fdi policy lao_pdr-1 2010

8/3/2019 FDI Policy Lao_pdr-1 2010

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FDI Policy of Lao PDRPresented by

Mr. Phouvong Sihomvong Counsellor Economic

& commercial,Lao Embassy Bangkok in Thailand


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Theme of Presentation

Brief of Lao PDR Government Policies on FDI in Lao PDR

Potential Sectors

Investment Procedure


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Brief of Lao PDR

Land Area : 236,800 sq. km

Population : 6 Millions

Population Density: 25 persons/sq km

Population Growth: 2,5% Labor Force : 3 Millions

Ethnic : 3 ethnic 49 groups

Religion: Buddhism


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Some Macroeconomic Data

GDP ( 2001-2005 ): 6.2%

- Agriculture: 3.4%

- Industry: 11.3%

- Service: 6.7%

- GDP ( 2006-2007 ) 8%

- GDP ( 2008-2009 ) 7,5%

- GDP capita ( 2001-2005 ): 491$/pers

- GDP capita ( 2006-2007 ): 678$/pers

- GDP capita (2007-2008 ): 728$/pers

- GDP capita (2008-2009 ): 925$/pers

- Infliation currency: 9,6%

- Exchange rate: 9.653,87 kips/$


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Government policies on FDI

Open Door Policy

New Economic Mechanism:

1986: Shifting from planned economy to a market oriented economy

Privatization of state enterprises

Open for FDI


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Shares of Private Investment

63.8%

35.7%

14.2%

4.4%

59.9%

22.0%

2001 2005

Foreign

DomesticPrivate

Public


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Approved and Implemented FDI in Lao PDR

$54.1$133.0

$466.0 $533.0

$1,245.0

$2,670.0

$1,137.0

$393.0

$54.0 $93.0$155.0

$299.0$449.0

$628.0$771.0

$194.0

64

80

178

161143

170

191

57

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2001 2002 2003 2004 2005 2006 2007 39508

Millio

nsDollars

0

50

100

150

200

250

No.ofProject

Approved

Implemented

No. of Projects


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Approved Foreign Investment in Lao PDRby Sector 2000- March 2008

No Sectors Projects Value of Investment (US$)

1 Electricity Generation 41 3,301,791,585

2 Agriculture 175 838,085,036

3 Mining 145 647,818,829

4 Industry & Handicraft 195 467,546,0665 Services 175 323,125,718

6 Trading 100 275,841,554

7 Construction 29 180,586,874

8 Hotel & Restaurant 61 162,561,245

9 Wood Industry 40 99,810,379

10 Banking 11 55,096,000

11 Telecom 4 72,390,980

12 Garment 37 28,344,920

13 Consultant 32 8,613,252

Grand Total 1.045 6,461,612,438


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Approved Foreign Investment in Lao PDRTop ten Countries 2000- March 20

No Countries Projects Value of Investment (USD)

1 Thailand 179 1,380,523,965

2 China 259 1,285,431,888

3 Vietnam 129 574,741,0714 France 60 442,501,179

5 Japan 36 423,201,946

6 India 3 350,330,000

7 Australia 28 331,887,528

8 Korea 113 333,315,392

9 Malaysia 33 140,113,392

10 Singapore 2 101,144,000


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Governments Investment Policies

. Promoted Activities eligible for incentives:

1. Production for export;2. Agro-processing and forestry;

3. Industrial processing;4. Human resource development and public health;5. Construction of infrastructure;6. Production of raw materials and equipment to be

supplied to key industrial activities; and7. Development of the tourism industry and transit

services


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Forms of Investment foreigns:

1. Business Cooperation by contract2. Joint Venture3. 100% foreign owned

Representative Office:to collect information, study investmentopportunities.

Branches:Foreign Banks, Financial Institutions, InsuranceCompanies, Consulting firms, and Airlines.


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Investment Incentives

ExemptionPeriod

Tax rate duringreduction period

tax rate

Zone I 7 years _ 10%

Zone II 5 yearsZone

7.5% for 3yrs

15%

Zone III 2 years 10% for 2 yrs 20%


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Investment Promotion Zoning

Zone i: 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

infractructure


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Others Intensives

Exemption of import duties and taxes on rawmaterials and capital equipment;

Exemption of export duty on export products;

10% personal income tax on expatriate employees;

Additional tax holidays, reduced tax rates for largeprojects with special concession are available upon

negotiation


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General Custom & Tax Systems

Regular Import Duty rates between: 3%-40%

Indirect taxes include :

Business turnover tax between 5%-10%

Excise tax between 5%-90% Direct taxes include:

General profit tax at 35%

Minimum tax at the rate of 0.1% of total revenue

Personal income tax between 0%-25%(progressive rate)

Fees and service charges.


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Advantages:

- Comparative Advantages:

Plentiful Natural Resources

Large Area of Fertile Agricultural Land

Varieties of Tourism Development Sites

Virtually no damaging natural disaster

- Competitive Advantages:

One of the most Politically Stable Country in the Region

Socio-Economic and Financial Stability

High Security (Low Crime Rate) Low Labor Costs

GSP Privileges given from 42 countries

Liberal Laws and Regulations creating favorable businessand investment environments


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POTENTIAL SECTORS

Energy

Mining

Agrobusiness Tourism

Construction Material

Light industry Services


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INVESTMENT SECTORS

ELECTRICITY GENERATION:

Abundant water resources produced by

tributaries of Mekong river

Estimated electricity generation potential:

over 18,000 MW BOT Investment in hydro-electric facilities

will be substantial

Investment in ancillary support services

will increase


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Existing Generation in Lao PDR

Plants owned by Electricit du Laos-EdLNam Ngum 1 155 MWNam Leuk 60 MWXeset 1 45 MWNam Mang 3 35 MW

Selabam 5 MWNam Ko 1.5 MWNam Dong 1 MW

Renewable Energy (Mini/Pico Hydro Plant) 7 MW Solar 170 kW

Plants owned by private investors- Houay Ho 150 MW- Nam Theun-Hinboun 210 MW


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MINING SECTOR:

Mining industry is under developed

Mining sector presents numerous

potential opportunities forinvestment and development

Mineral deposits : tin, lead, zinc,

iron ore, copper, gold, gypsum,

lignite, sapphires,

Concessions granted to foreign

investors


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AGRICULTURE-FORESTRY:

Large stands of tropical hardwoods including teak and rosewood

Highest ratio of forest area

Suitable land for various tree Plantation

Plenty of productive land


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Some Agro-Forest Projects in Laos

Oji Lao Plantation (Japan):50.000 ha = 49 m (inUSD)

CITYLAND Resources (Malaysia):3.500 ha = 11 m

Daklak Rubber (Vietnam):10.000 ha = 30 m

Viet-Lao Joint Stock Rubber(Vietnam):10.000 ha=22 m

Paksong Highland (Thailand):26.000 ha = 8 m

Agarwood Lao Group (Thai/Lao): = 10 m

Mitr Lao Sugar Co. Ltd. (Thailand) = 22.5 m

Savannakhet Sugar Corp. (Thailand) = 10 m

Birla Lao Pulp & Plantations Co. Ltd. (India):50,000 ha=

350 m


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TOURISM

1. Culture-Tourism

2. Eco-tourism

3. Agro-Tourism

Tourism Business is now opened to DI

With Foreign Equity of up to 70%

Several natural tourist sites are ng

FDI

F L d L k d t L d Li k d


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From Land-Locked to Land-Linked


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Special Economic Zone

NorthWest

Corridor

EastWest

Corridor

EmeraldTriangle

EconomicTriangle


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Savannakhet-Seno SEZ (S-S SEZ)

Savannakhet-Seno SEZ (S-S SEZ) establishedin 2003 by S-S SEZ Decree of the PM

no. 148/PM dated

Sept. 29 2003.

Site A: 305 ha

Site B: 20 ha


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SITE A 305 ha


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SITE B 20 ha


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LAO PDR IN THE GLOBAL ECONOMY

Member of international organization ( MIGA,

ASEAN, ASEAN-Japan Centre, WORLD BANK,

ADB, IMF)

GSP Privileges : 42 countries ( EU, JAPAN,

CANADA, CHINA, )

NTR with USA (04/02/2005)

Bilateral Investment Treaties with 23 countries

In process of joining WTO


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Investment Approval Procedure

Invest

or

Enterpris

eregistration

OSS(IPD)

Issue Inv.License

AppraisalOSS

meeting

Provinces

Lineministries

Business

License

Taxregistra

tion


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One Stop Service

Unified Investment Application Form forobtaining: - Investment License,

- Business License,

- Tax Registration Certificate

Nomination of One Stop Service Unitcomprises of DDFI Staffs and Representativesfrom all line ministries to expedite approvalprocedure


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Investment Promotion Department

Ministry of Planning and Investment

Luang Prabang Road, Vientiane 01001, Lao PDR

Tel: (856-21) 222 690

Fax: (856-21) 215 491

E-mail: [email protected]

Website:http://www.invest.laopdr.org


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Thank You For

Your Attention


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fdi policy lao_pdr-1 2010

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