April 23, 2014

Sending Money to Laos? The Unofficial Money That Flows Into Laos

Image of Lao money, currency, current big billsWho's sending the money?  Indeed, there is a lot of money going into Laos and this is not in reference to (formal) foreign direct investment and official development aid.  Rather, it is strictly money that is being transferred on a personal level and person-to-person basis.  Often times it is Lao expatriates sending money to family, relatives, and close friends.  However, there is also another common scenario in recent years.

There is an additional category of those who send money to Laos who are often overlooked or not mentioned.  Specifically, they are the growing number of non-Lao foreigners who have created close connections and friendships while on their visit to Laos.  For example, it has been observed where foreigners were sending money to pay for schooling for young monks they had met and had became friends with.

In other instances, there are men sending money to support someone they had fallen in love with and in some cases where they fathered a child.  In addition, there are also those who personally create a new (and sometimes unofficial) charitable organization in support of helping those in Laos.  In those cases, they initially start as unofficial charitable organizations especially if their organization is small or has limited resources.  Their contributions are often overlooked when summing up development aid.

Generally, these unofficial numbers are more difficult to track in part because they are not publicly published.  However many conservative estimates say it is in the tens of millions of dollars in remittances, if not more so.  The financial institutions who handle these transfers and the Lao government are believed to know the exact amounts and so far no one is divulging exact amounts or details.

By comparison, the Vietnamese government tracks how much money is remitted back to their country by their countrymen working or living outside of Vietnam.  And they report it publicly as well.  For example, in the Vietnam's People's Army newspaper on February 6 2013 that their country received an estimated $10B (USD) from overseas remittances. 

BCEL logoBanking.  It has become so common to send money to smaller and poorer countries like Laos that many financial institutions (ie. banks and money transfer companies) make it quite easy to send.  They do this in part because they make good money on this service but also because of the shear number of people doing it.  As it turns out, this type of support and money that comes from expatriate Lao people living abroad going into Laos is immense with many sending to their family, relatives and friends.

Cost of sending money.  If you wire money through your own bank to an account in Laos, your bank will often take a small percentage of the total amount you are sending.  The receiving account usually does not have to pay anything.  However where the receiving bank earns its money is in the exchange rate of the currency.  The most costly method to send money is with money transfer service companies (ex. Western Union and Money Gram).  Not only do they charge a higher initial service fee but they also have uncompetitive rates on currency conversion.  However one might argue that those are the costs of sending money conveniently and quickly around the world using their services.

There is growing support and more reports coming out about how reducing fees for money transfers will help poorer countries because they are largely the primary beneficiaries of such services.  Realistically, the only way prices will come down is with increased competition in the international money sending industry.  It should be noted that when sending small/medium amounts of money, there is approximately anywhere from 7%-20% of value that is lost after fees and currency conversion.

High levels of remittances are not unique just to Laos but also Myannmar, Vietnam, Phillipines and China, as well as many African and Latin American countries.

Western Union logoWestern Union.  Lao newspaper KPL in an article dated January 13 2013, reported on Laos' relationship with Western Union.  In it there was an article about Western Union celebrating its 10th anniversary of service to Laos that year.  In the same article, they reported that the first agent location was in 2002 in Chantabuly, Vientiane city.  Now they have at least 290 locations across 17 provinces.  As of the date of that newspaper article, people from 109 countries sent money into Laos, up from 41 countries just a decade ago.

Related Post:  "Remittances for Laos as of 2014" (January 18, 2016)


  1. I sent money to my fiance in Laos where I pay 30 CAD and her bank also takes money (aprox. $25 US) even though I sent it to her USD account so I don't what receiving bank doesn't take money but hers does and it's Lao Development Bank. I told her to switch banks but I'm pretty sure all banks will do the same. Also they charge 5000 kip a month regardless however much money you have in the account. Until I go there this summer I will see about opening an account because here there's normally a minimum you have to have to avoid any monthly fees but seems like banks in Laos are all crooks.

    1. Many western banks don't charge for receiving funds. You make a good point that unfortunately the bank you're dealing with in Laos does charge. Interesting details. Thanks for sharing!

      And they're not all crooks. Some of the banks we've dealt with were quite good.