Present by Mr. Manothong VONGSAY Deputy Director General of ...

Present by Mr. Manothong VONGSAY
Deputy Director General of Investment Promotion Department
Ministry of Planning and Investment
Seoul, 20 June 2012

1. Country snapshot
2. Why invest in Lao PDR
3. New Features of Investment Promotion Law
4. Priority Investment Sectors
4.1 Manufacturing Sector
4.2 Tourism Sector
4.3 Transportation sector
4.4 Hydropower Sector

Land Area :
236,800 sq. km
Population : 6.5 Millions (2011)
Population Density:
26 people/sq km
Population Growth: 2.3 %
Labor Force:
Religion:
3.6 Millions
Budhism

Strategic Location
Laos is at the center of the GMS,
consisting of Cambodia, Myanmar,
Thailand, Vietnam, and Yunnan
province of China.
1. It is the only country bordering all
the other countries in the subregion.
2. More than 70% of international
trade in Laos - except air freight
is cross-border trade
3. 50% of the Lao population lives
in border districts.

Comparative & Competitive Advantages
- Political stability
- High safety
- Low risk from natural disasters
- Low labour cost
Country of rich natural resources:
Fertile land, Minerals, Water, and forest,
giving development potential in
agriculture, mining, and hydropower.
5

One Stop Service Unit
To fasten and facilitate investment procedures.
The Government is creating a favorable business environment that is
responsive to private sector needs.
One Stop Service brings together representatives from all key
ministries to facilitate investment applications and business start-ups
Opened Ceremony on
Oct 11, 2011
6

Market Access
Access to ASEAN market with more than 500 million inhabitants
including southern part of neighboring China
Connects Vietnam and Thailand through the East-West Corridor with
Special Economic Zone in Savannakhet and through the 3 rd friendship
bridge in Khammuan acting as trade and service centers
• Unilateral Trade agreements with 39 countries
including countries in EU, Japan, Canada,
Australia, India, China and South Korea.
• Bilateral investment treaties with more than 25
countries from Europe to Asia
• Easy regional access with regular direct flights
to the major hubs of Bangkok, Hanoi, Kunming,
Kuala Lumpur, Singapore, and Seoul.
7

Combined the domestic investment law and foreign direct investment
law into one to create a “level playing field” for both domestic and
foreign investors;
Shorten procedures to open new businesses;
No terms of investment for promoted activities;
Extended Investment incentives: Corporate income tax exemption up
to 10 years, additional 5 years for Education and Health care sectors
as top priorities;
Foreigners can have access to local financial sources;
Foreigners can invest in the real estate sector;
Promotion of the development of SEZ and Industrial Park.

4.1 Manufacturing Sector
4.2 Transportation Sector
4.3 Tourism Sector
4.4 Hydropower Sector

‣ Government Policy on manufacturing sector as
clearly stated in the 7 th five-years plan (2011-2015):
1. Promoting industrial processing in the agriculture sectors
2. Promoting the wood processing industry.
3. Promoting the garment and textiles industry
3. Promoting the construction material industry
‣ Number of factories has been increasing to
about 37,690 factories in 2010, of which:
1. Large size 218 factories
2. Medium size 268 factories
3. Small size 23,098 factories

‣ Comparative and Competitive Advantages:
Low labor costs
Available areas for investment (Industrial Parks and SEZs)
High safety and Political stability
Low risk from natural disaster
Surrounded by 5 countries, which means bigger market
size
Center of logistics, supported by many bilateral
agreements.
Preferential Treatments or GSP given from various
countries including EU, US, China, and Japan.

‣ Government promotional incentives:
Import duties and tax exemptions on raw
materials and capital equipment using
for production
Exemption from export duty on exported
products
Tax holidays offered

The Lao government emphasizes infrastructure development sector
as a crucial need.
To provide an enabling, safe, and efficient transport throughout the
country with low transport costs, to support the Government effort to
graduate from LDC by 2020 and to achieve MDG by 2015”
To transform from a land-locked country to a land-Link country by:
◦ Providing efficient transportation infrastructures, and facilities,
particularly on transit transport routes.
◦ Facilitating cross border transport of goods and people between
neighboring countries.

The 7 th Five-Year Transport Development Plan (2011-2015)
Set a target budget allocation for infrastructure development projects at
35%(Social35%, and economic30%).
The important infrastructure projects for the next five years have been
identified by the Ministry of Public Work and Transport.(MPWT),
including:
1. Road construction
2. City planning and development
3. Airports, logistics, etc.
4. Upgrade and construct river ports, improve land and river transport
services
5. Construct railway line from Boten to Vientiane Capital, and carry out detail
design of railway line from Thakaek to Mugia to connecting with
Vietnamese Railway network.

No Name of railway Distance
(KM)
Amount
(Billion US)
Period
1 Thanaleng-Vientiane 3.5 40 2008-2010
2 Vientiane-Luangprabang-Boten 493 2,500 2010-2020
3 Vientiane-Thakhek 325 1,400 2010-2020
4 Thakhek-Mugia(Vietnam) 135 614 2010-2020
Source: Ministry of Public Work and Transport 2011

No
Name of the
road
Location
Distance
(KM)
Remark
1 National road 4B Hongsa-Xiengmen 128 NEDA is assisted in
carrying out F.S
2 Mekong Bridge Luang Prabang Proposed to NEDA for
F.S
3 National Road 1A Lantoui-Bounneua 142 Proposed for PRC soft
loan
4 National Road 1E Khamkeut-Ngommalad 93 Contract Agreement
being prepared for
Local Private financing
5 National road 17B Mouangsing-Xiengkok 97 This is the only road to
connect with Myanmar
6 Mekong Bridge Pak Beng proposed for PRC soft
loan

Tourism has gradually been raised
important.
The government has declared the
implementation, development and
promotion of:
Cultural tourism
Natural tourism
Historical tourism
Dedicated its efforts in developing
infrastructures such as the construction of
roads linking all northern, central and
southern parts.

1. Tourism Business is now opened to FDI with Foreign Equity of up to
70%
2. Extend more entry and exist checkpoints in various parts in order to link
with many different countries, (15 international checkpoints at present.)
3. Unilateral and bilateral Visa exemptions for several countries have been
granted.
4. Airport facilities have been upgraded.
5. There are now 3 international airports in Vientiane Capital,
Luangprabang and Pakse.

The National Tourism Authority (NTA) has
cooperated with sectors concerned and local
authorities to plan and develop national tourism sites.
Up to present:
Several natural tourist sites are welcoming FDI
About 985 sites have been surveyed and identified.
257 sites have been identified as cultural sites,
570 as natural sites,
162 as historical sites.
364 sites are curently in service

With the surrounding emerging economies of China,
Thailand, and Vietnam, electricity demand is expected to
increase very rapidly.
• With a potential of over 23,000MW of Hydroelectricity
• Lao PDR planed to be the “Battery of Southeast Asia”
• Abundant water resources produced by tributaries of Mekong river
• Currently, only about 10% of its potential has been utilized(2,300MW)
• GOL plans to increase its hydroelectric output to at least 1/3 of its
potential by 2020.
Laos has signed MOU to provide:
• 7,000 MW of energy after 2015 to Thailand
• 3,000 MW of electricity from present to 2020 to Vietnam

Table2. Hydroelectricity plan toward 2020
Region No. of projects Output (MW) Production(GWh/y)
Northern region 31 1,466 (2010-15)
1,623 (2016-20)
Central region 19 1,333 (2010-15)
323 (2016-20)
Southern region 27 1,047 (2010-15)
905 (2016-20)
Total 77 3846 (2010-15)
2,851 (2016-20)
8,016 (2010-15)
7,783 (2016-20)
5,366 (2010-15)
1,524 (2016-20)
6,504 (2010-15)
4,729 (2016-20)
19,886 (2010-15)
14,039 (2016-20)

Thank you
Investment Promotion Department
Ministry of Planning and Investment
Souphanouvong Avenue, Vientiane 01001,
Lao PDR
Tel: (856-21) 218377
Fax: (856-21) 215 491
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