An Overview of Foreign Investment Laws and Regulations of Lao PDR?

Abstract

This paper aims to examine foreign investment laws and regulations of Lao Peoples Democratic Republic (Lao PDR or Laos), which can provide information for better-informed decision-making by potential investors who wish to invest in Laos. The first regulatory reform in Laos aimed at shifting the country's foreign economic relations was the enactment of the foreign investment laws. The laws and regulations have been revised recently to create a more favourable investment climate. The Lao government has provided a wide range of tax and non-tax incentives for investment projects within the Special Economic Zones (SEZs), reduction on import taxes and tax on foreign corporate profit that is lower than for domestic enterprises. Foreign direct investment (FDI) laws are relatively liberal, allowing 100 per cent foreign ownership across a wide range of sectors.

Social capital as it pertains to international ventures in Asia

“…Another factor shaping Lao social capital is the fact that Lao institutions have undergone significant transformations with a mixture of French, Soviet, Chinese, and Vietnamese influences (Fry, 2008). Even though advancements have been made over recent years, Lao legislative frameworks are still underdeveloped (Gunawardana and Sisombat, 2008; The World Bank, 2017; Witt and Redding, 2013). Our research firmly documents that respondents did not use the local legal system; rather in this environment, personal connections (or social capital) are used to compensate for judicial deficiencies.…”

“…For example, in the more universalistic culture of the United States, social capital have in many instances been superseded by advanced legal systems (Putnam, 2001a). This clearly differs from the situation in Laos, where there are many areas that are not yet covered by viable regulation (Gunawardana and Sisombat, 2008;The World Bank, 2017;Witt and Redding, 2013). Similarly, respondents emphasized that linking social capital is particularly useful in sectors influenced by the government.…”

Characterizing private investments and implications for poverty reduction and natural resource management in Laos

“…These policies include Policy and Strategy for Agriculture and Forestry Development 2006–2010; Power Sector Environment Policy (2001), and the National Policy on Sustainable Hydropower (2009) (Water Resources and Environment Administration & MPI, ). Moreover, linking private investment with natural resource management (for example, through turning land into capital), the GoL has also formulated a set of supporting legal frameworks as well as a series of social and environmental safeguards governing foreign investment in specific sectors, including mining, land and energy (Gunawardana & Sisombat, ). These include the formal guidelines on Environmental Impact Assessment (2011) and Government Decree 192 on Resettlement, Compensation and Grievance Procedure for Project Affected People (2006).…”

Policy Complements to the Strengthening of IPRS in Developing Countries

“…34 Lao international economic relations have been influenced in recent decades by Thailand, which has been a dominant investor in the Lao PDR since 1988. Between 1988and 1994, Thai investment in the Lao PDR was over six times greater than that of the second largest investor, the United States (USD 554 million versus USD 86 million (Gunawardana and Sisombat, 2008). In 2004, Thailand accounted for 34% of all FDI flows into the Lao PDR.…”