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  • Enhancing National Policies

    This section describes the most recent investment-specific and investment-related measures per ASEAN member state. 

    • Lao PDR

      Year

      		 Category

      		 Sub Category

      		 Description
      2014

      		 Policy challenge

      		 A sustainable fiscal position

      		 The sharp widening of the fiscal deficit last year raised serious concerns for the government, which is wrestling with persistent arrears in its payment of wages and resorting to postponing public projects and cancelling cost-of-living allowances for the civil service. Addressing the fiscal deficit in a sustainable manner is key to maintaining economic stability and future growth, even if it means accepting lower growth in the short to medium term.

      The three major reasons for the large fiscal deficit have been overly optimistic revenue projections, large wage increases and allowances awarded without due regard for their impact on the country’s fiscal and external positions, and development projects financed off budget.

      In response to the emerging fiscal crisis, the government doubled its efforts to collect revenue and cancelled or postponed some expenditure. It is also preparing a new fiscal strategy.

      The main challenge is to reduce expenditure to drive the fiscal deficit down to a sustainable 3% of GDP. Assuming real economic growth of 7.5% and nominal growth of 13.0%, slowing expenditure growth in real terms to 2%–3% over the next 3 years would bring the budget deficit down to a sustainable level. Also, off-budget spending needs to be reined in.
      2015

      		 Investment Climate

      		 total investment

      		 In the fiscal year 2013-14, total investment is estimated 40,6 thousand billion Kip. The
      government of Lao invested 9,403.41 billion kip accounting for 23% of total investment and it
      is increased 7.14% compared to the last fiscal year. Foreign and private investment in Lao
      PDR was 31,296 billion Kip, increased from last year by 26%. Most of those investments are
      in the special economic zone and in general activities. For the concession area is unchanged
      compared to the last year.
      investment in general

      		 In 2014, total investment in general sectors are consisted of 2,432 projects value 4.4 billion Kip
      increased by 32.5% compared to last year. The major investments are in the accommodation
      (Guest house and Hotel) sector and other service sectors (which covered 43% of total registered),
      following by the construction sector (which cover 26%), then wholesaler – retailer sectors (cover9%). China was the largest investment in general sectors, following by Vietnam and Thailand
      respectively.
      investment from small companies

      		 The investment from small companies continuously increased in fiscal year 2013-14. There were
      33 companies (27 foreign companies and 6 domestic companies) had allowed to implement in
      Lao PDR. Total amount of investment were 327 million US dollar, which increased from last
      year by 173.89%. Most of investment came from the services sector, mainly in Botendanngam,
      Golden triangle and Savan-Xeno special economic zone respectively.
      The major industry invested in the special economic zone mainly product lines (or product
      chain) pattern and those production model are slightly increase. Most of investor from foreign
      companies which shift the investment base from Thailand to Lao PDR and export the production
      to other countries for assembly or improve those productions. The main reasons of shifted the
      investment from Thailand to Lao PDR are low labor fee and political situation is stability in Lao
      PDR.
      Foreign Direct Investment (FDI)

      		 In fiscal year 2013-14, Foreign Direct Investment (FDI) in concession projects achieved 1.1
      billion US dollar with 33 projects slightly decreased from last year by 61.67%. The major of
      investment in this sector are almost similar to the last year. Mining sector are the largest sector
      with 22 projects that value 802 million US dollar (cover 72.26% of total investment in
      concession projects), following by electricity sector with 3 projects that value 253 million US
      dollar (cover 22.85% of total investment in concession projects), agriculture sector (cover
      1.66%) and industrial sector (1.43%). The largest country invest in the area mentioned above is
      Thailand (cover 58.3% of total investment in this sector) following by China (cover 22.16%) and
      Vietnam (4.2%) respectively.
      The recent trends of economic growth in Lao PDR

      		 National Research Economic Institute (NERI)

      		 Base on the trend of the world economic and the gross domestic production in Lao PDR,
      National Research Economic Institute (NERI) had projected that Lao economy is continuously
      growth about 7.6 % in the fiscal year 2014-15 and 7.8% in fiscal year 2015-16, this mean that the
      trend of economic growth was achieve the target setting in development plan (at least 7.5%). In
      fiscal year 2014-15, the main factors drive the economic growth are due to the recover of the
      world economy and slightly increase trade with the trading partners such as: China, Vietnam,
      Japan and Thailand. This creases a good opportunity to increase agricultural production and
      industries sectors such as textile-garment and other production as well as consumption from
      private with given economic growth significantly.
      Lao economic growth rate in fiscal year 2014-15 is slower than fiscal year 2013-14 about 7.8%
      mainly because the growth rate in some sector are estimated to decrease such as 1). Financial and
      Banking sectors decline as a result of the loan and credit activities in this sector trends to
      decrease in 2014; 2). Government policies which try to reduce the government investment but
      most of policies mainly focus on solving government’s debt from the loan which used for many
      projects in last year causing slowly growth in construction sectors. Therefore, industries sectors
      are estimated to increase particularly mining sector due to the gold price in world market
      increase and stable in the year 2015. Therefore, gold production is estimated a little increase and contribute to the growth rate of this sector. In addition, electricity sector is estimated to
      rapidly increase due to an increase in new hydropower such as LumPanh hydropower, Num
      Khan 2, Xekaman1and Hongsa lignite, which will start to product electricity and export in
      2015. Agricultural sector also trend to increase in 2015, particularly rice production due to the
      rice production in last year was lower than the development plan. Therefore, the related
      ministries and agencies will try to increase the rice production in other to meet with the target
      in 2015. Other crop production also grows in the same rate with last year.
      The economic growth rate in fiscal year 2015-16 is estimated higher than 2014-15 because
      electricity production from the new hydropower station which has started to produce and export
      electric in since 2015, the electricity production covers 26% of total electricity production in Lao
      PDR. In addition, services sectors also projected to increase particularly financial and banking
      sectors, after tightening loan and reduce government debt in 2015. Agricultural sector in this year
      is estimated to grow slowly, however expected no impact in the general economic growth.
      Lao Bilateral Treaty

      		 Bilateral Investment Treaty (BIT)

      		 Laos has signed Bilateral Investment Treaty (BIT) with 28 country for further facilitated and

      promotion investment. Now are going on negotiate between Lao-Canada, Lao-Serbia, Lao-
      Pakistan, Lao-Ukraine, Lao-Turkey, Lao-Portugal, Lao-Azerbaijan.
      2016

      		 INVESTMENT CLIMATE

      		 FDI

      		 Promotion and attraction FDI and domestic investment is crucial to contribute the
      implementation the 7th of Five Year Social-Economic Development Plan of our country,
      which has the expects figure to achieve not less than 8% of GDP per year to attract the
      foreign and private investment. To achieve the target the investment promotion sector release
      the expectation to attract private and foreign investment at least 1.9 billion US Dollars equal
      63% of total investment.
      In fiscal year 2014-2015, be able to attract the foreign and private investment 2.418 projects,
      total investment value 3.457.742.860 US Dollars in Land Concession project has 26 projects
      equal 244.316.367 US Dollars. For General Business activities which are under the
      responsible of Ministry of Industry and Commerce (MOIC) has 2.304 Projects equal
      3.005.389.330 US Dollars.
      For Special Economic Zone and Specific economic Zone has 88 companies equal
      208.037.163 US Dollars. In this, there are three sectors has total value investment like; 1)
      Agriculture and forestry sector has investment value 191.145.204 US Dollars. 2) Mining
      Sector has investment value 95.000.000 US Dollars. 3) Hydro power Sector has investment
      value 4.225.000 US Dollars.
      INVESTMENT ACT (RELEVANT INVESTMENT LEGISLATION)

      		 Law on the Investment Promotion

      		 (No. 02/NA date 08 July, 2009)
      The Law on the Investment Promotion defines principles, regulations and measure
      regarding the domestic and foreign investment promotion and administration in order
      to enable investment expediently, quickly and in conformity with laws and
      regulations, as protected by the government and to ensure the rights and benefits of
      investors, the state and people.
      Investment forms

      		 (Article 8 of the Investment Promotion Law No. 02/NA)
      Investors may directly or indirectly invest in the following forms:
      1. A wholly domestic or foreign-owned investment
      2. A joint venture between domestic and foreign investors
      3. A business cooperation by contract.
      Apart from these, foreign investors can also set up representative offices and establish
      branches in Lao PDR (branches are limited to banks or financial institutions,
      insurance companies, international consulting firms and foreign airlines).
      Investment Activities

      		 Type of Investment
      (Article 13 of the Investment Promotion Law No. 02/NA)
      The investor may invest in the following type of investments:
      - General business
      - Concession business
      - Activities for development of special economic zones and special economic
      zones.
      Investment term

      		 (Article 28 of the Investment Promotion Law No. 02/NA)
      The term of investment in concession depends on the type, size, investment value and
      conditions of the activities bases on concession activities based on concerned
      regulations and laws; it shall not exceed ninety nine years and may be extended with
      the approval of the Government.
      2017

      		 Investment Climate

      		 foreign direct investment (FDI)

      		 Investment value of foreign direct investment (FDI) flow into Laos is 997 million USD in this 2016, which declined approximately minute eight percent (-8%) to compare with last year. A cause from the large hydropower investment construction had completed and the Government had suspended the consideration of approval of mining sector since year 2012 to present. For the approval of new concession investment project has a trend to decline to compare with last year.   
      INVESTMENT ACT (RELEVANT INVESTMENT LEGISLATION)

      		 Law on the Investment Promotion (No. 14/NA date 17 November, 2016)

      		 The Law on the Investment Promotion defines principles, regulations and measure regarding the domestic and foreign investment promotion and administration in order to enable investment expediently, Transparency, quickly and in conformity with laws and regulations, as protected by the government and to ensure the rights and benefits of investors, the state and people enabling the regional and international integration contributing to the continuous growth of national social-economic development in line with green direction and sustainability.
      Investment forms

      		 (Article 26 of the Investment Promotion Law No. 14/NA)
      Investors may directly or indirectly invest in the following forms:

      1. A joint venture between domestic and foreign investors
      2. A business cooperation by contract.
      3. A joint venture between state enterprise and private enterprise
      4. A joint venture between public and private partnership
      Investment Activities

      		 Type of Investment
      (Article 32 of the Investment Promotion Law No. 14/NA)

      The investor may invest in the following type of investments:
        -      General business
        -      Concession business
      Types of general business

      		 (Article 33 of the Investment Promotion Law No. 14/NA)

      General business consists of the following types:
      Business activities under controlled business list
      Business activities outside controlled business list.
      Investment term for general businesses

      		 (Article 40 of the Investment Promotion Law No. 14/NA)

      The investment in general businesses has unlimited term of investment except for businesses of which the term of investment has been limited by regulations of relevant sector authority.
      Investment term for Concession business

      		 (Article 42 of the Investment Promotion Law No. 14/NA)

      The term of investment in concession depends on the type, size, investment value, conditions, feasibility study of the activities based on concerned regulations and laws; it shall not exceed fifty years and may extended with the approval of the Government.
      PROTECTION OF INVESTMENT

      		 PROTECTION OF INVESTMENT

      		 (Article 22 of the Investment Promotion Law No. 14/NA)

      The State protects legitimate rights, interests and equality of all domestic and foreign parties of economy who invest under Lao PDR laws, treaties, and agreements to which Lao PDR is a party.
      FORMS OF INVESTMENT PROTECTION

      		 (Article 23 of the Investment Promotion Law No. 14/NA)

      The Government fully acknowledges and protects the lawful investment of investors against Government seizure, confiscation or nationalization by administrative means.
      In the case that the Government has the needs to utilize the facilities for public interests, the investors shall be compensate with actual invested value at the prevailing market price at the time of transfer using payment methods as agreed by both sides.
      PROTECTION OF INTERECTUAL PROPERTY

      		 Article 24 of the Investment Promotion Law No. 14/NA)

      The Government acknowledges and protects the intellectual property of investors registered under the Law on Intellectual Property Rights of the Lao PDR, international treaties and agreements to which the Lao PDR is a party.
      INVESTMENT PROMOTION INCENTIVES

      		 Investment incentives by business sector

      		 (Article 09 of the Investment Promotion Law No. 14/NA)

          Business sector granted incentives includes:
      High and modern technology application, scientific research, research and development, use of innovative, environmental-friendly [technology] application, and efficient use of natural resource and energy;
      Clean, toxic-free agriculture, planting seed production, animal breeding, industrial plantation, forestry development, protection of environment and bio-diversity, activities promoting rural development and poverty reduction;
      Environmental-friendly agricultural processing industry, national traditional and unique handicraft processing industry;
      Environmental-friendly and sustainable natural, cultural and historical tourism development industry;
      Education, sports, human resource development and labor skill development, vocational training institutions or centers, production of educational and sports equipment;
      Construction of modern hospitals, pharmaceutical and medical equipment factory, production of and treatment by traditional medicine;
      Investment, service provision and development of public infrastructure for urban traffic congestion reduction and residence facilities, infrastructure development for agricultural and industrial production, transportation services of goods, transit services and international linkage;
      Policy banks and micro-finance institutions, focusing on poverty reduction for people and communities who have less access to a bank;
      Modern commercial centers promoting domestic products and world-renowned brands, exhibition centers, fairs for domestic industrial, handicraft and agricultural products.

      Investment in business sector to be granted incentives under this Article shall have a value of at least two hundred million Kip; or employed at least 30 Lao skilled labor or using fifty or more Lao national employees with employment contract of at least 1 year.

      Small and medium size businesses with investment capital and number of labor less than figures set in third paragraph of this Article will receive incentives in according to relevant laws and regulation.

      The Government shall determine the detailed list of activities according to promoted sectors.
      Incentives by zone

      		 (Article 10 of the Investment Promotion Law No. 14/NA)

      Incentives by zone are defined into three zones:

      Zone 1: poor zone, remote zone with socio-economic infrastructure unfavorable to investment;
      Zone 2: zone with socio-economic infrastructure favorable to investment;
      Zone 3: special economic zone.
      Profit tax incentives by business sector and by zone

      		 (Article 11 of the Investment Promotion Law No. 14/NA)

      Investors investing in sectors and zones defined in Articles 9 and 10 of this Law shall receive the following profit tax exemption:

      Zone 1: exemption for ten years, additional five years for investment in sectors set out in section 2, 3, 5 and 6 of Article 9 of this Law;
      Zone 2: exemption for four years, additional three years for investment in sectors set out in section 2, 3, 5 and 6 of Article 9 of this Law.

      The above exemption periods shall be counted from the year the investing enterprise generates business revenues. Upon expiration of above exemption periods, the enterprise shall follow to the Tax Law. 
      Zone 3:  shall comply with the specific regulation.
      Concession business shall comply with relevant laws or according to the agreement.

      The Government shall issue regulations and detailed procedures for implementation of profit tax exemption incentives as set out by law.
      TAXATION

      		 Regular customs and Tax systems
      Rates of Profit Tax

      		 Article 29 of the Taxation Law No. 05/NA)

       The rate of profit tax are determined as the followings:
       1. The 24% rate is applied to both domestic and foreign enterprises that hold legal entities, except companies that are registered at the stock market which are granted profit tax reduction of 5% from normal rate for a period of four years from the date of registration at the stock market. After such period normal rate as determined in this Law shall be applied;

       2. The 26% rate is applied to enterprises that are legal entities which produce,    import and supply tobacco products of which 2% shall be contributes to cigarette control fund according to Article 46 of the Law on Tobacco Control.
       
      3. Profit tax rates for individual enterprises and freelance shall be progressive rates ranging from 0% to 24%.
      2018

      		 Investment Climate

      		 Private Investment

      		 Foreign and domestic Private Investment attraction and promotion is an important part to contribute an implementation of the eighth of social-economic development plans 5 years, which expected to get the GDP at least 7 percent per year, mean government must be attract and promote private investment sector on both domestic and foreign to achieve approximately 2.4 billion USD per year.

      Investment value of foreign and domestic private investment on the second half of 2017 in Laos, Government could attract total private investment at 37 project which have total investment value at 1.712.790.817 USD. The main sector to contribute the economic growth is concession activity there are consist of hydro power, mining, industry and telecommunication sectors. 

      On the first half of 2018 government could attract total foreign and domestic private investment at 2.779 projects/enterprises which have total investment value at 3.284.579.412 USD. There are concession projects has approved by 8 projects, which has total value at 175.241.513 USD. For general business activity is under control by Ministry of Industry and Commerce has approved 2.758 company which have total capital register value at 1.192.279.409 USD. In the special economic zone has approved by 16 projects which have total investment value at 14.630.000 USD. 
      REGULATORY REFORM

      		 Government

      		 Government of has pay attention to the improvement of economic development especial aim to graduate from the lease develop country and to improve the human life to be better. Government has been focus on the attraction of promotion on foreign and domestic private investment to make better investment environment. Referring to the indicator of facilitation on doing business (Each of doing business) from ranking number 139 in 2016 declines to 141 in 2017 from global country.
      Government has reviewed the processing on starting business which now is on-going recall the procedure of approval and other details with concern authority to boost up the doing business environment in Laos.
      Bilateral Investment

      		 At present, Lao has been modified the draft of Bilateral Investment Treaty which now is in the process of scribing its model draft and working with concern authority further to take this model draft of BIT to be an official version for signing with negotiate country.
      Revised Law on the Investment Promotion (No. 14/NA date 17 November, 2016)

      		 This Law defines principles, regulations and measures regarding the domestic and
      foreign investment promotion and administration in order to enable convenient, expeditious, transparent and proper investments, as protected by the Government, aiming to ensure the rights and benefits of investors, the state, collective and people, enabling the regional and international integration, contributing to the continuous growth of national socio-economic development in line with green direction and sustainability.
      Investment forms
      (Article 26 of the Investment Promotion Law No. 14/NA)

      		 Investors may directly or indirectly invest in the following forms:
      1. A wholly domestic or foreign-owned investment
      2. A joint venture between domestic and foreign investors
      3. A business cooperation by contract
      4. A joint venture between a state-owned enterprise and a private enterprise
      5. A public-private partnership (PPP)
      Investment Promotion Incentives

      		 Investment incentives by business sector
      (Article 09 of the Investment Promotion Law No. 14/NA)

      Business sector granted incentives includes:
      High and modern technology application, scientific research, research and development, use of innovative, environmental-friendly [technology] application, and efficient use of natural resource and energy;
      Clean, toxic-free agriculture, planting seed production, animal breeding, industrial plantation, forestry development, protection of environment and bio-diversity, activities promoting rural development and poverty reduction;
      Environmental-friendly agricultural processing industry, national traditional and unique handicraft processing industry;
      Environmental-friendly and sustainable natural, cultural and historical tourism development industry;
      Education, sports, human resource development and labor skill development, vocational training institutions or centers, production of educational and sports equipment;
      Construction of modern hospitals, pharmaceutical and medical equipment factory, production of and treatment by traditional medicine;
      Investment, service provision and development of public infrastructure for urban traffic congestion reduction and residence facilities, infrastructure development for agricultural and industrial production, transportation services of goods, transit services and international linkage;
      Policy banks and micro-finance institutions, focusing on poverty reduction for people and communities who have less access to a bank;
      Modern commercial centers promoting domestic products and world-renowned brands, exhibition centers, fairs for domestic industrial, handicraft and agricultural products.

      Investment in business sector to be granted incentives under this Article shall have a value of at least two hundred million Kip; or employed at least 30 Lao skilled labor or using fifty or more Lao national employees with employment contract of at least 1 year.

      Small and medium size businesses with investment capital and number of labor less than figures set in third paragraph of this Article will receive incentives in according to relevant laws and regulation.

      The Government shall determine the detailed list of activities according to promoted sectors.
      Incentives by zone
      (Article 10 of the Investment Promotion Law No. 14/NA

      		 Incentives by zone are defined into three zones:

      Zone 1: poor zone, remote zone with socio-economic infrastructure unfavorable to investment;
      Zone 2: zone with socio-economic infrastructure favorable to investment;
      Zone 3: special economic zone.
      Profit tax incentives by business sector and by zone
      (Article 11 of the Investment Promotion Law No. 14/NA)

      		 Investors investing in sectors and zones defined in Articles 9 and 10 of this Law shall receive the following profit tax exemption:

      Zone 1: exemption for ten years, additional five years for investment in sectors set out in section 2, 3, 5 and 6 of Article 9 of this Law;
      Zone 2: exemption for four years, additional three years for investment in sectors set out in section 2, 3, 5 and 6 of Article 9 of this Law.

      The above exemption periods shall be counted from the year the investing enterprise generates business revenues. Upon expiration of above exemption periods, the enterprise shall follow to the Tax Law. 
      Zone 3:  shall comply with the specific regulation.
      Concession business shall comply with relevant laws or according to the agreement.
      Regular customs and Tax systems
      Rates of Profit Tax
      (Article 29 of the Taxation Law No. 05/NA)

      		 The rate of profit tax is determined as the followings:
       1. The 24% rate is applied to both domestic and foreign enterprises that hold legal entities, except companies that are registered at the stock market which are granted profit tax reduction of 5% from normal rate for a period of four years from the date of registration at the stock market. After such period normal rate as determined in this Law shall be applied;

       2. The 26% rate is applied to enterprises that are legal entities which produce, import and supply tobacco products of which 2% shall be contributes to cigarette control fund according to Article 46 of the Law on Tobacco Control.
       
      3. Profit tax rates for individual enterprises and freelance shall be progressive rates ranging from 0% to 24%.
      2019

      		 Lao’s Investment climate

      		 private investment

      		 Newly approved foreign and domestic private investment in 2018 The investment attraction continues to grow at a good pace, showing the investment approval figure of $ 6,047 million, as the approved figure exceeds the five-year plan's annual plan (2016-2020) the expected figure set for annual plan averaged at $2,4 billion. The total value of investments covering the investment project / activity in the sector of electricity, mining, agriculture and forestry sectors and services. The number of investment approvals / registered capital is obtained from the three parties: 1. Planning and Investment sector, 120 projects and increased registered capital on 9 projects, totaling $ 4,704 million. 2. Industry and Commerce sector, 2,758 units and the registered capital value at $1.192 million. 3. Special Economic Zone sector approved 68 projects, totaling $151 million.

      6. For the real import figures, 2018 was $ 2,749 million with actual imports from related sectors, including the custom and banking sectors. The custom sector includes materials, equipment, vehicles, worth $ 1,450 million. The banking sector is worth $ 1.298 million. Due to the large number of projects are still under the construction implementation such as Lao-China railway construction project, Vientiane-Vangvieng express way project, NUM THEUN 1 hydro power project and about 10 other hydropower projects, as well as about 10 mining projects, have entered into exploration and exploitation contracts. The agriculture sector, an outstanding project is the construction of the Chinese Paper Factory in Savannakhet province, has invested an additional $ 200 million and will officially start production in 2019. In addition, there is also expected to be a flow of investment into other services. Given the conditions and potential mentioned above, it is certifying that the actual inflows of money are still going in a positive direction and could be able to achieve the year plan at least the neared figure. 

      7. The task of attracting and promoting foreign and domestic private investment is one of the most important tasks to contribute to the implementation of the socio-economic development plan from time to time. For the eighth Five-Year Plan (2016-2020) that we are working on now, with the global economic conditions and macroeconomic conditions of the country, it is currently a challenge compared to the previous seventh Five-Year Plan. Therefore, to maintain stability and pace the average GDP growth rate of no less than 7% per year to achieve this target.

      8. Lao PDR encourage on attracting foreign and domestic private investment during the first six months of 2019, with approving a total of 1,266 investment projects, totaling $ 3,644 million, with 1,255 activities. For actual imports, the value was $ 1,091 million, equivalent to 40.6% of the yearly plan (23,086.13 billion Kip). The actions build large infrastructure are proceeding according to the plan as well as the construction of Vientiane - Vangvieng expressway can perform engineering 33% expected that 2019 will carry 44%. The Lao-China railway project practice came to 70% in 3 Months early 2019. For Xayaburi hydro power project will completed 100% in late 2019, currently being test of running an electric purchasing. 
      investment policy

      		 Presently, Lao PDR is pay attention in improving the investment climate that target to improve and attract foreign investment. The Investment promotion department is implementing the Prime Minister Order No. 02/PM on the improving the regulations and coordinating mechanisms on ease of doing business in Lao PDR, related to 10 indicators in order to investment facilitation with expecting to complete at the end of this year.

      10. Lao PDR issued an introduction the investment policy on custom and VAT for Enterprise’s Importation (Master List) No. 01/CCIPM, dated 2 January 2019 and Decree on Approval of Control Activities List and Concession Activities List No. 03/PM, dated 10 January 2019. 

      11. Lao PDR continues to focus on implementing promoting, advertising and attracting investment to achieve socio-economic development targets as planned.
      2020

      		 Development in Investment Regime or Business Environment

      		 Measure to resolve the affected from the Outbreak of COVID-19
      -  The Government of Lao PDR has exempted the income tax form the salaries of worker that earning 5 million Kip less and exempt the income tax of the small enterprises in period of 3 months (4,5,6 Year 2020).
      -    Exemption the duties and taxes on importation of goods for serving the work of prevention the COVID-19.
      -  Postpone of tax payment on tourism business in period of 3 months (implemented from April 2020), postpone for submission of financial report year 2019 of enterprises and extend for payment others fee.
      -   Reduction of electric fee, internet fee and phone call and extend for payment of electric and water supply.
      -   Adjusted to reduce the fundamental interest rate of the Bank of the Lao PDR and provide policy for credit, deferment payment of costs and interest. Bank of Lao PDR has contributed 200 billion Kip which release 100 billion Kip to SME fund through commercial Bank at a fixes interest rate of 3% per year and has approved 3% interest loan for commercial bank to release cradit an interest rate of 5,5% to revitalize the busineses of manufacturing of goods. 

      4. The Government of Lao PDR is pay attention to improve the regulation under the Laws and focus on the implementation such as 1. The Investment Promotion Law No. 14/NA dated 17 November 2016 (revised version). 2. Order No. 02/PM dated 01 February 2018 on improving the regulations and coordination mechanism on doing business in Laos. 3. Order No. 03/PM dated 21 January 2020 on improving the services of investment licence issue and issuing the business operation licence over the country and etc. 

      5. From the implementation of the regulation and policy issued in each period, the implementation of the Social Economic Development Plan of the fiscal year 2020 define the target of private investment attracting approximately 50 percent, and to facilitate the private investment sector and doing businesses. The Government has improved some Laws in economic field mainly such as Tax Law which reduce the income tax rate at 20%.

        
      6. Through attracting private investment in 2019, the country is likely to continue to grow at a good pace, with a total investment value of 19.42 billion US dollars. This figure exceeds the figure set in the annual plan of the five-year socio-economic development plan 2016-2020 (the average figure set in the annual plan is 2.4 billion US dollars per year). The total investment value covers investment projects / activities in the Hydropower, mining, agriculture and forestry, services and other sectors. For the figur of real importation capital in 2019 is worth at 3.24 billion US dollars through the financial sector in area of importating the raw materials, equipments and vehicles is worth at 2.20 billion US dollars and the capital import through the bank of Lao PDR is worth at 1.04 billion US dollars.
      7. Since the beginning of 2020, the government has continued to implement the work of attracting and promoting investment which has the concession projects were approved by the Central Commission for the Promotion and Management of Investment, with a total value of US $ 2.64 billion. Compared to the same period of Fiscal Year 2019 is worth 9.71 billion US dollars (Fiscal Year 2019 attracted a total of 19.42 billion US dollars). For special economic zones across the country, since the beginning of 2020, 38 companies have registered for investment and the registered capital is 79 million US dollars and is expected to have a total investment value of 118 million US dollars.

      8. For approved and monitored projects has reflected that those projects are in progress of implementation and will be a potential in bringing foreign investment capital into the country to develop and create the income such as Lao-China railway construction project (is in progress to date 30/04/2020 has implemented the public work completed 89.2% and expect to completed in the post of the year 2021 and open to used in the beginning of 2022), the new city development project in surrounding area of railway station, Vientiane-Vangvieng express way project has value of investing approximately 1.29 US $, as of 20/05/2020, the project has completed investment of approximately US $ 918 million, calculated at 71.03% of the total investment value. In addition, there are still have the project that is ongoing for implementation in the fields of agriculture, industry and services, such as commercial animal husbandry, industrial production, export and investment, etc.
      Policy and Regulatory Reforms

      		 investment policy

      		 Pemerintah Lao PDR sedang meningkatkan lingkungan investasi yang bertujuan untuk meningkatkan dan menarik investasi asing dengan menerapkan Perintah Perdana Menteri No. 02/PM tentang peningkatan regulasi dan mekanisme koordinasi kemudahan berbisnis di Lao PDR, terkait dengan 10 indikator untuk memfasilitasi investasi.

      Lao PDR mengeluarkan kebijakan investasi tentang bea masuk dan Pajak Pertambahan Nilai untuk Impor Perusahaan (Daftar Utama) No. 01/CCIPM, tanggal 2 Januari 2019 dan Dekrit tentang Persetujuan Daftar Kegiatan Pengendalian dan Daftar Kegiatan Konsepsi No. 03/PM, tanggal 10 Januari 2019.

      Untuk mempromosikan dan menarik investasi asing dan domestik, Lao PDR sedang menyusun Instruksi tentang kebijakan insentif investasi terkait pajak keuntungan dan biaya sewa atau biaya konsesi tanah.

      Pada bulan Desember 2019, Lao PDR disetujui oleh Majelis Nasional untuk mengeluarkan Undang-Undang tentang revisi Pasal 12 dari Undang-Undang Promosi Investasi No. 14/Na, tanggal 17 November 2016 agar konsisten dengan Undang-Undang Pajak Pertambahan Nilai dan regulasi terkait dengan tujuan mendirikan mekanisme fasilitasi untuk mendorong dan mempromosikan lingkungan investasi.
      Tax Law

      		 For Taxation, Laos had implemented new income tax rates for businesses and employees on February 17, in a move to improve tax compliance as well as boost productivity.

      14. The new Income Tax Law (Tax Law No. 67/NA Dated 18 June 2019), which will replace Tax Law No. 70/NA issued in 2015, will lower the profit tax rate for small, medium, and large enterprises for most activities and the Law provides better progressive rates and a large deduction base for personal income tax (PIT).
      15. In June 2019, Lao PDR was issued three Laws such as The Law on Tax Management (Revised version) No.66/NA Dated 17 June 2019, the Income Tax Law (TAX Law No.67/NA Dated 18 June 2019) and the Law on Excise Tax (Law No.68/NA Dated 19 June 2019), which determines the regulations, measures, management, and inspection of taxation activities in Laos. 
      2021

      		 Development in Investment Regime or Business Environment

      		 Measure to resolve the affected from the Outbreak of COVID-19

      		 To ease any particle measures and resolve the impact of the COVID-19 epidemic that occurred to manufacturing sector, business people and all society parts. Therefore, the government has agreed to implement the policies and measures as following: 

      10. Agree to implement the financial policy such as the Government of Lao PDR has exempted the income tax form the salaries of worker that earning 5 million Kip less and exempt the income tax of the small enterprises in period of 3 months (April, May, June Year 2021).

      11. Exemption the duties and taxes on importation of goods for serving the work of prevention the COVID-19.

      12. Postpone for submission of financial report year 2020 of enterprises and extend for payment others fee to June 30, 2021.

      13.  Agreed to reduction of electric fee, water supply fee, internet fee, trash fee and extend for payment of electric and water supply.

      14.  Assign the Ministry of Finance as the center to coordinate with the relevant departments to research the policy to reduce the value added tax (VAT) rate as appropriate to help stimulate the economy, but at the same time take into account the impact on budget revenue collection in the 2021 and the fiscal year especially for business tourism services in appropriate rate and period.  

      15. Continue to encourage the implementation of policy easing credit to customers loans of business bank and finance institutions that is not banks which have been affected by the outbreak of the Covid-19 such as the postponement of repayment of capital and interest, adjusted lower interest rates and fees, providing loans with restructuring loans according to the agreements on the credit policy to address the impact of the outbreak of the disease Covid-19, No. 238 /bol, dated 26 March 2020 and further agreement on implementing policies Loan No. 256 /bol, dated May 13, also in 2021;

      16. Continue to implement policies to strengthen the funds to provide loans to boost production to replace imports and exports to address the impact of the disease Covid-19 and promote micro enterprises, enterprises and small and medium such as funds from the special credit of the Bank of the Lao PDR according to the agreement on the project for credit to encourage production and resolve the effects of disease Covid-19, No. 318 /bol, dated 19 May 2020 and the Government fund to promote Lao SME, withdrawal Loan from Bank Development of China (CDB).

      17. Agreed to continue the implementation of subsidies policy and support labor, in case of suspended businesses which was paid workers salary for those labors but they still can have right for healthcare subsidies and gain subsidies in short term.

      18. through the actual implementation, the trend of domestic and foreign private investment in whole country is still considered to be in a good direction which has total investment value US$2.6 billion. The approval figure exceeds the figure set in the five-year plan 2016-2020 (the average figure set in the annual plan is US$ 2.4 billion/year) and attract investment increase from 2019 by 74%. The total investment covers projects/activities that invest in the electricity, mining, agriculture and forestry sectors, services and other sectors. The number of investment/registration approval figures is obtained from the approval of three sectors:
      - The planning and investment sector approved 322 projects worth 8.875 billion US dollars.
      -  The Industry and commerce approved 13.939 units with a value of 17.194 million US dollars.
      - The Special economic zone approved 89 units with a value of 215.778 US dollars.

      For the actual import figures for 2020 are:
      Financial sector (raw materials, equipment and vehicles) the actual import value is USD 2.336 billion.
      Bank of the Lao PDR (capital imported through the bank) the actual import value is USD 12.059 billion.
      Policy and Regulatory Reforms

      		 prime minister Order

      		  Currently, in addition to promoting the task of attracting investment from domestic and foreign private sector, during the year 2020 can also encourage investment in the form of public-private investment mainly: project research, survey and detailed design of feasibility study project on development the railway project from middle to southern part of Laos which is length 345 KM and further projects.

      Continuing to the implement of prime minister Order No. 02/PM dated 01 February 2018 on improving the regulations and coordination mechanism on doing business in Laos. 3. Order No. 03/PM dated 21 January 2020 on improving the services of investment licence issue and issuing the business operation licence over the country.

      During the year 2020, the following activities were implemented:
      - Create an electric system to link business registration information, investment licenses, tax license as a single database which now ministry of planning and investment (MPI) and ministry of industry and commerce (MOIC) jointly set up a database to bring into the system.
      - Ministry of finance has completed the development of a system for managing, monitoring, inspecting (deducting ) the annual import plan which is monitored at international border customs checkpoints throughout the country.
      - developed the customs declaration system (ASYCUDA), the Smart-Tax, the Smart-Vat, the International Transit goods management System, and the E-pass system.  
      2022

      		 Streamlining Processes and Requirements

      		 Prime Minister’s Order

      		 Lao PDR highlighted the implementation of its Prime Minister’s Order No.02/PM in February 2018 on Improvement of Regulations and Coordination Mechanism of Doing Business in Lao PDR, which include simplification of procedures for obtaining license and registered company seal.
      Undertaking Tax and Financial Market Reforms

      		 Tax policies

      		 Brunei Darussalam, Indonesia and Lao PDR issued new tax policies during this reporting period.  Brunei Darussalam established Income Tax Board of Review to facilitate the administration and operation of taxation through a new process of hearing, examining and settlement of objection cases from companies against the Collector of Income Tax’s assessment.  Indonesian issued a new Tax Holiday policy through Regulation No.35/PMK.010/2018 dated 4 April 2018 in order to boost the industry sector. Lao PDR issued custom and VAT incentive for enterprise’s importation in accordance with its investment promotion policy No. 01/CCIPM, dated 2 January 2019, and a Decree on Adoption of Lists of Controlled and Concession Businesses No. 03 dated 10 January 2019.
      2023

      		 Development in Investment Regime or Business Environment

      		 Promotion of foreign and domestic investors

      		 The promotion of foreign and domestic investors to invest in Laos PDR in Six months of the first half of 2023, in the economic world and Laos PDR was effect by the Russia and Ukraine war, and inflation but the promotion of investment still operating to complete the goal from the national economic plan. The statistics of investment in the first half of 2023 had 119 projects with a total value of 64.688 trillion kips increased to 19% from 2022, the value-added included hydropower, mining, agriculture and forestry, services, and other sectors. The government signed Project Development Agreement for 21 projects (mining 9 projects, Hydropower 2 projects, agriculture 9 projects, and general business 1 project), business license approved 55 projects (mining 16 projects, Hydropower 8 projects, agriculture 5 projects, and control business 55 projects). In addition, the Ministry of Industry and Commerce in charge of approving enterprise licenses the total value of the investment is 457.455 trillion kips, and in the special economic zone is 6.345 trillion kips increased to 1,53% from 2022, import 1.540 trillion kips increased to 11,21% from 2022, This figure exceeds the figure set in the annual plan of the five-year socio-economic development plan 2021-2025 (the average figure set in the annual plan is 1.93 billion US dollars per year or 20.000 billion Kip per year).
      Policy and Regulatory Reforms

      		 Revision of the law

      		 In addition, in 2023 there are some laws in the area of the economy that are subject to revision such as the Law on Investment Promotion (Investment promotion Department, 2022) for approval by the assembly at the end of this year; and Law on Land. To support strengthening the international reserves, the BOL will continue to revise the law on foreign exchange management for approval by the National Assembly; implement the revised laws and regulations focusing on the management of foreign exchange business, cross-border capital flows, external debts, credits and deposits denominated in foreign currencies.
       

      		 One Stop Services

      		 The Ministry of Planning and Investment responsible for improving the One Stop Services mechanism presently is in the process of operation and creation guide book for the investment opportunity in Lao PDR; Making a video for investment promotion and making guide book for Investment Profile; improving investment website; and preparing the plan for set up a database to link between central level and provincial level and link to a database of commerce sector and tax sector, and create a tracking system to pursue the one-stop service investment documents. The following activities were implemented:
      - Continuing the implementation of prime minister order No.02/PM dated 01 February 2018 on improving the regulations and coordination mechanism for doing business in Laos. Order No. 03/PM dated 21 January 2020 on improving the services of investment license issue and issuing the business operation license over the country.

      -Continuing to create an electric system to link business registration information, investment licenses, and tax license as a single database which now the Ministry of Planning and Investment (MPI) and Ministry of Industry and Commerce (MOIC) jointly set up a database to bring into the system.
      development of a system

      		 The Ministry of Finance has completed the development of a system for managing, monitoring, and inspecting (Deducting) the annual import plan which is monitored at international border customs checkpoints throughout the country. Developed the customs declaration system (ASYCUDA), the Smart-Tax, the Smart-Vat, the International Transit goods management System, and the E-pass system.
      In the future, there is a plan to increase investment promotion and attraction by developing and improving information by diversifying to modernize with the target to enable to submit of investment documents through electronic channels and create the investment brochure to be date version parallel with hosting the dissemination on investment promotion seminar in abroad with having the objective and take the chance of high-level bodies pay an official visit to promote investment.