Download - FDI Policy of Lao PDR
FDI Policy of Lao PDR
Presented by
Mr. Phouvong Sihomvong Counsellor Economic
& commercial,
Lao Embassy Bangkok in Thailand
Theme of Presentation
• Brief of Lao PDR
• Government Policies on FDI in Lao PDR
• Potential Sectors
• Investment Procedure
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
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/$
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
Shares of Private Investment
63.8%
35.7%
14.2%
4.4%
59.9%
22.0%
2001 2005
Foreign
Domestic
Private
Public
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
161
143
170
191
57
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2001 2002 2003 2004 2005 2006 2007 39508
Mill
ions D
olla
rs
0
50
100
150
200
250
No
. o
f P
roje
ct
Approved
Implemented
No. of Projects
Approved Foreign Investment in Lao PDR
by Sector 2000- March 2008No Sectors Projects Value of Investment (US$)
1 Electricity Generation 41 3,301,791,585
2 Agriculture 175 838,085,036
3 Mining 145 647,818,829
4 Industry & Handicraft 195 467,546,066
5 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
Approved Foreign Investment in Lao PDR
Top 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 129 574,741,071
4 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
Government’s 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; and
7. Development of the tourism industry and transit services
Forms of Investment foreigns:
1. Business Cooperation by contract
2. Joint Venture
3. 100% foreign owned
Representative Office:
to collect information, study investment opportunities.
Branches:
Foreign Banks, Financial Institutions, Insurance Companies, Consulting firms, and Airlines.
Investment Incentives
ExemptionPeriod
Tax rate during reduction period
tax rate
Zone I 7 years _ 10%
Zone II 5 yearsZone
7.5% for 3 yrs
15%
Zone III 2 years 10% for 2 yrs 20%
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
Others Intensives
Exemption of import duties and taxes on raw materials and capital equipment;
Exemption of export duty on export products;
10% personal income tax on expatriate employees;
Additional tax holidays, reduced tax rates for large projects with special concession are available upon negotiation
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.
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 business and investment environments
POTENTIAL SECTORS
Energy
Mining
Agrobusiness
Tourism
Construction Material
Light industry
Services
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
Existing Generation in Lao PDR
• Plants owned by Electricité du Laos -EdLNam Ngum 1 155 MWNam Leuk 60 MWXeset 1 45 MWNam Mang 3 35 MWSelabam 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
MINING SECTOR:
• Mining industry is under developed
• Mining sector presents numerous
potential opportunities for
investment and development
• Mineral deposits : tin, lead, zinc,
iron ore, copper, gold, gypsum,
lignite, sapphires, …
• Concessions granted to foreign
investors
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
Some Agro-Forest Projects in Laos
• Oji Lao Plantation (Japan): 50.000 ha = 49 m (in
USD)
• 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
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
From Land-Locked to Land-Linked
Special Economic Zone
North
West
Corrido
r
East
West
Corridor
Emerald
Triangle
Economic
Triangle
Savannakhet-Seno SEZ (S-S SEZ)
• Savannakhet-Seno SEZ (S-S SEZ) established in 2003 by S-S SEZ Decree of the PM
no. 148/PM dated
Sept. 29 2003.
• Site A: 305 ha
• Site B: 20 ha
SITE A 305 ha
SITE B 20 ha
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
Investment Approval Procedure
Investor
Enterprise
registration
OSS(IPD)
Issue Inv. License
AppraisalOSS
meeting
Provinces
Line ministries
Business
License
Tax registra
tion
One Stop Service
• Unified Investment Application Form for
obtaining: - Investment License,
- Business License,
- Tax Registration Certificate
• Nomination of One Stop Service Unit
comprises of DDFI Staffs and Representatives
from all line ministries to expedite approval
procedure
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
Thank You For
Your Attention