Capital of Laos, locally (4)

I believe the answer is:

oslo

'capital' is the definition.
(Oslo is an example)

'of laos locally' is the wordplay.
'of' indicates the answer is hidden within the clue.
'OSLO' is hidden in the letters of 'laos locally'.

(Other definitions for oslo that I've seen before include "where Ibsen lived under another name" , "Capital often frozen" , "European capital city (found in Czechoslovakia!)" , "Former Christiania" , "Northern city" .)

I've seen this clue in the Independent.

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