LAO PEOPLE'S DEMOCRATIC REPUBLIC

FOREIGN INVESTMENT MANAGEMENT COMMITTEE

Executive
Summary
On Foreign Investment
in Lao PDR

1. Brief introduction on Lao PDR

-LANLOCKED COUNTRY ! but expected to be transformed into "LANDLINKED COUNTRY"
-Five neighboring countries: CHINA, VIETNAM, CAMBODIA, THAILAND and MYANMAR.

"Greater Mekong Sub-region = GMS"

-Land area: 236,800 Km2
-Mountains, highlands & plateaus = 70%
-Cultivated area = 649,310 ha
-Rice cultivated area = 538,690 ha

  • Population = 4.5 million
  • Density = 19-20 inhab/km2
  • Rural population = 85%
  • 3 major ethnic groups
  • Language = Lao (English & French for business)

+Economic growth =6-8%
+Income per capita = 350 USD (in 1995)
+Economic financial & monetary = stable
+Exchange control = progressively liberalized
+Social-political stability = very sound!
+Natural resources = weathy!
+Main-export = electricity, wood products, coffee, garments, minerals, etc.

2. GOVERNMENT POLICY

* From Centrally Planned Economy to Market Economy;
* Opening Lao Economy to outside world "OPEN DOOR POLICY"
* Encouraging Foreign Investment;
* Creating Favorable Environment, aiming to attract foreign direct investment (FDI);
improving legal & regulator framework, investment protection commitment, etc.
* CHALLENGE for the Sub-region is to enhance the greater cooperation in order to be able to develop them.
* GMS 6: What prospective?
**Fundamental obstacles:
= inadequate domestic resources mobilization caused by low capita incomes;
= physical infrastructures (transport sector still undeveloped);
= efficient use of human, capital and natural resources to be focus;
= climate for foreign investment to be improved;
= facility for transfer of technology.

* ADB (Asian Development Bank) role:
= Striving to build up a strong intra-region economic cooperation aiming at promoting develpoment and trade with the context of national priorities.

* Sectors of cooperation:

1. Transport
2. Energy
3. Environment and natural resources management
4. Human resources develpoment
5. Trade and Investment
6. Tourism

3. FIMC RESPONSIBLE BOARD

  • FIMC =FOREIGN INVESTMENT MANAGEMENT COMMITTEE (ONE STOP SERVICE)

* MAJOR ROLE
1. promoting
2. screening
3. negociating
4. licensing
5. monitoring
NB: See organization chart

  • Application process: address to PERMANENT BUREAU OF FIMC, Luang Prabang Rd.,
    Vientiane, Lao PDR for further information.
Consideration process: 3 levels
1. Full Committee (for important project)
2. Permanent Committee
3. Technical Committee
(see flow chart attached)
  • Ministries and Local authorities: assist and share RESPONSIBILITIES with FIMC in every level!

4. Attractive Factors:

1. Political Stability and Social Safety
2. Good relationship with neighboring countries;
3. Prospective regional market, (geographically Lao PDR is located in the hearth of South East Asia);
4. LIBERALIZATION of exchange control;
5. Huge unsurveyed and untapped natural resources;
6. Safe from natural damages, such as: -Earthquarke, -Monson, -Snowy, etc.

5. Incentives:

1. Tax incentives Regime:
- Tax Hollidays (2-4 years, up to the projects)
- Net Profit Tax (20% at a uniform flat rate)
- Import Duty Tax maximum 1%
(for raw materials, equipment, etc.)
-Personal Income Tax (10%)
-Etc.
2. Low labor cost
3. Long term of Land Lease: 30 years and renewable

6. Performance

-1988 up to April 1997 > 6.8 billion USD/licensed investment
-632 projects
-34 countries and territories
(see data atached)

Foreign Investment Management Committee
Luang Prabang Rd., Vientiane, Lao PDR.
Phone: (856-21) 216 662-4, 217 005, 216 691-2
Fax: (856-21) 215 491

Country Summary
Country Policy

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Copyright © 1997 by the Lao Embassy, Washington D.C. All Rights Reserved.