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Welcome

Welcome. to. Laos. Geographical Location. China (505 km in the north). Vietnam (2,069 km in the east). Myanmar (236 km in the north-west). Cambodia (435 km in the south). Thailand (1,835 km in the west). Country’s Profile. Land Area : 236,800 sq.km2 Population : 5.6 Millions (2005)

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Welcome

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  1. Welcome to Laos

  2. Geographical Location China (505 km in the north) Vietnam (2,069 km in the east) Myanmar (236 km in the north-west) Cambodia (435 km in the south) Thailand (1,835 km in the west)

  3. Country’s Profile • Land Area : 236,800 sq.km2 • Population : 5.6 Millions (2005) • Population Density: 24 persons/sq km • Population Growth Rate: 2.8% • Labor Force : 2.17 Millions • Religion: Buddhism (85%)

  4. Lao P.D.R. : 5.6 Millions Thailand : 61.6 Millions Cambodia : 12.5 Millions Vietnam : 80.5 Millions Yunnan Province : 43.0 Millions Myanmar : 48.9 Millions In Total : 252 Millions inhabitants Regional Population/Market Access(2004)

  5. Open Door Policy • New Economic Mechanism: • 1986: Shifting from planned economy to a market oriented economy • Privatization of state enterprises • Open for FDI

  6. Shares of Private Investment

  7. Approved and Implemented FDI in Lao PDR from Y2000 to 1st half 2005.

  8. Approved Foreign Investment in Lao PDR by Sector 1988-March/2005

  9. LAO PDR IN THE GLOBAL ECONOMY • Member of international organization ( MIGA, ASEAN, ASEAN-Japan Centre, WORLD BANK, ADB, IMF…) • GSP Privileges: 42 countries ( EU, CANADA, JAPAN, CHINA, ….. ) • NTR with USA (04/02/2005) • Bilateral Investment Treaties with 23 countries (Investment Promotion and Protection) • In process of joining WTO

  10. GEOGRAPHY Lao PDR is being transformed into LAND LINKED country and Transit country in the region

  11. Kunming CHINA 1,200 Km. Jinghong Luang Namtha LAOS Chiang Khong Chiang Rai THAILAND • On-going project • Thai, ADB, China share 1/3 • (soft loan) • Start 2004, complete 2007

  12. Second Mekong Int’l Bridge Project HAI VAN PASS TUNNEL Dansavan/ Lao Bound Dong Ha Seno Kon Kaen Maung Pin Danang A. Chumpae Mukdaharn/ Savannaket Kalasin Lao PDR Vietnam Cambodia • On-going project • Second Mekong Bridge (Mukdaharn – Savannaket) • Soft loan from Japan • Cost = 4,753 Mil Yen. • Under construction • Complete end 2006

  13. (Road Project) Lashio Jinghong Dien Bian Phu Kentung LM16 Bagan Bo Ten Meiktila Muang Xai LT28 MT36 Luang Prabang LT34 LT29 Nan Payaggi Nakhon Phanum Thaton LT30 MT37 LT32 Mae Sot Mukdaharn Khon Kaen MT38 Ubon Ratchathani Thanbuzayat Three Pagoda Pass Nakon Ratchasima Quang Ngai Andaman Sea MT40 CT25b CT56 Tavoy CM12 Poipet CL14 Quy Nhon Stung Treng Kanchanaburi Siem Reap Trat CT25a Kaw Thong Sihanouk Ville Ranong Ca Mau Showcase, Short-Term Medium to Long-Term Showcase, Short-Term Medium to Long-Term • On-going project • III CL14: Stung Treng – Champasak and Preah Vihear – Champasak • No progress on Cambodia side • Section in Lao PDR is completed. • IV CM12: Road linkage under Asian Highway project • Cambodia: Poipet –Sisophon (48 km) • Under ADB loan

  14. (Road Project) Lashio Jinghong Dien Bian Phu Kentung LM16 Bagan Bo Ten Meiktila Muang Xai LT28 MT36 Luang Prabang LT34 LT29 Nan Payaggi Nakhon Phanum Thaton LT30 MT37 LT32 Mae Sot Mukdaharn Khon Kaen MT38 Ubon Ratchathani Thanbuzayat Three Pagoda Pass Nakon Ratchasima Quang Ngai Andaman Sea MT40 CT25b CT56 Tavoy CM12 Poipet CL14 Quy Nhon Stung Treng Kanchanaburi Siem Reap Trat CT25a Kaw Thong Sihanouk Ville Ranong Ca Mau Showcase, Short-Term Medium to Long-Term Showcase, Short-Term Medium to Long-Term Next stage projects CT56: Chong Chom – Siem Reap LT29: Muang Ngeon – Loung Prabang MT40: Three Pagoda Pass – Thanbuzayat • Field reconnaissance will start mid 2004. • LT34: Mekong Bridge at Chiang Kong/Houay Sai • ADB will start FS & DE in 2005 LM16: Lao – Myanmar Friendship Bridge over Mekhong River Preliminary survey complete, wait for funding (Japan) MT37: Mae Sot – Pa an - Thaton (Section Foothill – Pa an – Thaton) MT38: Kawkariek – Mawlamyine - Thaton

  15. Government’s Investment Policy • Law on the Promotion of Foreign Investment (2004) • Welcome every business sector and activity not detrimental to national security, environment, and public health and safety • All investment is guaranteed against expropriation and nationalisation without compensation • Remittance of dividends an profits back home or to third countries is allowed through banking system • Employment of skilled and expert foreign personnel (up to 10% of total employees of an enterprise) • Long term land lease (50-75 years)

  16. Government’s Investment Policy (con.) • 3 Forms of Foreign Investment: 1) Business Cooperation by contract 2) Joint Venture between foreign & domestic investor 3) 100% foreign owned enterprise • Representative Office & Branch: + Foreign Company can open its Representative Office in Lao PDR to collect information, study the feasibility of investment and coordinate matters for the purpose of applying for investment. + Foreign Banks, Financial Institutions, Insurance Company, Consulting firms, Airlines can open their branches in Lao PDR. • Investment Term: The investment term of a foreign enterprise depends on the nature, size and conditions of the business activities will be fifty(50) years and extendable to seventy five (75) years.

  17. Government’s Investment Policy (con.) • Promoted Activities eligible for incentives: • Production for export; • Activities relating to agriculture or forestry, and agricultural, forestry and handicraft processing activities; • Activities relating to industrial processing, industrial activities using modern techniques and technology, research and development, and activities relating to the protection of the environment and biodiversity; • Human resource development, skills development and public health; • Construction of infrastructure; • Production of raw materials and equipment to be supplied to key industrial activities; and • Development of the tourism industry and transit services.

  18. Government’s Investment Policy (con.) • Promoted Zones Zone 1: Mountainous, Plain and plateau zones with no economic infrastructure facilitate investments, which will be entitled to a profit tax exemption for 7 years and thereafter will be subject to profit tax at the rate 10%. Zone 2: Mountainous, Plain and plateau zones with a certain level of economic infrastructure suitable to accommodate investments to some extent, which will be entitled to a profit tax exemption for 5 years and thereafter will be subject to a reduced profit tax rate of half of fifteen 15% for 3 years and thereafter a profit tax rate of 15%. Zone 3: Mountainous, Plain and plateau zones with good infrastructure to support investments, which will be entitled to a profit tax exemption for 2 years and thereafter will be subject to a reduced profit tax rate of half of 20% for 2 years and thereafter a profit tax rate of 20%.

  19. Government’s Investment Policy (con.) In addition to the incentives mentioned above, FDI shall be entitled to the following incentives: • an exemption of minimum tax; • the profit used for the expansion of business activities will be exempted from profit tax during the accounting year; • Exemption of import duties and taxes on equipment, spare parts, vehicles directly used for promotion and raw materials; • Exemption of export duty on export products. • 10% income tax on expatriate employees • Loss carry forwards: 3 years • Additional tax holidays, reduced tax rates for large projects with special concession are available upon negotiation

  20. POTENTIAL SECTORS • Energy • Mining • Agribusiness • Tourism • Construction Material • Light industry • Service

  21. INVESTMENT SECTORSELECTRICITY GENERATION: • Abundant water resources produced by tributaries of Mekong river • Estimated electricity generation potential: over 23,000 MW(only about 2% currently exploited) • Investment in BOT hydro-electric facilities will be substantial • Investment in ancillary support services will increase

  22. MINING SECTOR: • Mining industry is at an early stage of development • Mining sector presents numerous potential opportunities for investment and development. • Mineral deposits : tin, lead, zinc,iron ore, cooper, gold, gypsum, lignite, sapphires, … • Some concessions granted to foreign investors

  23. Focus in Agro-Forest Processing • Highest ratio of forest area • Large stands of tropical hardwoods including teak, mahogany and rosewood • Suitable land for various tree Plantation • Plenty of productive land • Long term land lease (50-75 years)

  24. Agro-Forest in Lao PDR • 44 projects in Lao PDR = 61.711.209 us$. • Some achievement and large scale projects : - BGA Lao Plantation (Newz): 50.000 ha = 49.000.000 us$; - CITYLAND Resources (Malaysia): 3.500 ha = 11.000.000 us$; - Daklak Rubber (Vietnam): 10.000 ha = 6.000.000 us$; - Vietnam General Rubber(Vietnam):10.000 ha=22.000.000 us$; - Paksong Highland (Thailand): 26.000 ha = 8.000.000 us$.

  25. Investment in Agro-Forest of Top 7 countries.

  26. Agro-Forest in Lao PDR • Main issues in Agro-Forest: - Land approved level: • District not over 3 ha with approval from province • Province not over 100 ha with approval from MAF; • MAF not over 10.000 ha with approval from GOL; • Government 10.000 ha up with adoption from NA; - Fees rate between 6 -9 US$/ha/year. • Long term land lease (50 -75 years)

  27. Tourism • Eco-tourism • Culture-Tourism • Agro-Tourism

  28. Eco-tourism • Clean air • Beautiful landscape • Attractive for health-improving purposes

  29. Culture-tourism • Rich in well-preserved culture and traditions • World heritage sites

  30. ADMINITRATION OF THE FDI SYSTEM • FDI system is administered by DDFI • DDFI acts as One-Stop-Shop • DDFI manages the investment application process advices for investors:-investors in filling out investment application forms;- processes/obtains the foreign investor’s business and tax licenses;- assists investors in obtaining other necessary permits and licenses;- grants investment incentives.

  31. Thank You For Your Attention

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