On May 12, the Lao government announced a temporary suspension on the import of fuel-powered internal combustion engine (ICE) vehicles until the end of 2026. The change in import policy is part of a broader transport sector decarbonization strategy to promote the the use of electric vehicles (EVs). Effective June 1, the policy restricts imports of most petrol and diesel vehicles, with exemptions granted for certain passenger transport vehicles, project- and production-related vehicles, and specialized-use vehicles.
To support the transition, the Ministry of Industry and Commerce has been tasked with developing a standardized pricing framework for EVs, covering factory costs, transportation, taxes, and approved profit margins across all vehicle categories. Companies that exceed these limits will be subject to fines and penalties. The government is also introducing tax incentives to encourage EV adoption, including a full excise tax exemption for fully electric vehicles priced below US$50,000. Tax rates for higher-value EVs and other alternative-energy vehicles remain under review. The directive further strengthens regulatory oversight by requiring all vehicle transactions to be processed transparently through the banking system to improve monitoring and compliance. The suspension is expected to affect vehicle import volumes and business operations in the near term as the market adjusts to the new policy framework.
Note: Under the Government of Singapore’s Green Plan 2030, the nation will completely phase-out of all internal combustion engine (ICE) vehicles by 2040 and new petrol-only car and taxi registrations will officially cease by 2030. Diesel car and taxi registrations have been banned since January 1, 2025.
