Lao P.D.R. FDI Policy

1. Lao P.D.R. FDI Policy Presented by: Manothong Vongsay Deputy Director General Investment Promotion Department Ministry of Planning and Investment

2. Outline of Presentation: Country Snapshot: Macro Performance FDI Info Government Policy Open Door Policy Investment Policy III. New features of Investment Law IV. Sector Opportunities

3. LAO PDR I. Country Snapshot • Land Area : 236,800 sq. km • Population : 6.6 Millions (2008) • Population Density 25 people/sq km • Population Growth: 2.3 % • Labor Force : 2.9 Millions • Religion: Buddhism • Laos is at the centre of the GMS, consisting of Cambodia, Myanmar, Thailand, Vietnam, and Yunnan province of China. • It is the only country bordering all the other countries in the sub-region. • More than 70% of international trade in Laos - except air freight - is cross-border trade • 50% of the Lao population lives in border districts.

4. I. Country Snapshot: Macro- Economic Policy Framework (7th NSEP) Ensuring Economic Growth at ≥ 8% p.a. Ensuring Sustainable Development - Balancing Socio-Economic Development along with Environmental Protection, emphasizing on HRD Promotion of Gradual Development of Industrialization and Modernization Achieving Millennium Development Goals (MDGs) – poverty reduction by 2015 and graduating from least development countries (LDC) by 2020 Promotion of Regional and International Integration {GMS,ASEAN, WTO, BITs (28) [Lao-Korea BIT signed on 15 May 1996, became effective on 14 Jun 1996]}

5. I. Country Snapshot: Macro-Economic Performance(the 6th Five-Year National Socio-Economic Plan) Total Investment 73.9 th. Bil. Kip (32% of GDP) Public Investment: 31.25% Private: Domestic and Foreign: 68.75% • Average GDP Growth: 7.5-8%, Per Capita Income 827 US$

6. I. Country Snapshot: Macro-Economic Plan (the 7th Five-Year National Socio-Economic Plan) Private Investment: Domestic and Foreign: 64 % of Total Investment or 7.4 Billion US$ Public Investment: the remaining % • Average GDP Growth: ≥ 8%, Av. Per Capita Income 1,700 US$ • (in 2015)

7. I. Country Snapshot: FDI Info Investment Inflows, 2001-2010

8. FDI Inflows by Investment 2001-2010 (December)

9. Top ten FDI by Countries, 2000- 2010 (Sep)

10. II. Government Policy: Open Door Policy New Economic Mechanism: 1986: Shifting from planned economy to a market oriented economy Privatization of state enterprises Open for FDI: - FDI Law 1988 - FDI Law (1st revised) 1994 - FDI Law (2nd revised) 2004 - FDI Law (3rd revised) 2009

11. II. Government Policy: Party Approves New Measures to Boost Development: “Four Breakthrough Measures” Change in Attitude “…relieve the minds from old stereotypes, complacency and extremism” Develop Human Resource “…has important role in socio-economic development in a new era of the intellect based economy” (New IP Law) Simplify Administrative Procedures and Management :Government imposition of Policy to set up single window (New IP Law) Poverty Reduction: Domestic and Foreign Fund Mobilization, Incentives vs Investment in Rural Areas (New IP Law)

12. III. New Features of Investment Law • Combined the domestic investment law and foreign direct investment law into one to create a “level playing field” for both domestic and foreign investors; • Shorten procedures to open new businesses; • No terms of investment for promoted activities; • Extended Investment incentives: Education and Health care sectors are top priorities; • Foreigners can have access to local financial sources; • Foreign Invested Companies can own a piece of land for building their offices/residences (Certain conditions to be applied); • Foreigners can invest in the real estate sector; • Promotion of the development of SEZ and Industrial Park.

13. -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. CAMBODIA

14. Incentive on Cooperate Profit tax

15. Granting additional incentives • Exempt land lease or land concession Zone 1 = 15 years Zone 2 = 10 years Zone 3 = 3 years • Provide additional 5 years for cooperate profit tax exempt Education & Healthcare sectors

16. Investor proposes to register Approval procedure for domestic and foreign investment Licenses in general/opened activities Ministry/Department of Industry and Commerce Business that fall into controlled list Business not fall into controlled list Request for comments from Ministry/Department concerned within 10 working days Issue enterprise registration certificate within 10 working days Issue enterprise registration certificate within 3 working days

17. Investor submit investment application Approval Procedure for Concession Investment Projects 1 IPD receive the application for appraisal and technical approval of the investment 2 Provide guidance to investor for preparing necessary documents 3 OSS meeting 4 Propose to Government or provincial authorities for approval consideration and suggest investor to submit the quarantee money 5 Signing the agreement, issue the concession certificate

18. IV. Sector Opportunities: • Electricity Generation • Tourism • Agriculture and Forestry • Processing Industry • Manufacturing • Mining • Services

19. Contact Address: Investment Promotion Department Ministry of Planning and Investment Souphanouvong Avenue, Vientiane 01001, Lao PDR Tel: (856-21) 222 690 Fax: (856-21) 215 491 Website:www.investlaos.gov.la

20. Thank You For Your Attention