Services represented 27 percent of the Lao economy in 1999 and employed roughly 10 percent of the work-force. The largest component (37.2 percent) of the service sector is wholesale and retail trade. Perhaps the largest entities in this arena are Honda and Shell. Honda retails a wide variety of products, particularly motorcy- cles. With Laos' rapid economic development in the 1990s, many Lao in urban areas have up-graded from bicycles to motorcycles or scooters, or among elites from motorcycles to private cars or SUVs. Toyota, Pepsi Cola, and Bier Lao are also active retailers. In urban areas there are a large number of formal retail shops as well as a large informal economy . Those in the formal retail sector market a wide range of consumer goods. A large number of small family-owned stores sell a variety of low cost products for basic everyday needs. Those selling goods in the large informal economy are often selling agricultural products.
The next largest component of the service sector is represented by transportation, communications, and postal services (23 percent), followed by ownership and rental of dwellings (12.1 percent). The latter grew significantly in the 1990s with the presence of a growing expatriate community associated with diverse development aid activities who are in need of modern housing.
The public service still represents an important element of the service sector (11.6 percent), though the government, with assistance from organizations such as the World Bank has sought to reduce the size of the public sector. For the most part, the Lao government has used non-draconian methods to reduce the size of this sector. Considerable success has been achieved in reducing the size of the military, for example. The next most important component of the service sector is represented by hotels and restaurants (7.6 percent), reflective of the growing importance of tourism in the Lao economy.