LAO PEOPLE'S DEMOCRATIC REPUBLIC

FOREIGN INVESTMENT MANAGEMENT COMMITTEE

Policy Guidelines
For Foreign Investment
In the Lao People's Democratic Republic

T he Government of the Lao People's Democratic Republic has officially authorized and encouraged private direct investment since July, 1988, when enactment of the Law on Foreign Investment marked the opening of the nation's economic doors. That policy has now been unequivocally reaffirmed by the National Assembly's adoption of the new Constitution on August 15, 1991.

As declared in Article 14 of the Constitution: The State protects and develops all forms of State, collective and individual ownership, including the private ownership of domestic and foreign entrepreneurs who have invested in the Lao People's Democratic Republic.

The State encourages all economic sectors (public and private) to compete and cooperate with one another in expanding their production and business. All such sectors are equal before the law.

Lao PDR seeks foreign investment for the overall goal of constantly improving the well-being of the nation's multi-ethnic people. Within this framework, specific foreign investment policy objectives include:

(1) Attracting private finance from diversified sources, especially in convertible currencies, in order to contribute to to the establishment of productive enterprises;

(2) Transferring appropriate technology;

(3) Creating employment;

(4) Promoting exports and access to foreign markets; and

(5) Generating Government revenues, in the form of taxes, duties, royalties, land rents, equity participation, and privatization proceeds, as applicable.

Foreign investment in Lao PDR is welcome in a full range of legal form, including wholly foreign-owned enterprises, joint ventures and business by contract. Each investor is free to choose its optimal form.

The Government and the law of the Lao PDR assure foreign investors of:

(1) The right to repatriate capital and dividends;
(2) Protection against uncompensated nationalization or expropriation of their investments; and
(3) The right to own personal property and to use and transfer real property in Lao PDR.

Foreign investors and investments also enjoy the protection of the new Lao PDR Constitution and of the rapidly emerging framework of commercial laws. Specific promotional facilities and incentives include : a "1-stop service center" for foreign investors; assistance with business visas and other travel arrangements; and the right to import machinery, materials, other inputs and spare parts for investment projects.

Foreign investments are welcome in all sectors of the Lao economy, and in all geographic areas, subject only to considerations of national security. Especially welcome are investments which promote Lao exports, generate hard currency earnings, maximize use of domestic resources (human and material), and train Lao nationals in relevant skills. When making sectoral choices, prospective investors are encouraged to pay particular attention to the perceived comparative advantage of Lao investments in hydro generation, minerals extraction and processing agribusiness, wood product productions, export-oriented light manucfacturing, small-scale tourism, and financial and transport services. Attention is also invited the substantial porfolio of state-owned Enterprises currently being privatized by the Lao Government.

Foreign investments in Lao PDR will be required to demonstrate respect for, and protection of, the natural environment, Lao cultural and social values, and workers health and safety.