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Laos: Proposed Amendment of Law on Promotion of Investment

(Nov. 28, 2016) On November 17, 2016, Laos’s Deputy Minister of Planning and Investment, Khamlien Pholsena, introduced a draft amendment to the 2009 Law on Investment Promotion to the National Assembly, the country’s legislature. (Somxay Sengdara, Law Amendment to Strengthen Investment Promotion, VIENTIANE TIMES (last updated Nov. 18, 2016); Law on Investment Promotion, No. 2/NA (July 8, 2009), Lao Ministry of Planning and Investment, Investment Promotion Department website (scroll to p. 46 for English text).)  The draft of the amended law has 106 articles.  (Sengdara, supra.)

The Deputy Minister stressed in particular the importance of article 9, which focuses on a promotion policy for specific areas of investment, including:

  • advanced technology, science, and research and development;
  • protection of the environment and of biodiversity;
  • organic farming, including seed production and livestock breeding;
  • tree plantations;
  • rural development;
  • poverty reduction
  • education, including vocational training;
  • sports and sports equipment businesses;
  • human resources services;
  • transportation improvement, including reduction of urban traffic congestion and international transit;
  • and agricultural facilities. (Sengdara, supra.)

Under article 51 of the draft revised law, in order to qualify for a business concession, a company need only provide 1-3% of the total investment at the time of registration.  (Id.).

A National Assembly Member from the city of Vientiane, Valy Vetsaphong, supported the amendment in general, saying that it would attract investment in key areas.  However, she went on to raise the issue of the need for a definition of what it would mean to be a business using modern technology and suggested a regulation might be needed to supplement the amended law.  For example, she posed the question of whether a hospital that uses some advanced technology but overall has poor facilities would be an enterprise that could benefit from the proposed amendment.  She also expressed concern about forcing potential investors to contact a number of agencies and proposed that either the Ministry of Industry and Commerce or the Ministry of Planning and Investment become a “single door” for those investors.  In addition, she argued that businesses should be required to have a much bigger initial capital investment of perhaps 20-30% in order to secure a concession.  (Id.)

A second Member, Vilaysouk Phimmasone, stressed the need to give particular priority to environmental protection projects such as waste water treatment plants and other operations that require a lot of capital, particularly projects that create domestic products to replace imports.  (Id.)

The current investment policy of Laos includes, in theory, a one-stop service unit to facilitate investment, although some have suggested that in actual operation many agencies must be contacted.  (Id.; Phonethavong Singhalath, Current Investment Regime of the Lao PDR (Mar. 27-28, 2012), Organisation for Economic Co-operation and Development website.) The policy also includes exemption from import duties and taxes on raw material and capital equipment, exemption from export duty, ten-year tax holidays, and additional tax relief for selected projects.  (Singhalath, supra.)