the specificities of digital pictures for an attractive online presence.
Following these events, UNCDF will convene a training workshop. Sessions will focus on detailing and practicing Alipay / WeChat Pay acceptance solutions businesses having signed-up or expressed interest in. In addition, UNCDF will help hotels and guesthouses adopt use of Fliggy.com. Training on digital photography for online presence for any type of business interested will also be provided. The photographer will then visit a representative sample of business types to provide impactful photographs for online promotion.
All these services are available for free for the Lao PDR tourism MSMEs, thanks to the generous funding of the Swedish International Development Agency (SIDA).
The impact of this initiative will be assessed following a three-month period. This will be done by analysing transaction data from partner banks and fintech. The effectiveness of the intervention will be gauged by benchmarking the trained businesses against a control group.
An overview of the kick-off event
The kick-off awareness event took place on 18 October 2019 at the LNCCI Headquarters in Vientiane.
89 participants attended the workshop which was opened by the President of LNCCI, the Director General of IMCT, and the Director General of BoL Payments Systems Department. Their opening remarks reaffirmed the legality of the services presented, an important statement in the face of a public sentiment confused with the initial ban in Lao PDR in 2018 of Alipay / WeChat Pay, then brokered by unlicensed technology operators.
The banks started with their commercial pitch and performed public demonstrations of their solutions. The solutions presented include:
- Merchant side static QR codes;
- Smartphone apps;
- Advanced point-of-sales devices capable of generating dynamic QR codes.
While the audience was visibly impressed with these demonstrations, there remains a ‘wait and see’ attitude in terms of practical use. Based on participant consultations, future events in the province (Van Vieng on 29 October and Luang Prabang on 05 November) will include:
- More focus on banking product presentations;
- More demonstration of the online services used by Chinese tourists when they book their travel to Lao PDR from home, and once they are in Lao PDR to justify the advantage of an online presence on Chinese mobile apps;
- Door-to-door distribution of informational leaflets ahead of the awareness event to encourage participation from smaller or informal businesses.
These lessons are also valuable to Luxemburg and IMCT which are about to test two trainings aligned with this initiative called ‘China ready’ and ‘Online Presence’. The current project will provide more updates on how the tourism sector members in Lao PDR can leverage digital technologies to unleash their growth.