Investment Policy of Investment Policy of Lao PDRLao PDR

Thamma PHETVIXAYDeputy Director GeneralInvestment Promotion Department (IPD)Ministry of Planning and Investment, Lao PDR

Outline:Outline:I. New Features of Investment

Promotion Law II. Investment Zones and

IncentivesIII. Investment AdvantagesIV. Investment ProceduresV. Things Investors should

knownIPD

NEW FEATURES OF INVESTMENT PROMOTION

LAW ( No.02/NA, 8 JULY 2009)

• No discrimination between the foreign and domestic investors, esp. investment incentives

1. Unifying Domestic and Foreign Investment Laws

4

• No terms of investment of general business activities (Article 20)

• Terms of the concession projects is up to 99 years (Article 28)

2.Terms of Investment

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3. Approval procedures for domestic and foreign investment in

general/opened activities (new law)

Follow the Enterprise Law

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4. One Stop Service4. One Stop Service

One Stop Services:

• Ministry of Industry and Commerce;

• Ministry of Planning and Investment;

• Special Development Zone

• Government strongly encourage investors to develop:

- Special economic zone

- Export Processing zone

- Industrial Park

- Tourism zone

- Duty free zone

- ICT Zone, and

- Others zone

5. Special Economic Zones

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• Investor will be granted rights on purchasing rights of land use for their residential purpose (Article 58), if the following conditions are satisfied:

- Taking of registered capital (in cash) at lease US$500,000

- Land is belong to government

- Certificate on location of investment which is issued by local authority

- Terms of land use is equivalent to term of investment

6. Rights of land use for residential purpose

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• Both foreign and domestic investors can access to credits at commercial banks and financial institutions in Lao PDR and abroad (Article 53)

7. Access to credits7. Access to credits

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Investment Promotion Zones

and Incentives

-Zone I

-Zone II

-Zone III

Investment promotion

zoning

Investment Promotion Zoning

Zone 1: Mountainous, plateau zones with no economic infrastructure.

Zone II: Mountainous, plateau zones with a moderate level of economic infrastructure.

Zone III: Mountainous, plateau zones with good economic infrastructure.

• Incentives for promotion sectors:- Promotion activities will be determined by the Gov. in 3 different level based on priority activities of the Gov., activities related to poverty reduction, . . .

For example:

1. Agro-processing businesses;

2. Industrial processing ( New products; Using Hi technology products)

3. Human resource development and public health;

4. Infrastructure Development

5. Services

Investment Promotion Sectors

Promoted Sectors

Zone Level Period of exempt (yrs)

IndustryAgriculture

Service

1 1 10

2 6

3 4

2 1 8

2 4

3 2

3 1 4

2 2

3 1

Incentive on Corporate Profit tax

Other incentives: Exemption of import duties and

taxes on raw materials and capital equipment;

Exemption of export duty on export products;

10% personal income tax on expatriate employees;

Granting additional incentives

Education & Healthcare sectors

• Exempt land lease or land concession

Zone 1 = 15 years

Zone 2 = 10 years

Zone 3 = 3 years

• Provide additional 5 years for corporate profit tax exempt

Investment Advantages

Advantages:Advantages:Comparative Advantages:– Natural Resources endowments– Large Area of Fertile Agricultural Land– Varieties of Tourism Development Sites– Virtually no damaging natural disaster– Government vision : Land – linked

Competitive Advantages:– Social and Politically Stability – High Security (Low Crime Rate)– Low investment Costs (Labor, Land, Utilities. . . )– GSP Privileges given from 42 countries– Investment bilateral Agreements with 27 countries– In the process of joining WTO

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

Investment Procedures

Investment ActivitiesThree types of Investment Activities:

1.General/Opened Activities

2. Concession Activities : Electricity, Mining, Land concession, Airline businesses, Telecommunication, Insurances, Financial Institution…

3.Special Economic Zones and Specific Economic Zones

-General/opened activities- Branch of foreign entity

Investment in specific economic zone

Specific Economic

Zone

Ministry/ Dept. of

Industry and

Commerce

• Concession activities

• Representa-tive office

Ministry/Dept. of Planning

and Investment

-Enterprise registration license

-Concession license-Representative office license

-Enterprise registration license

Investor proposes to register

Business not fall into controlled list

Business that fall into controlled list

Ministry/Department of Industry and Commerce

Issue enterprise registration certificate within 10 working days

Request for comments from Ministry/Department concerned within 10 w. days

Issue enterprise registration certificate within 3 working days

Approval procedures for domestic and foreign investment in general/opened activities (new law)

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Investor submit investment application

IPD receive the application for appraisal and technically approval on the investment

Giving guidance for investor for preparing necessary documents

OSS meeting

Propose to Government or provincial authorities for approval consideration and suggest investor to submit the quarantee money

Signing the agreement, issue the concession certificate

Approval procedures for investment in concession (new law)

1

2

3

4

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Things Investors should known

• Laws and Regulations of Lao PDR

• Brokerages

• Lao cultures

Contact AddressContact Address::

Investment Promotion DepartmentMinistry of Planning and Investment

Souphanouvong Road, Vientiane 01001, Lao PDR

Tel: (856-21) 222 690 Fax: (856-21) 215 491

Website:www.investlaos.gov.la

Thank You Thank You For Your For Your AttentionAttention