Geographical Location

Thailand (1,835 km in the west)

Cambodia (435 km in the south)

China (505 km in the north)

Myanmar (236 km in the north-west)

Vietnam (2,069 km in the east)

Country’s ProfileCountry’s Profile

•Land Area :Land Area : 236,800 sq.km2236,800 sq.km2•Population :Population :5.6 Millions (2005)5.6 Millions (2005)•Population Density:Population Density: 24 persons/sq km24 persons/sq km•Population Population Growth Rate: Growth Rate: 2.8%2.8%•LLabor Force abor Force :: 2.172.17 Millions Millions•Religion:Religion: Buddhism (85%)Buddhism (85%)

Regional Population/Market Regional Population/Market AccessAccess(2004)(2004)

Lao P.D.R.Lao P.D.R. :: 5.6 Millions 5.6 Millions

ThailandThailand :: 61.6 Millions61.6 Millions

CambodiaCambodia :: 12.5 Millions12.5 Millions

VietnamVietnam :: 80.5 Millions80.5 Millions

Yunnan ProvinceYunnan Province :: 43.0 Millions43.0 Millions

MyanmarMyanmar :: 48.9 Millions48.9 Millions

In TotalIn Total :: 252 Millions 252 Millions inhabitantsinhabitants

Open Door PolicyOpen Door Policy• New Economic Mechanism: 1986: Shifting from planned economy to a market

oriented economy

• Privatization of state enterprises

• Open for FDI

Shares of Private Shares of Private InvestmentInvestment

63.8%

34.1%

29.7%

18.6%

47.3%

6.5%

2001 2005

Foreign

DomesticPrivate

Public

$54.1

$492.0 $465.0$533.0

$1,249.0

$75.0 $93.0$155.0

$299.0

$405.052

84

178

131 127

$0

$500

$1,000

$1,500

2001 2002 2003 2004 2005

Millio

ns D

olla

rs

0

50

100

150

200

No. of

Pro

ject

Approved

Implemented

No. of Projects

Approved and Implemented FDI in Lao Approved and Implemented FDI in Lao PDR from Y2000 to 1PDR from Y2000 to 1stst half 2005. half 2005.

88

Approved Foreign Investment in Lao Approved Foreign Investment in Lao

PDR by Sector 1988-March/2005PDR by Sector 1988-March/2005 No Sectors Projects Total Investment Cost

1 Electricity Generation 24 2,317,300,000

2 Telecommunication 17 677,204,647

3 Hotel-Restaurant 93 586,374,232

4 Industries-Handicrafts 243 350,174,752

5 Other Services 204 259,116,903

6 Wood Industries 62 186,933,048

7 Agriculture 152 254,627,242

8 Construction 58 120,837,626

9 Mining 86 458,400,591

10 Trading 176 111,556,192

11 Banking 10 81,800,000

12 Garment 85 72,068,398

13 Consultances 58 11,591,322

Grand Total 1268 5,487,984,953

LAO PDR IN THE GLOBAL LAO PDR IN THE GLOBAL ECONOMYECONOMY

MMember of international organization ember of international organization ( MIGA, ( MIGA, ASEAN, ASEAN-Japan Centre, WORLD ASEAN, ASEAN-Japan Centre, WORLD BANK, ADB, IMF…)BANK, ADB, IMF…)

GSP PrivilegesGSP Privileges : 42 : 42 countries countries ( EU, CANADA, JAPAN, CHINA, ….. )( EU, CANADA, JAPAN, CHINA, ….. )

NTR NTR with with USA (04/02/2005)USA (04/02/2005)

BBilateral Investment Treaties with 23 countries ilateral Investment Treaties with 23 countries ((Investment Promotion and ProtectionInvestment Promotion and Protection))

IIn process of joining n process of joining WTOWTO

GEOGRAPHYGEOGRAPHY

Lao PDR is being transformed into Lao PDR is being transformed into LAND LINKED country and Transit LAND LINKED country and Transit country in the regioncountry in the region

On-going projectOn-going project

• Thai, ADB, China share 1/3 Thai, ADB, China share 1/3

(soft loan)(soft loan)

• Start 2004, complete 2007Start 2004, complete 2007

Jinghong

1,200 Km.1,200 Km.

Chiang Rai

Luang Namtha

Kunming

THAILANDTHAILAND

LAOSLAOS

CHINACHINA

Chiang Khong

On-going projectOn-going project

• Second Mekong Bridge Second Mekong Bridge (Mukdaharn – Savannaket)(Mukdaharn – Savannaket)

•Soft loan from JapanSoft loan from Japan

•Cost = 4,753 Mil Yen.Cost = 4,753 Mil Yen.

•Under constructionUnder construction

•Complete end 2006Complete end 2006A. Chumpae

Kon Kaen

KalasinMukdaharn/

Savannaket

Seno

Maung Pin

Dansavan/Lao Bound Dong Ha

Danang

HAI VAN PASS TUNNELSecond Second Mekong Int’l Mekong Int’l Bridge ProjectBridge Project

Cambodia

Lao PDR

Vietnam

Showcase, Short-TermShowcase, Short-Term

Medium to Long-TermMedium to Long-Term

Andaman Sea Tavoy

Khon Kaen

Nakon Ratchasima

Mukdaharn

Ubon Ratchathani

Siem Reap

Stung Treng

Quy Nhon

Quang Ngai

Ca Mau

Trat

Luang Prabang

Muang Xai

Dien Bian Phu

Kanchanaburi

Three Pagoda Pass

Thaton

Payaggi

Mae Sot

Thanbuzayat

Meiktila

Bagan

Lashio

Kentung

Jinghong

Bo Ten

Nan

Poipet

Ranong

Kaw Thong

Sihanouk Ville

(Road Project)

Nakhon Phanum

CT25aCT25a

CM12CM12CT56CT56

CT25bCT25b

CL14CL14

LT30LT30LT32LT32

LT29LT29

MT36MT36

LT34LT34

LM16LM16

LT28LT28

MT40MT40

MT38MT38

MT37MT37

Showcase, Short-TermShowcase, Short-Term

Medium to Long-TermMedium to Long-Term

On-going projectOn-going project

III III CL14: Stung Treng – Champasak and CL14: Stung Treng – Champasak and Preah Vihear – ChampasakPreah Vihear – Champasak

•No progress on Cambodia sideNo progress on Cambodia side

•Section in Lao PDR is completed.Section in Lao PDR is completed.

IV IV CM12: Road linkage under Asian CM12: Road linkage under Asian Highway projectHighway project

•Cambodia: Poipet –Sisophon (48 km)Cambodia: Poipet –Sisophon (48 km)

•Under ADB loanUnder ADB loan

Showcase, Short-TermShowcase, Short-Term

Medium to Long-TermMedium to Long-Term

Andaman Sea Tavoy

Khon Kaen

Nakon Ratchasima

Mukdaharn

Ubon Ratchathani

Siem Reap

Stung Treng

Quy Nhon

Quang Ngai

Ca Mau

Trat

Luang Prabang

Muang Xai

Dien Bian Phu

Kanchanaburi

Three Pagoda Pass

Thaton

Payaggi

Mae Sot

Thanbuzayat

Meiktila

Bagan

Lashio

Kentung

Jinghong

Bo Ten

Nan

Poipet

Ranong

Kaw Thong

Sihanouk Ville

(Road Project)

Nakhon Phanum

CT25aCT25a

CM12CM12CT56CT56

CT25bCT25b

CL14CL14

LT30LT30LT32LT32

LT29LT29

MT36MT36

LT34LT34

LM16LM16

LT28LT28

MT40MT40

MT38MT38

MT37MT37

Showcase, Short-TermShowcase, Short-Term

Medium to Long-TermMedium to Long-Term

Next stage projectsNext stage projects

CT56: Chong Chom – Siem ReapCT56: Chong Chom – Siem Reap

LT29: Muang Ngeon – Loung PrabangLT29: Muang Ngeon – Loung Prabang

MT40: Three Pagoda Pass – ThanbuzayatMT40: Three Pagoda Pass – Thanbuzayat

Field reconnaissance will start mid 2004.Field reconnaissance will start mid 2004.

LT34: Mekong Bridge at Chiang LT34: Mekong Bridge at Chiang Kong/Houay SaiKong/Houay Sai

•ADB will start FS & DE in 2005ADB will start FS & DE in 2005

MT37: Mae Sot – Pa an - ThatonMT37: Mae Sot – Pa an - Thaton

(Section Foothill – Pa an – Thaton)(Section Foothill – Pa an – Thaton)

MT38: Kawkariek – Mawlamyine - MT38: Kawkariek – Mawlamyine - ThatonThaton

LM16: Lao – Myanmar Friendship LM16: Lao – Myanmar Friendship Bridge over Mekhong RiverBridge over Mekhong River

Preliminary survey complete, wait for Preliminary survey complete, wait for funding (Japan)funding (Japan)

• Law on the Promotion of Foreign Investment (2004)Law on the Promotion of Foreign Investment (2004)

Welcome every business sector and activity not Welcome every business sector and activity not detrimental to national security, environment, and public detrimental to national security, environment, and public health and safetyhealth and safety

All investment is guaranteed against expropriation and All investment is guaranteed against expropriation and nationalisation without compensationnationalisation without compensation

Remittance of dividends an profits back home or to third Remittance of dividends an profits back home or to third countries is allowed through banking systemcountries is allowed through banking system

Employment of skilled and expert foreign personnel (up to Employment of skilled and expert foreign personnel (up to 10% of total employees of an enterprise) 10% of total employees of an enterprise)

Long term land lease (50-75 years) Long term land lease (50-75 years)

Government’s Investment Government’s Investment PolicyPolicy

Government’s Investment Policy Government’s Investment Policy (con.)(con.)

3 Forms of Foreign Investment:3 Forms of Foreign Investment:

1) Business Cooperation by contract1) Business Cooperation by contract2) Joint Venture between foreign & domestic investor2) Joint Venture between foreign & domestic investor3) 100% foreign owned enterprise3) 100% foreign owned enterprise

Representative Office & Branch:Representative Office & Branch:+ Foreign Company can open its Representative Office in + Foreign Company can open its Representative Office in

Lao PDR to Lao PDR to collect information, study the feasibility of collect information, study the feasibility of investment and investment and coordinate matters for the coordinate matters for the purpose of applying for investmentpurpose of applying for investment..

+ Foreign Banks, Financial Institutions, Insurance + Foreign Banks, Financial Institutions, Insurance Company, Company, Consulting firms, Airlines can open their Consulting firms, Airlines can open their branches in Lao PDR. branches in Lao PDR.

Investment Term:Investment Term:

The investment term of a foreign enterprise depends on The investment term of a foreign enterprise depends on the nature, size and conditions of the nature, size and conditions of the business activities will the business activities will be fifty(50) years and extendable to seventy five (75) years.be fifty(50) years and extendable to seventy five (75) years.

• Promoted Activities eligible for Promoted Activities eligible for incentives:incentives:

1.1. Production for export; Production for export; 2.2. Activities relating to agriculture or forestry, and Activities relating to agriculture or forestry, and

agricultural, forestry and handicraft processing activities; agricultural, forestry and handicraft processing activities; 3.3. Activities relating to industrial processing, industrial Activities relating to industrial processing, industrial

activities using modern techniques and technology, activities using modern techniques and technology, research and development, and activities relating to the research and development, and activities relating to the protection of the environment and biodiversity; protection of the environment and biodiversity;

4.4. Human resource development, skills development and Human resource development, skills development and public health; public health;

5.5. Construction of infrastructure; Construction of infrastructure; 6.6. Production of raw materials and equipment to be supplied Production of raw materials and equipment to be supplied

to key industrial activities; andto key industrial activities; and7.7. Development of the tourism industry and transit services. Development of the tourism industry and transit services.

Government’s Investment Policy Government’s Investment Policy (con.)(con.)

Government’s Investment Policy Government’s Investment Policy (con.)(con.)• Promoted ZonesPromoted Zones

Zone 1: Zone 1: Mountainous, Plain and plateau zones with no Mountainous, Plain and plateau zones with no economic infrastructure facilitate investments, economic infrastructure facilitate investments, which will be entitled to a profit tax exemptionwhich will be entitled to a profit tax exemptionfor 7 years and thereafter will be subject to profit for 7 years and thereafter will be subject to profit

tax tax at the rate 10%.at the rate 10%.

Zone 2:Zone 2: Mountainous, Plain and plateau zones with a Mountainous, Plain and plateau zones with a certain certain level of economic infrastructure suitable to level of economic infrastructure suitable to accommodateaccommodate

investments to some extent, which will be entitled investments to some extent, which will be entitled to a profit to a profit tax exemption for 5 years and thereafter tax exemption for 5 years and thereafter will be subject to a will be subject to a reduced profit tax rate of half of reduced profit tax rate of half of fifteen 15% for 3 years and fifteen 15% for 3 years and thereafter a profit tax rate thereafter a profit tax rate of 15%.of 15%.

Zone 3:Zone 3: Mountainous, Plain and plateau zones with Mountainous, Plain and plateau zones with goodgood infrastructure to support investments, infrastructure to support investments, which will be which will be entitled to a profit tax exemption for 2 entitled to a profit tax exemption for 2 years and years and thereafter will be subject to a reduced thereafter will be subject to a reduced profit tax rate of profit tax rate of half of 20% for 2 years and half of 20% for 2 years and thereafter a profit tax rate thereafter a profit tax rate of 20%. of 20%.

Government’s Investment Policy Government’s Investment Policy (con.)(con.)

In addition to the incentives mentioned above, FDI In addition to the incentives mentioned above, FDI shall be entitled to the following incentives:shall be entitled to the following incentives: • an exemption of minimum tax;an exemption of minimum tax;• the profit used for the expansion of business the profit used for the expansion of business

activities will be exempted from profit tax during activities will be exempted from profit tax during the accounting year;the accounting year;

• Exemption of import duties and taxes on Exemption of import duties and taxes on equipment, spare parts, vehicles directly used for equipment, spare parts, vehicles directly used for promotion and raw materials;promotion and raw materials;

• Exemption of export duty on export products.Exemption of export duty on export products.• 10% income tax on expatriate employees10% income tax on expatriate employees• Loss carry forwards: Loss carry forwards: 33 years years• Additional tax holidaysAdditional tax holidays, r, reduced tax rates for large educed tax rates for large

projects with special concession are available upon projects with special concession are available upon negotiationnegotiation

POTENTIAL SECTORSPOTENTIAL SECTORS Energy Mining Agribusiness Tourism Construction Material Light industry Service

INVESTMENT SECTORSINVESTMENT SECTORSELECTRICITY GENERATION:ELECTRICITY GENERATION:

• Abundant water resources produceAbundant water resources producedd by by tributaries of Mekong rivertributaries of Mekong river

• EstimateEstimatedd electricity generation potential electricity generation potential:: over 23,000 MWover 23,000 MW (only about 2% currently (only about 2% currently exploited)exploited)

• Investment in BOT hydro-electric facilities Investment in BOT hydro-electric facilities will be substantialwill be substantial

• Investment in ancillary support services will Investment in ancillary support services will increaseincrease

Luangprabang

NN1

Xekaman1. 468 MW

Xeset 45 MWSekong 5. 253 MW

Nam Mo 100 MW

Nam Theun3. 237 MW

Nam Theun2 681 MW

Nam Ngiep 1 440 MWMae Moh

To Bangko

Hongsa Lignite

LEGEND :

Existing Transmission line Before the year 2010 After year 2010 Existing Power Plan Under Construction before 2010 After 2010 Proposed 500 kV Substation Existing 115/22 kV Substation Proposed 115/22 kV substation 22 or 35 kV 115 kV 230 kV 500 kV

Sekong 4. 440 MW

POWER DEVELOPMENT PLAN

B. Mai

To Hatinh

CHINA

THAILAND

MYANMAR

CAMBODIA

Paksane

Xiengkhuang

Xayabury

Huaphan

OudomxayHouayxai

Phongsaly

Nam Ou 600 MW

CS. Luangnamtha

Nam Tha 263 MW

500 kV

Theun-Hinboun 210 MW

NN5 100 MW

ThakhekUdonthani 3

Savannakhet

Xepone

Saravane

Sekong

To Uborn 2Pakse HHO 150 MW

XPXN 390 MW

M. Khong

To Roi Et 2

M. Boten

To Plieku

115 kV

35 kVTheun1. 500 MW

Xekaman3 198 MW

NN3 460 MW

NN2 615 MW

NLEUK 60 MW

M.Salakham

Attapeu

TRANS2020dec98.pr4

MINING SECTOR:MINING SECTOR:

• MMining ining industry industry is at an early stage of is at an early stage of developmentdevelopment

• Mining sector presents numerous potential Mining sector presents numerous potential opportunities for investment and development.opportunities for investment and development.

• Mineral deposits : tin, lead, zinc,iron ore, Mineral deposits : tin, lead, zinc,iron ore, cooper, gold, gypsum, lignite, sapphires, …cooper, gold, gypsum, lignite, sapphires, …

• Some concessions granted to foreign investorsSome concessions granted to foreign investors

Focus in Agro-Forest Focus in Agro-Forest ProcessingProcessing• Highest ratio of forest areaHighest ratio of forest area

• Large stands of tropical hardwoods including teak, Large stands of tropical hardwoods including teak, mahogany and rosewoodmahogany and rosewood

• Suitable land for various tree Plantation Suitable land for various tree Plantation

• Plenty of productive landPlenty of productive land

• Long term land lease (50-75 years)Long term land lease (50-75 years)

Agro-Forest in Lao PDRAgro-Forest in Lao PDR

• 44 44 projects in Lao PDR = projects in Lao PDR = 61.711.20961.711.209 us$. us$.

• Some achievement and large scale projects : Some achievement and large scale projects : - BGA Lao Plantation (Newz): - BGA Lao Plantation (Newz): 50.000 ha50.000 ha = = 49.000.000 49.000.000

us$;us$;

- CITYLAND Resources (Malaysia): - CITYLAND Resources (Malaysia): 3.500 ha3.500 ha = 11.000.000 us$; = 11.000.000 us$;

- Daklak Rubber (Vietnam): - Daklak Rubber (Vietnam): 10.000 ha10.000 ha = 6.000.000 us$; = 6.000.000 us$;

- Vietnam General Rubber(Vietnam):- Vietnam General Rubber(Vietnam):10.000 10.000 ha=22.000.000 ha=22.000.000 us$;us$;

- Paksong Highland (Thailand): - Paksong Highland (Thailand): 26.000 26.000 ha = 8.000.000 us$. ha = 8.000.000 us$.

Investment in Agro-Forest of Top 7 Investment in Agro-Forest of Top 7 countries.countries.

NoNo CountryCountry Capital (USD)Capital (USD)

11 ThailandThailand 63,311,20963,311,209

22 VietnamVietnam 55,985,41455,985,414

33 New Zealand New Zealand 49,000,00049,000,000

44 MalaysiaMalaysia 18,448,38618,448,386

55 ChinaChina 12,003,72012,003,720

66 FranceFrance 13,079,04713,079,047

77 KoreaKorea 12,794,75012,794,750

Agro-Forest in Lao PDRAgro-Forest in Lao PDR• Main issues in Agro-Forest: Main issues in Agro-Forest:

- Land approved level:- Land approved level:• District not over District not over 3 ha3 ha with approval from province with approval from province

• Province not over Province not over 100100 ha with approval from MAF; ha with approval from MAF;

• MAF not over MAF not over 10.00010.000 ha with approval from GOL; ha with approval from GOL;

• Government Government 10.000 10.000 ha up with adoption from NA;ha up with adoption from NA;

- Fees rate between 6 -9 US$/ha/year.- Fees rate between 6 -9 US$/ha/year.

Long term land lease (50 -75 years)Long term land lease (50 -75 years)

TourismTourism1. Eco-tourism2. Culture-Tourism3. Agro-Tourism

Eco-tourismEco-tourism•Clean air•Beautiful landscape•Attractive for health-improving purposes

Culture-tourismCulture-tourism

• Rich in well-preserved culture and traditions

• World heritage sites

ADMINITRATION OF THE FDI ADMINITRATION OF THE FDI SYSTEMSYSTEM

• FDI system is administered by DDFIFDI system is administered by DDFI• DDFI acts as One-Stop-ShopDDFI acts as One-Stop-Shop• DDFI manages the investment application process DDFI manages the investment application process

advices advices for investors:for investors:-- investorsinvestors in in fillfillinging out investment application out investment application forms;forms;- - processes/processes/obtains the foreign investor’s business obtains the foreign investor’s business and tax licenses;and tax licenses;- assists investors - assists investors in in obtaining other obtaining other necessary necessary permits and licenses;permits and licenses;- grants investment incentives.- grants investment incentives.

Thank You Thank You For Your For Your AttentionAttention