The notice was sent after officials inspected the shops at the end of last month and found more than 200 did not meet requirements.
The authority began working to better regulate the issue in the provincial capital of Pakse district around a year ago, when they warned foreign traders that they had three months to sell their stock and shut down their businesses.
After a year of gathering information, officials found that of the more than 352 shops operating in the province, only 123 had a trade licence and 229 did not meet requirements.
The merchants, most of whom are Vietnamese and Chinese, are occupying jobs reserved for Lao people, according to the provincial Industry and Commerce Department. A few of the shop owners are also Cambodian.
The own medical clinics, hair-dressing salons, game shops, as well as shops selling items such as motorbike spare parts, mobile phones, clothes, household items, food and drinks and plane tickets.
If the notified business owners continue to operate their products will be confiscated.