THE PROGRESS REPORT OF THE ACTION PLAN FROM THE LAO … · THE PROGRESS REPORT OF THE ACTION PLAN FROM THE LAO SIDE December 16, ... unless they prejudice Lao national security and

The Lao- Japan Public and Private Sectors Joint Dialogues:

-----For further enhancing investment from Japan to Laos----

THE PROGRESS REPORT

OF

THE ACTION PLAN

FROM THE LAO SIDE

December 16, 2011

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The Lao-Japan Public and Private Sectors Joint Dialogues : the First Meeting (04/12/2007)

ACTION RECOMMENDATIONS FROM THE JAPANESE SIDE

1. Legal and policy transparency and predictability

1.1 To clarify and make public the responsible governmental departments in charge of

granting the necessary official licenses and approvals.

→ ACTIONS BY THE LAO SIDE

(1)The GOL will establish a kind of ‘clearinghouse-center’ which is to render

“one-stop-service” to the investors the information as to legal affairs, tax matters, labor

issues, licenses and approvals such as the one relating to land use by mid-2009. The

information is to cover all the governmental ministries and agencies of the Lao PDR.

(2)The GoL will make the list of the responsible governmental departments in charge of

granting the necessary official licenses and approvals by publishing a booklet by

mid-2009. Ministry of Planning and Investment will show the above information on

their website also by mid-2009.

→ PROGRESS OF THE ACTION PLAN BY THE LAO GOVERNMENT

(1) Currently, the one stop service unit under the Investment Promotion Department provides the

data service that relates to investment such as providing the investment application form,

recommendations and explanation on the procedures and progress of the consideration in each step. At

the same time, unit provides the comprehensive data to investors regarding the customs, taxation,

importation of raw material and machinery, how to obtain VISA, Foreign ID for the investor and other

related information on investment. Recently, a JICA expert started working at MIP as an adviser Since

September 2009 to assist IPD and provide information and data to Japanese Investors.

(2) Ministry of Planning and Investment (Investment Promotion Department): will revise the

Investment Guideline Book for Lao PDR, after the completion of the implementing decree of the

new investment law. The name list of relevant government offices which is in charge of issuing

licenses and certificates will be published on the revised version of Investment Guideline Book.

PROGRESS OF 2010

(1) The Prime Minister Office has issued the Notice dated September 01, 2010 giving instruction to

MPI to improve its existing One-Stop-Service (OSS) Unit of IPD by having competent

representatives from line departments sitting together at the OSS Office of MPI. IPD has

incorporated the governing regulation of the said OSS into the draft Implementing Decree on the

new Investment Promotion Law. MPI cabinet is now considering the possible office space

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available to accompany this to be newly expanded OSS office in MPI. This new OSS will also

serve as a consultation window on issues and matters related to investment and business

operations.

(2) MPI is now publishing the Investment Magazines on a quarterly basis and latest copies of the

special edition in November 2010 can be obtained from MPI cabinet. In addition, IPD is

publishing its quarterly newsletter providing information on its investment promotional activities.

IPD will also issue its new Investment Guide booklet after the completion of the implementing

decree of the new investment promotion law.

PROGRESS OF 2011

(1) The implementation schedule of OSS at MPI and Ministry of Industries and Commerce (MOIC)

central and provincial office has been set in the same period as the implementation of Law and

Decree. However, it requires the strong connection between the concerning ministries, because

OSS will issue the Concession license (MPI) and Business license (MOIC) which includes Tax

code and tax exemption terms approved by Ministry of Finance. In addition OSS will also issue

provide company stamp within 7 working days after the approval of business or concession

license.

(2) OSS was opened at MPI on 10th October, 2011. This OSS has four functions: 1) supplying

information to investors, 2) issuing concession certificate, 3) issuing VISA for investors, and

4) advising labor employment. After 11th October 2011, MPI is a window for concession

business application and MOIC is a window for general business application.

(3) So far, OSS for concession business application has been established only at MPI. OSS

will be established in all provinces in addition to OSS at MPI, in accordance with the Law

on Investment Promotion.

(4) In case of OSS at MPI, the application form of concession business investment is one sheet

including for tax registration. MOIC plans to use the application form of general business

investment including for tax registration as well.

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1.Legal and policy transparency and predictability

1.2 To make public the laws and regulations as well as measures concerning investment, e.g.

favorable treatments for foreign companies, in an easily accessible way. For instance, it will be

useful to timely up-date the web-site of the Lao Government and to issue the official gazette.


(1) All the Ministries/Agencies will consider opening their web-site in English, if they do not

have it in the present, by mid-2009.

(2) The GoL will actively update the information on laws, decrees, rules and regulations on

investment on the website of the Ministries/Agencies concerned without delay each time there

take place any change or modification to them.

(3)The GOL will continue to publish revised investment guideline and brochure, including

Law and Decrees related to investment, at least once a year in English.

(4)The GoL will consider issuing the official gazette containing all the official governmental

decisions, unless they prejudice Lao national security and other vital national interests, on the

monthly basis within the year 2009.

(5)The GoL will promote “E-Government” and will have a tangible outcome by the end of

2009.

(6)The GoL will make sure that the Embassy of Lao PDR in Japan will have the

above-mentioned investment guideline, brochure and so on to facilitate the investment-related

information to Japanese investors.


Some ministries have their own website, but some are constructing their website as follows:

- Ministry of Planning and Investment, Investment Promotion Department: www.investlaos.gov.la

- Ministry of Finance: www.mof.gov.la; Customs Dept: www.custom.gov.la

- Ministry of Industry and Commerce: www.moc.gov.la

- Ministry of Energy and Mine, Energy Promotion and Development Department:

www.poweringprogress.org, Department of Geology and Mine: www.dgm.gov.la; Department of

Electricity: www.mem.gov.la; Mines Dept will have its website in 2010.

- Ministry of Public Security, Immigration Dept: www.immigration.gov.la

- Ministry of Justice is constructing the website and data center (with the collaboration of Vietnam)

- The Bank of Lao PDR: www.bol.gov.la

- Ministry of Information and Culture: www.mic.gov.la

- Ministry of Public Health: www.health.gov.la

http://www.investlaos.gov.la/

http://www.mof.gov.la/

http://www.custom.gov.la/

http://www.poweringprogress.org/

http://www.dgm.gov.la/

http://www.mem.gov.la/

http://www.immigration.gov.la/

http://www.bol.gov.la/

http://www.mic.gov.la/

http://www.health.gov.la/

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- Ministry of Education: www.moe.gov.la

- Ministry Agriculture and Forestry: www.maf.gov.la

- Public Administration and Civil Service Authority: www.pacsa.gov.la

- Ministry of Public work and Transportation: www.mpwt.gov.la

- Civil Aviation Dept: website will be available in 2010

- National Science and Technology Dept: www.nast.gov.la

(2) Ministry of Planning and Investment (Investment Promotion Department) will continue to publish the

updated brochure and investment guidebook, which are including the law and decree on investment in

English language at least one a year.

(3) MPI is in consultation with line agencies.

(4) E-Government project is one of the 111 top priorities of Lao government to develop the country in

order to become a modern industrial country. With this system the governmental offices will effectively

keep all data with rapidity, clear and save. Even though, the E-government will spend a large budget

and put more tasks into the concerned sectors to change working style and learn more about modern

equipments. However, in the long run for E-Service establishment will save time and expense for the

citizen that use the public service such as reduce paper use, reduce the traveling to the service unit and

the service procedure will be reduced.

After the government had permitted the implementation in November 2006, the implementation

team was immediately begun the project and developed the E-government system to be completed by

2009.

There are 5 main significant tasks under E-Government construction as following:

- Build Local and National E-Government Service Center

- Set up the E-Government infrastructure to connect with other governmental offices, institutions,

private business sectors and citizen.

- Upgrade the programs and facilities for management and information service of offices.

- Provide information technology equipments to the offices to access the E-Government system

and modern working style. Computers are generally being installed in the government offices.

- Provide training on information technology to the government officers and the expert on

E-Government system service

National Authority of Science and Technology or Information and Technology center have received

the grant aid as following countries:

National E-Government project: 35 million USD

National Communication Network: 58 million USD

National Internet Network:20 million USD

- Malaysia took an import role for providing education fund

http://www.moe.gov.la/

http://www.maf.gov.la/

http://www.pacsa.gov.la/

http://www.mpwt.gov.la/

http://www.nast.gov.la/

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- India have donated over 3 million USD including:

Laboratory Training program

Information Technology

Provided over 30 IT Master degree scholarship to study in India

The supported had started when the Prime minister of India visited Lao PDR

while the Lao government on the demand of improving ICT. Thus, the MOU

had been signed.

Recently, MoPI is on the process of consulting with National Authority of Science and

Technology, Information Technology institute on creating the official website for the Ministry of

Planning and Investment, investment promotion department.

(5) Ministry of Planning and Investment (Investment Promotion Department): Provided “law on

investment, investment guidebook and investment brochure” to the Embassy of Lao PDR in Japan in

March 2009 and will continuously provide after the publishing of the revised version.

PROGRESS OF 2010

(1) The progress of websites of ministries:

- Website of Ministry of Foreign Affairs is www.mofa.gov.la is under construction.

- The Import-Export Department, Ministry of Industry and Commerce has provided the operational

certificate procedure for the rule of origin under Asean, Asean-China and Asean-Korea including

the rule of origin for product only under Asean in this website www.moc.gov.la

- Ministry of Energy and Mine (Mine Dept): the Mines Dept has not set up their own website yet

because at the moment their work is not directly related to the website, but they plan to set up

one in future.

- Ministry of Energy and Mine (Office): These are the websites relates to Ministry of Energy and

Mine:

+ Office of Ministry: www.mem.gov.la

+ Electricity Dept: www.mem.gov.la

+ Energy Promotion and Development Dept: www.poweringprogress.org

+ Geology and Mine Dept: www.dgm.gov.la

+ Entreprise D' Electricite du Laos: www.edl.laos.com

+ Lao Holding State Enterprise: www.laoholding.com

+ Electrical Construction and Installation State Enterprise: www.eci.com.la

http://www.mofa.gov.la/

http://www.moc.gov.la/



http://www.poweringprogress.org/

http://www.dgm.gov.la/

http://www.edl.laos.com/

http://www.laoholding.com/

http://www.eci.com.la/

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(2) MPI is planning to convert the existing IPD website to become MPI website in 2011. Several

government ministries and departments are in progress of setting up their websites.

(3) MPI is publishing the quarterly Investment Magazine in Lao and English. IPD is publishing its

quarterly Newsletter in English.

(4) Real situation of on the E-government project is not clear, because there is no further updated

progress report from National Authority of Science and Technology (NAST). As far as MPI

knows, the E-government project is originally planned by NAST with an assistance provided by

China to connect ministries by Wide Area Network (WAN). However, so far, such network has not

been observed yet by any ministries. Besides the E-government project executed by NAST,

National Authority of Post and Telecommunication (NAPT) has already established the National

Internet Center to enable easy access among different internet service providers in Laos.

(5) MPI and IPD are pleased to provide the quarterly Investment Magazines and Newsletters to the

Japanese Embassy in Laos as well as the Lao Embassy in Japan.

PROGRESS OF 2011

Website of Tax Department is http://www.tax.gov.la.

http://www.tax.gov.la/

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1.3 To give prior notice to the public well in advance when laws and regulations as well as

measures concerning investment are newly adopted or modified. For the sake of the

directly-affected companies in particular, it will be desirable to give them prior explanations

individually and then seek their opinions.


(1)The GoL will open the public hearings when it takes new laws, decrees, rules and

regulations concerning investment. This process is particularly important for drafting the

so-called unified investment law. These public hearings are very useful for the companies

which will be directly affected by the new measures.


(1) Ministry of Planning and Investment (Investment Promotion Department): During the time of

drafting of the new law on investment promotion, MPI did the public consultation in four

provinces including Luang Prabang, Savanakhet, Vientiane Capital and Vientiane provinces. In

addition, MIP invited related sectors and organizations and embassies to comment on the draft of

new law. During the time of drafting the decree of the Prime Minister regarding the

implementation of the amended law, MPI also will do the public consultation.

PROGRESS OF 2010

(1) During the drafting process of the decree of the Prime Minister regarding the implementing of the

amended law, IPD has been organizing 12 consultation meetings with relevant government

departments and agencies.

(2) MPI would like to invite the explanation and public comment hearing meeting of new laws and

decrees concerning the economic sector. The Japanese Chamber of Commerce and Industry will

be called for invitation to such meetings to be held not only by MPI but also by economic

ministries such as MOIC, MOF, and NLMA.

PROGRESS OF 2011

(1) According to the decree on implementation of the investment promotion law, the law consultation

window (LCW) shall consist of staffs from concerning ministries, who will sit and work in the

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same working place. Thus, regarding to those concerning questions from investors, these

people can be able to give an answer within one week. However, some questions may need

time to consult with their own ministry.

(2) For all legal blinding documents related to the investment or need to be publicly and required to

implement by investors, the IPD is welcome to and publicly informing all investors. At the

moment, IPD is organizing disseminate the decree on implementation of the investment

promotion law at the provincial levels.

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1.4 To apply these laws and regulations as well as measures concerning investment to the

investors in an impartial and fair fashion at all the governmental levels including the

implementation one.


(1) The GoL will make sure that laws, decrees, rules and regulations will be executed in unity

across the country in an impartial and fair fashion for all the investors.

(2) As one of the steps for this purpose, the GoL will continue to conduct the dissemination and

training on the work of investment to the central governmental officials as well as the local

officials.


(1) The government will continue to try to implement of the laws, decrees and various regulations to be

unified across the country and fair for investors;

(2) After the new law is in to force, Ministry of Planning and Investment (in collaboration with IFC) will

conduct the dissemination and training on the work of investment to the central government officials as

well as the local officials in order to make them understand deeply how to implement the new law.

PROGRESS OF 2010

The PM decree on the implementation of the amended law has still not been approved by the

government. The investment promotion department is still finalizing the draft decree. After the

completion of the said implementing decree, IPD plans to organize dissemination and training

workshops in Vientiane Capital and in several major provinces.

PROGRESS OF 2011

(1) The Government issued the PM decree on the implementation of investment promotion law (No.

119/PM) on 20th April 2011.

(2) Referring to the meeting among the representatives from Ministry of Planning and Investment,

and from Ministry of Industry and Commerce on 10/5/2011 and 24/5/2011, the Investment

Promotion Law and its Implementation Decree will be fully interpreted in 11th October 2011.

Meanwhile, the concerned authorities are making amendment on some laws and regulation in

order to comply with the Investment Promotion Law such as the regulations on custom and tax

exemption policy, tax code and other regulations related to the approval of business license.

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1.5 To ensure consistency among the laws and regulations concerning investment.


(1)The GoL will make further efforts to ensure consistency among international agreements,

laws, decrees, rules and regulations by comparing and analyzing them before the adoption of

laws, decrees, rules and regulations.


(1) Ministry of Justice (Institute of law research and international cooperation): Consistency among the

laws and regulations concerning investment: for drafting laws or revising laws, the party-government’s

policy is focusing and considering the importance of coordination with people and all business sectors

as a. In the previous action, laws concerning economic such as: law on Investment, resource

management, tax-duties and others were all commented from the sub-working groups of the economy.

Article 30 of Presidential Decree No.02 / Lao PDR, dated on 20 October, 2003 on Legal Document

Creation in Lao PDR determines that the organizations have the right to propose the draft of law.

But the organizations have to collect data, study on the actual status of the politic and social-economic

and lessons from internal and overseas to create the law.

Besides the drafting of law, the drafting of Implementation Decree, which is drafted by the concerning

sector, has a consultation and brainstorming session with all sectors.

Department of Treaties and International Law, Ministry of Foreign Affair submitted the draft of

President’s decree on creation and implementation international agreements to the NA, now waiting

for approval and official endorsement.

PROGRESS OF 2010

The Ministry of Foreign Affairs finished the draft of President’s decree on Creation and

Implementation International Agreements. After the National Assembly has approved and adopted it,

this decree came into force in December 7, 2009. (Department of Treaties and International Law,

MoFA)

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PROGRESS OF 2011

Regarding the presidential decree on governmental fee and service charge, MPI replied to the requests

from the Japan side as follows.

(1) The building permission fee shall be charge accordingly to the Presidential decree No. 03/PM. In

other cases that are not complied with this presidential decree, it is illegal and IPD will follow

those cases and check with the concerning authorities.

(2) In this case that fee tables are unofficially imposed by a local rule, the MPI has no authority to

immediate abolition, but MPI can ask the related authorities to check and propose to change.

(3) When the cooperation is requested by the Japan side to solve the similar problems, LCW will be

focal point for the coordinating regarding to this matter.

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2. Deregulation

2.1 To clarify and ease the regulations on foreign capitals and amplify the sectors which are

100% open to foreign capitals' participation.


(1) The GoL will enact the unified investment law which is to clarify and ease the regulations on foreign

capitals by the end of 2009. Unify the Domestic Investment Law and Foreign Investment Law including

9 significant issues as following:

1) Unify the Domestic Investment Law and Foreign Investment Law which clarifies the equality

between Lao investors and Foreigners Investors. The government policy indentifies huge significant

on attracting foreigner investors as well as for some sectors that do not recognize.

2) Now, investment consideration approvals have turned into one stop service unit, particularly at

investment department, planning and investment department as well as expanding to the industrial and

commerce sectors who will consider for approvals for general enterprises (article 14 and article 17 on

investment law), which is follow the law on enterprise. The planning and investment department is

responsible for concession enterprise (article 15 and article 21). The GoL were trying to implement on

One Stop Service Unit for many years. The implement had examined at Saysettha District by gathering

the related governmental officers to take part as a team for considering and solving problems as one

stop service.

3) Policy on custom-tax promotion has divided into 3 investment areas and each place had divided into 3

steps, which according to the type of investment (article 49-51). In addition, there is a special policy for

education and public health enterprise (article 54), by attracting more investment for these enterprises, the

concerned sectors will reduce custom and tax for special case. With this policy, the citizen will ease to

access more education and public health service in order to successful on to Millennium Development

Goals.

4). Domestic and foreign investors many access the capital by getting the loan from business bank or

bank institute in Laos or abroad (article 53).

5). Besides the foreign investors who will be able to investment for 100%, on the other hand for general

enterprise is unlimited investment period (article 20) and for concession enterprise should not longer than

99 years (article 28).

6). Foreign investors may have rights to buy the land to build his own accommodation (article 58). In

order to have such a rights, the investors should have the following criteria:

1) Holding the enterprise capital in cash at least not less than 500.000 USD

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2) The land should be state land (not belonging to Lao citizen) and the government will responsible for

providing the land

3) There should be the approval documents from local authority where the investor resides.

4) land use period will be equal to the period of investment (it means that once the enterprise stops its

business the land use right will invalid also)

7) Foreign investors may invest in real estate property by renting governmental land or from private

(article 58) and that real estate property can be merchandised.

8) Investors can access to any investment Information.

9) GoL promotes on economic special zone development which is a zone that the government allows

investor to develop into economic special zone, exporting process zone, industrial zone, tourist cities

zone, duty free zone, border trade zone, ICT and etc (article 33-43)


(1) The law on investment promotion has been approved by the National Assembly (NA) in early on

July 8th, 2009 and the legal committee of the NA is revising and final editing on some articles to

be harmonious with comments and propose of assembly delegations. Expected the President of

National Assembly to sign soon and after that present to president office to issue the presidential

decree for announcing this law to be used. In addition, Ministry of Planning and Investment is

preparing draft of Prime Minister’s decree regarding the implementation of this law. When the

presidential decree issue, then this will be present to prime minister for signature and declare to

be implementing immediately.

PROGRESS OF 2010

The Investment Promotion Law No. 02, dated 08 July 2009, has been promulgated by the

Presidential Decree dated 20 July 2010. However, the law has not been fully implemented because

the implementing decree has not yet been in place.

PROGRESS OF 2011

(1) The Government issued the PM decree on the implementation of investment promotion law

(No. 119/PM) on 20th April 2011.

(2) Referring to the meeting among the representatives from Ministry of Planning and Investment,

and from Ministry of Industry and Commerce on 10/5/2011 and 24/5/2011, the Investment

Promotion Law and its Implementation Decree will be fully interpreted in 11th October 2011.

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3.Procedures for permission and approvals

3.1 To simplify the procedures for visa and labour permission.


(1)The GoL will issue the first list of documents and necessary attachments to apply for

permission of residence for foreign investors and foreign workers by mid-2009. Ministry

of Planning and Investment will show the above information in their website.

(2)The GoL will issue the decree of Prime Minister on management of immigration

including the expansion of multi visa for foreign investors from one (1) year to five (5)

years and also the expansion of identification card from one (1) year to five (5) years

by mid-2009.


(1) The GoL has issued the decree of Prime Minister at immigration management which was approved by

the Prime Minister No. 136/PM, dated 25 May 2009. This Decree state clearly on the procedures and

necessary documents to obtain VISA and permission of residence for the foreign investors and labor

( please see attached decree)

(2) Article 15 of the decree of Prime Minister at immigration management which was approved by the

Prime Minister No. 136/PM, dated 25 May 2009 mentions the expansion of permission of residence

from 1year to 3-5 years for foreign investor who has signed long-term investment contract with the Lao

government. For multi- entry visa for foreign investors expands from 1year to 3-5 years and the validity

of identification card expands from 1 year to 3-5 years.

PROGRESS OF 2010

(1) Ministry of Foreign Affairs (Consular Department): Government of Lao PDR has issued the

decree of Prime Minister No. 136/PM, dated 25 May 2009 on Lao Immigration and Foreigner

Management. No. 5 of Article 15 determines procedure of registration and permission of

residence for foreign investors. The investor who has signed long-term investment contract with

the Lao government will receive the permission of residence from 3-5 years and can be

extended as the proposal from the relevant sector.

(2) For multi- entry visa for foreign investors which determined in Article 19: the validity of

multi-entry visa is the same as validity of identification card or permission of residence. At the

present, the issuance of multi-entry visa by the Consular Department is based on the validity of

the identification card or permission of residence which is issued by the concerned sector and

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valid for 1 year.

(3) The detail procedure for applying for the multiple entry visa and identification card for foreign

investors, which can be valid for 3-5 years, has been incorporated in the draft PM Decree on the

implementation of the amended investment law.

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3.2 To simplify the procedures for licenses and approvals as much as possible at every stage

for realizing the investment in Laos such as land use license, business license and

import/export license, and then to reduce the number of licenses and approvals as well as the

time to grant them.


(1)The GoL will enact the unified investment law which is to clarify and ease the regulations

on foreign capitals by the end of 2009. This is purported to simplify the procedures for licenses

and approvals for investment.

(2)The GoL will use ONE STOP SERVICE UNIT of Department for Investment Promotion of

MPI whose responsible contact point is:

◎ Office ONE STOP SERVICE UNIT

◎ Tel: (856) 21 217 012

◎ Fax: (856) 21 215491

◎ E-mail address: [email protected]

This will be instrumental for enhancing smooth coordination with the related sectors.

(3)The GoL will set up the investment application system through web-site for the businesses

in the Promotion List by mid-2009.

(4)The GoL will make sure the common application forms for the investment permission and

approvals across the country by mid-2009


(1) For the progress of the revised version of the Law on Promotion of Investment, please see the above

2.1.

(2) One Stop Service Unit at Promotion Investment Department is coordinating with the related

government sectors to collect the comments faster to ensure a prompt consideration and meet the

deadline of approval for the investment. After the investment license is issued, the One Stop Service at

Promotion Investment Department will facilitate the application for the enterprise license from the

Industry and Commerce sector and the tax registration from the Taxation sector. Besides that, this unit

will also facilitate the application for obtaining multi-entry VISA and permission of residence for the

investors and their family.

(3) The investment application form of general activity is submitted through the website, will be

considered by the Ministry of Industry and Commerce due to the new law assigns this sector to

approve the general activities. Regarding to the new law, the submission of the investment application

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form will be as follow:

- For the general activities: investors no need to have investment license. In order to start a business in

Laos, investors have to submit an application form to obtain the one stop service of the commercial

sector (The commercial sector comprises: 1. The Ministry Industry and Commerce; 2. the trade

divisions at the provincial and capital city level; 3. The trade offices at the district and municipal level)

in accordance with the law on enterprises.

- For the concession projects, investors have to submit an application form to the One Stop Service for

consideration and forward to the Government for approval.

(4) After issuing the unified Investment Law and implementation decree, IPD will disseminate and hold

the seminar for planning and Investment sectors and other related sectors in nation wide for unity

implementation of the investment sectors comprise with application form used.

PROGRESS OF 2010

The above mentioned actions can only be implemented after the promulgation of the PM decree on the

implementation of the amended law, i.e. when the law is fully implemented.

PROGRESS OF 2011

The Cabinet of MPI announced by No.2350/MPLIPD4 dated 7th October 2011 that starting from 11th

October 2011 investment and investment-related applications shall be proceeded as follows.

(1) All investment applications of general activities (non-concessional activities) and all applications

for changing/varying legal basis related to general activities shall be directly submitted to and

coordinated with MOIC.

(2) All applications for investment incentive (import tax exemption) on the importation of raw

materials, equipment, machinery, spare parts, and vehicles directly used for production shall be

submitted to and coordinated with MOF.

(3) All applications applied for concession activities from the Government and all applications for

changing/varying legal basis of concession activities shall be directly submitted to and

coordinated with the One-Stop-Service (OSS) Office located on the MPI.

Therefore, starting from 10th October 2011 OSS Office located in MPI will provide the following

services to the existing domestic and foreign as well as to potential businessmen /investors

/entrepreneurs in the Lao PDR as follows.

(1) Applications for concession activities:

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(2) Applications for the establishment and/or extension of representative offices of foreign

companies/enterprises:

(3) Applications for changing/varying legal basis of companies/enterprises engaging in concession

activities:

(4) Provide service on obtaining business visa, multiple entry visa, work permit card, and stay permit

card to foreign businessmen, experts, technical staff and of companies/enterprises invested in the

Lao PDR.

(5) Provide investment information and data in the Lao PDR.

The service provided by the OSS Office is only applied for central level. Provision of OSS at

provincial level will be announced at later stage.

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3.3 In this regard, to implement the one-stop-service across the country.


(1) The GoL will continue to expand the one-stop-service across the country by early 2009.

(2) In addition to the steps concerning clearing house/center (see page 1) and the single-stop

/ single-window service at the border areas (see page 21), the GoL will implement the

one-stop-service at the Prefecture government’s offices.


(1) The GoL has issued the agreement of government no. 86/PM, dated August 03, 2007 regarding

“One Stop Service” at the government office and has an implementing trial at Saysettha district.

After 1 year trial, the outcome was very satisfied and it was convenient to use the service of one

stop service. Therefore, the Public Administration and Civil Service Authority has published the

“Guideline for One Stop Service” in 2008 and instructed the government sectors in the central

and local level to implement this one stop service. (the sample of Guideline for one stop service

is attached). For Ministry of Planning and investment: In accordance with article 44, 45 and 46

of the new law on promotion of investment, the investment promotion department has completed

the draft of the decree of implementation for one stop service and submitted this draft to GoL for

approval. Waiting for the GoL to announce this new law.

The draft of the decree of implementation for one stop service consists 8 principles by following:

1. Internal and foreigners investors may hand in their proposals and inquiries directly to

the concerned sectors, by fax or through the internet within official working hours at

mentioned on article 1 No 1.3 as the following address:

A. Ministry of Industry and Commerce www.moc.gov.la or E-mail: [email protected]

B. Ministry of Industry and Commerce, Vientiane Capital

C. Investment Promotion Department, Souphanuvong Street, Vientiane

01001 Lao PDR.

Fax: + 856-21 215491

Website: www.invest.laopdr.org

D. Planning and Investment Department, Vientiane Capital

E. Economic Special Zone Administration Committee

2. Planning and Investment sectors, concerned investment authorities are the one who

http://www.moc.gov.la/

mailto:[email protected]

http://www.invest.laopdr.org/

20

considering the concession enterprise and establish the representative legal officers unit

for foreigner by following procedures and defined period according to law on

investment;

3. Planning and investment for district and local authority will consider the enterprise

according to the procedures and defined period on enterprise law, law on investment

promotion and related sector laws;

4. Special economic zone administration committee will independently consider the

investment in special economic zone according to the procedures and defined period for

that special zone.

5. For the fees and service charge on one stop service unit must clearly declare at one stop

service unit and follow the presidential decree on fees and service charge No 03/….,

dated 19 November, 2008.

6. One stop service unit will reveal the result (if it is accepted or denied) to the investors

in exactly period and related laws;

7. The investors will hand in the proposal himself or through his own representative office

(non-broker), that representative will responsible for legal affairs.

8. Investors, data service provider and representative will responsible for legal affairs and

complain can be made according to Lao PDR laws. (more details please find the attach

(draft of decree)

For the implementation of One Stop Service at the Ministry of Planning and Investment was

already implement at the Promotion Investment Department according to 8 principles that also

mentioned above. Recently, The office of one stop service unit is inside the investment

promotion building, 1st floor, room no. 108 and consists of 6 staffs (formal suit with name

sign)to provide the service. The number of people using this service is increased in previous and

especially, in the period of September 2009 this unit has facilitated and approved 208 projects,

worth USD 4.3 billion. Though, the office is very small and old. At the present, the new building

of ministry of planning and investment is under construction and will be completed in 2 years.

(2) According to the instruction of the Public Administration and Civil service Authority as

mentioned in (1), now some of ministries and the office at the province are attempting to

implement one stop service.

PROGRESS OF 2010

(1) The progress of setting up One-Stop-Service of MPI can be found in 1.1 (1).

(2) There has been no report from the Public Administration and Civil Service Authority on the

progress of the expansion of OSS in various ministries and agencies at the national, provincial,

21

and district levels as per the PM order no. 86 and the “Guideline of One-Stop-Service” of the

Public Administration and Civil Service Authority.

PROGRESS OF 2011

For the one-stop-service, please refer to item 3.2.

****** ******************************** **************************************

In 2011, a discussion was made for the issue of environmental certification procedure at the working

group No.4. The following outcomes were obtained from the meeting.

“Does the annual environmental management budget described in EIA or IEE mean

WREA’s annual inspection cost?”

According to item (5) & (6) of article 4 & 20 of the Environmental Impact Assessment (EIA)

Decree No: 112/PMO, it states that all costs, including collecting baseline environmental & social

data, writing up an EIA or IEE report, reviewing EIA or IEE report, reviewing Environmental

Management Plan (EMP) and monitoring & inspection of implementing the EMP of the

projects are developers’ responsibility.

Therefore, an annual environmental monitoring and inspection budget described in the EIA or

IEE report is the budget for districts, provinces and WREA to use for monitoring and inspection

the implementation of EMP.

In fact, the EMP of large scale projects such as hydropower, mining or industry factory, the EMP

must clearly indicate two monitoring and inspection budgets; (1) is a monitoring budget for a

company or developer himself to carry out daily monitoring and implementing EMP; (2) is a

monitoring and inspection budget for government (district, province and WREA) to carry out the

monitoring and inspection in each period (refer to the Degree 112/PMO and EMP of the project).

Excess annual budget for environmental monitoring and inspection can be carried over the

next year.

The central sector distributes an annual environmental monitoring and inspection budget

to the local sectors.

We intend to enhance the inspection and monitoring function.

We hope to establish a consulting window in our organization.

22

“If it means annual inspection fee, we request to revise the EIA or IEE which has already

approved. (The Japan side)”

In principle, after an IEE report is approved it cannot be revised. However, if developers request

to make a revision and amendment of an EMP and its monitoring and mitigation budget, the

developers can do but they have to make a request to the agency that approved the IEE report.

If it is an EIA report, developers must refer to conditions set in the Environmental Certificate

Compliance (ECC) or article 18 of the EIA Degree 112/PMO. It states that an EMP of a project

needs to revise every 2-5 years, based on case by case.

“For the inspection fee, does WREA have a transparent standard price list? We request

WREA to provide us. (The Japan side)”

Regarding the expenditure of monitoring and inspection budget, WREA, provinces and districts

refer to a regulation of Ministry of Finance, No: 008/MOF, 05 Jan 2010 which is revised from an

old regulation in 2008.

“If WREA has not made a standard price list, please make it immediately.”

In principle, the Government of Laos does not allow any governmental agency and Ministry

concerned to develop its own financial regulations for specific purpose i.e its own regulation for

spending and reporting budget used for monitoring and inspection. Therefore, any expenditure of

monitoring and inspection budget, WREA refers to a financial regulation provided by the

Ministry of Finance.

“Environmental consultant companies which are registered to WREA are very limited and

its human resources are insufficient. Under these monopolistic companies, some light

industries companies were requested 25,000USD for IEE consultation.”

According to article 4 & 6 of the EIA Degree, No: 112/PMO, it states that all types of investment

projects which are listed in group 1 & group 2 (refer to EIA Degree 112/PMO) must carry out an

IEE or EIA report.

Collecting baseline data of physical, biological and social environment and writing up an IEE or

EIA report must be done by individual person, a group of people or an Environmental Consultant

Company that has a certification/registration from WREA.

Fee or cost for collecting baseline data and writing up an IEE or EIA report is truly depend on a

negotiation and agreement between an Environmental Consultant Company and a developer.

Currently, WREA does not have any rule to control service fee or cost for collecting baseline data

23

and writing up an IEE or EIA report.

According to the Decree No: 112/PMO, WREA is handing over responsibility of reviewing and

approving IEE report to provincial authority and this will solve the problem.

A Division of Industry in province will not issue an Environmental Certificate Compliance

(ECC) that is apparel with WREA.

Decree No: 112/PMO determines that reviewing an IEE report is 50 working days. This period

does not include the amount of time that an Environmental Consultant Company revises or

updates the IEE report after WREA made comments on the IEE report.

We will consider to the possibility of preaparing IEE and EMP by the investors, although

the prime minister decree prescribes utilization of consultants for preparing IEE and EMP.

We will investigate the unit price of control service fee or cost for collecting baseline data

and writing up an IEE or EIA report by the request from the Japan side. Since MNRE

has less experience in this field, we would like to ask the Japan side provide experiences in

Japan.

According article 10 of the EIA Degree No: 112/PMO, it states that

reviewing IEE report is 50 working days

reviewing EIA report is 90 working days

reviewing complicated EIA report is 120 working days

In reality, however, it may take less or more time to review. It is totally based on the fact that how

good an IEE report is, trust reference document and comments from line Ministry and province.

In reply to the question from the Japan side, we will investigate whether OSS can deal with

the problem of taking long time to review IEE and EIA reports.

An old IEE regulation gave permission for concerned ministries to develop their own regulations

for reviewing an IEE report.

After the EIA Decree No: 112/PMO is approved, it is agreed that WREA is only the agency to

issue the ECC.

WREA understands the concerns of developers and therefore, WREA is putting efforts to develop

manuals, guidelines and regulations to support and facilitate Environmental Consultant

24

Companies, Developers and WREA

A list of Environmental Consultant Company is changed over time due to the life of

certificate/registration that WREA issues for the Environmental Consultant Companies that has 2

years period and it can be renewable.

WREA will provide a list of Environmental Consultant Companies to Japanese Team.

The request raised by the Japanese Team is really useful and WREA will take into consideration

when revising the EIA Decree No: 112/PMO in the near future.

According to EIA Decree No: 112/PMO, ESIA Department (WREA) and Industry Department

(MIOC) had a discussion and finally agreed to follow the EIA Decree No: 112/PMO. Sectors are

responsible for reviewing the IEE reports and WREA is responsible for issuing ECC.

25



4.Taxation and accounting

4.1 To clarify and make fair the tax collection system and tighten control of double collection

and irregularities.


(1)The GoL consider issuing a plain booklet on tax written in English for the benefit of

foreign investors. Ministry of Planning and Investment will show the above information

in their website.

(2)The GoL will make fair tax collection based upon laws, decrees, rules and regulations.

(3)The GoL will strengthen the enforcement of the anti-corruption law, approved in July

2006, and revise the law appropriately.


(1) Ministry of Finance (Tax Department):

A plain booklet on tax written in English for the benefit of foreign investors: The Tax Law No. 04/

NA, dated 19/05/2005 in English language is available on the National Assembly website

(www.na.gov.la), but it is not published yet.

(2) Ministry of Finance (Tax Department):

To make fair tax collection based upon laws the Tax sector has created legal documents as following:

Tax Law, the Instruction regarding the Implementation of Tax Law, Regulations on tax License and

tax payer administration, the announcement of Minister of Finance regarding to tax for the project

which uses the grant aid or the loan as it capital source, Decree on the bill, The instruction regarding

the implementation of Decree on the bill, Decree on Tax Payer ID number, The President’s Unified

Decree on fees and service charges, The Guideline of Tax collection from the wood and the forest

products, The instruction regarding the task of telecommunication sector, the guideline of SME

administration, the guideline of Small Enterprise, The guideline of Enterprise Accounting, The

guideline for instant inspection, the guideline for pending tax and the Law of Value Added Tax.

- The meaning of decree on the bill is the preparation for the use of VAT which will be implemented

on Jan 01st, 2010; the bill will be a document certifies the charge, payment, claim or return VAT and

other taxes in accordance with the law. The announcement no. 284/MoF.DT, dated Nov 6, 2009

regarding to the instruction to prepare the VAT implementation.

(3) In case of breaching the law, either the official or tax payer will be punished according to the law. For

the official will be punished according to the regulation of civil servant. Ministry of Finance has set up

the department of Inspection to check the work preferment in ministry and has a box for receiving

complaint. The businessmen and tax payer can submit a letter to ask, consult or complain to the

http://www.na.gov.la/

26

Inspection Unit, Taxation department, Office of Ministry of Finance, State Auditing Committee or Central

Committee for Inspection regarding the anti-corruption, unfair, and miscalculation of tax.

PROGRESS OF 2010

(1) Ministry of Finance (Customs Department) improved the custom clearance to be convenient and

developed ASYCUDA system to process the custom document online. ASYCUDA system is

expected to be on trial in 2011 for the custom check point at the Friendship Bridge I. The IT

system will be extended at the other international check point.

(2) Customs Department installed 8 units of the Scanner X Ray at the following check points: the

Friendship Bridge I, the Friendship Bridge II, Dansavanh check point, Vang Tao check point,

Namphao check point, Nam Heaung Friendship bridge check point, Huaixai check point and Bor

Ten check point.

(3) Ministry of Finance (Tax Department) is the central of improving the Law on Taxation and the

Decree on Fee and Service Charges that is expected to be completed in the middle of 2011. The

law, decree, and legislations (in Lao language) related to taxation are available at the Tax office,

Legal Department (Tel 021 223650). Tax Department has proposed to publish their legislation on

the website of Ministry of Finance.

(4) Ministry of Finances (Custom Department) conducted the trial implementation of custom

clearance in accordance with the rule of GATT for some kinds of product list. It is expected that

the custom clearance can be functionally implemented in 2012 according to the rule of GATT.

Custom Department set up a team in charge of the Customs Risk Management to analyze the

problem and modernize the customs work.

PROGRESS OF 2011

Please explain the upper limit of transportation expenses in the draft of revised tax law.

Draft of Revised Tax Law:

In the Study on Revised Tax Law, the travel expense is divided into the following two kinds

of costs

(1) Travel for administration expenses (other than transport cost): deductible of a rate of

0.60% of the annual turnover at a maximum;

(2) Shipping, freight or transport costs: deductible at a rate of 100 % (Excluding private or

family travel expense).

Reception, telephone: deductible at a rate of 0.40% of the annual turnover at a maximum

Please explain the progress in tax reduction for donation.

According to tax regulation, donation can be recorded on the daily bookkeeping. But for the

27

review of calculation of annual profit tax from the company’s financial reports, Tax Authorities

will take the amount of donation expense which over ceiling rate to calculate profit tax as

income.

Donation: deductible at a maximum rate of 0.30% of the annual turnover

Donation means such as: donation for hospital and school construction, medical equipment,

donation for poor people and utilities for public use. In addition, it includes financial supports for

developing rural area which are agreed with GOL and investors under concession and other

specific contracts.

Donation for disaster such as flood and earthquakes or given to the victims which the GOL

mobilizes to rescue by mass-media is deductible at a rate of 100%.

According from newspaper, draft of revised tax law has been completed and held a public

hearing. Please give us a draft tax law and documents for public hearing. And also,

please invite JCCIV to next public hearing meeting.

The Draft of Tax Law version 2011 has passed the National Assembly meeting held on June

2011. Draft of Tax Law is going to be revised in the last stage, but it has not been officially

signed yet. Therefore it can’t be given to JCCIV at this time. Tax Department willing to invite

Japanese Chamber of Commerce to the next public hearing meeting concerning the Revised Tax

Law.

Revised Tax Law shall enter into force is 90 days after the President promulgates the Law in the

official.

The following points are under discussion by the National Assembly meeting for revising

tax law.

(1) Whether the current rates of personal income tax and corporate income tax can satisfy

the state budget?

(2) Possible introduction of excise tax

(3) Possible introduction of environment tax

Revising the tax law is being investigated towards the National Assembly Meeting in

December 2011.

The past survey by the Tax Department revealed the fact that the communication expenses

not related to business were reported as the deductible expenses in many cases. The

communication expenses cannot be allowed to deduct because of this fact. However, we

can understand foreign investors frequently need to make international calls for doing

business. We will investigate this issue in the Lao Government.

Donation is deductible at a maximum rate of 0.30% of the annual turnover. Donation

provided under the contract with the Government is fully deductible.

28

The rate of corporate income tax is currently 20% for foreign enterprises and 35% for

domestic enterprises. At the final stage of investigation, it most likely to settle the rate at

24% common for foreign and domestic enterprises based on the discussion at the National

Assembly. New rate at 24% will be applied for the new investors.

Personal income tax for foreign and domestic enterprises will be integrated by the revised

tax law. We will investigate conclusion of the tax convention to avoid double taxation.

It is scheduled to enforce the revised tax law in January 2012. However, it is not clear

whether the revised tax law will pass the National Assembly meeting. We will notice it

after the revised tax law is approved.

The Government has provided the investment incentives to foreign enterprises. The

Government is going to integrate taxation for foreign and domestic enterprises for the sake

of Lao people as well. If the Japan side has comments on taxation for foreign investors, we

would like to ask formal request from the Japan side. Upon receipt it, we would like to

consider within the Government.

29




4.2 To make no unjustified discrimination among the investors from all the foreign nations as

to custom duties and taxation.


(1)The GoL will not make unjustified discrimination among all the foreign investors in

accordance with the PM decree for Custom Law which was approved by the National

Assembly in 2007 as well as the Law on the Promotion of Foreign Investment.


(1) Ministry of Finance (Tax and Custom Department) and Ministry of Planning and Investment

(Investment Promotion Department): confirmed that there is no unjustified discrimination on the

implementation of tax regime. Foreign investors, regardless to which country they are from, they

have to follow the law on custom, the taxation law, and law on promotion of investment as the

impartial and fair fashion. If the business activity is granted promotion of investment incentive,

they will receive the priority. If the activity is non granted promotion of investment incentive,

they have to follow the law on custom and taxation law. (the list of activities granted and

non-granted promotion of investment incentive is attached as the second attachment of Prime

Minister’s decree No. 301/PM regarding the implementation of the law on promotion of foreign

investment No. 11/NA)

PROGRESS OF 2010

The Ministry of Finance and the Ministry of Planning and Investment once again confirm no

unjustified discrimination to foreign investors. If such case is to be experienced by the investors,

please contact with the Tax Department and the Investment Promotion Department for clarification.

30




4.3 To make sufficient explanation in advance upon the transition from the current turnover

tax to the future VAT, and then to implement the VAT in an impartial and united way after its

entry into force.


(1) The GoL will hold the explanation conferences to the foreign investors about the VAT with

sufficient frequency before the introduction of this new tax.

(2) The GoL will continue the training and dissemination for the central government and local

authorities officials on execution of the VAT, such as;


(1) The National Assembly announced to delay the implementation of the law on VAT to 01/01/2010 with

following reasons:

As The world economic crisis has made economy slowdown

The drafting of relevant legal documents to the VAT does not complete. It corresponds to the

widely and deeply dissemination of the VAT to businessmen and general citizens.

the MOF or the government is considering the proposal from the World Trade Organization

about the improving the law on tax to fulfill with criteria of the WTO’s rules in order to

become a WTO member;

The high technology of VAT management system does not complete.

However, in order to create favorable condition in implementing the VAT, the MOF or the

government is improving organization structure which changes three government agencies (custom, tax

and treasury) to become horizontal structure. Business has to use the certified receipt and use the tax

payer’s number. MOF has to disseminate the Law on VAT in forms of seminar and newspapers to the

officials, businessmen and general citizens around the country. In addition, MOF had cooperation and

received an assistant from the government of Japan, Republic of Korea, Vietnam and SIDA on

dissemination the general principle of VAT through conducting training/seminar for public and private

sector.

(2)The Taxation department has published the brochure for basic information for entrepreneurs: Things

that consumers should know; Please find out if you would like or be able to register for VAT license or

not; If you are registered as VAT payer; Please find out what you can do and do you have to pay tax

directly to the treasury when you buy service from oversea. ( Details are attached)

31

PROGRESS OF 2010

Ministry of Finance (Tax Department) has implemented Law on VAT since 1 January 2010.

Preparation of relevant legal documents was basically completed. After the completion of revising

Law on Tax in middle of 2011, the business tax will be canceled and only VAT will be implemented.

The Ministry of Finance will receive the national budget as budget for VAT refund to companies in

fiscal year 2011-2012.

PROGRESS OF 2011

Please explain the progress in VAT refunds.

The process of VAT refund consists of the following 5 steps:

1. VAT refund filing;

2. Auditing;

3. Preparing memorandums;

4. Issuing the approval letter from the Tax Department;

5. Issuing and sending the formal refundable letter to the company and Treasury Department

If filed document for VAT refund is assessed correct by auditing in accordance with the related

regulations, VAT shall be refunded not later than 3 months after the completion of auditing according

to the VAT Law. (The budget regulation and full detail VAT refund procedure are described in No.

3229/MOF, dated 17 December 2009, which is included in the VAT legislations orange color book.)

We heard that some company has been allowed to offset VAT refund with other tax. Does

the offset is still possible or not?

Some companies are authorized to deduct VAT input from goods and service in the domestic to against

profit tax paid. However, this method is not applied to general businesses. It is applied to only

companies that have concluded the specific agreement with Government and have made specific

provisions with Tax Department.

Please explain the definite schedule of VAT refund implementation and necessary

procedures. If VAT refund is delayed, we request to be allowed to offset with other tax.

32

Under the Lao VAT Law, VAT input can’t be deducted from other taxes. The company applicable

for VAT system shall pay VAT according to the Law and be able to deductible or VAT refund

from exported goods.

In case of VAT input that is not completely deducted or not able to refund on time, Tax

Department will propose to Minister of Finance for the permission to allow company to offset

with other tax.

Tax Department has received a budget from Ministry of Finance with a total amount of 60 billion

kips and during January to June 2011. The department has refunded VAT with a total about 9

billion kips to the exporting companies such as:

Wonderful garment Co. Ltd;

Trio Lao Export Co. Ltd;

Gade Lao Garment Co. Ltd;

Lanexang Arphone Co. Ltd;

Silicon Co. Ltd.

We request GOL establish VAT consultation window, please make clear person in charge

(organization, name and contact address).

Presently Tax Dept has many VAT service units, for example: VAT auditing unit, VAT refunding unit

which belong to Revenue Collection,

Tax Department Lanexang Avenue, Ban Hadsady, Vientiane Capital Tel: 021217025, Fax: 021218569.

Revenue Collection Division:

Mr. Sinxay PHETSAVONG, Deputy Chief of Revenue Collection Division mobile phone:

55895486

Miss. Viengkhone CHINDAVONG, Chief of Filing Auditing mobile phone: 55676919

Mr. Daovala PHOMMALA Mobile phone: 22470225

Hotline phone number:1455-1466

33




4.4 To harmonize the accounting standards with the international one.


(1)In order to make the accounting standards clear and unified, the GoL will continue to make

efforts to harmonize the accounting standards with the international one by mid-2009, such as

the effort by the Accounting Authority for introducing the new Accounting Code.


(1) The law on accounting (revised) was adopted in middle of 2007, which is effective in 2009 and has

the policy to adjust the Lao accounting system to match with the growth of the Lao

social-economic, the region and international. This policy is the base for preparation to connect to

world economic, as well as, prepare to become a member of World Trade Organization, and prepare

to open stock market in Lao PDR.

To build a trust for the financial report of local business to investors. At the international level,

the business has to follow the Lao accounting standard which is improved and matches with

international standard. Due to the Lao economic mostly consists of SMEs, therefore the accounting

standard is different for the scale of enterprise. For the big enterprise and enterprise registered with

the stock market shall follow the international standard of accounting. For the SMEs shall follow

the Lao accounting standard; For the smallest enterprise shall follow the compact accounting

standard.

According to this policy, Accounting Department is improving the accounting law by studying

the decree of implementation on accounting law, which will explain clearly on the methods of

studying, adopting Lao accounting standard which will be improved from time to time according to

the growth of the Lao social-economic, the region and international and the change of International

accounting standard and financial report. Due to the sensitivity of the studying decree, The

Accounting department has received the financial assistance from the World Bank and hired the

accounting expert to revise the draft of decree and standard of Lao accounting to ensure the approval

and announcement for the implementation in 2010.

PROGRESS OF 2010

No further report on the accounting issue from the Accounting Department.

34



5.Public utility charges

5.1 To abolish the dual pricing system for the foreign businesses.


(1)The GoL confirms that there is no dual pricing system as to public utility charges for the

foreign businesses and will make a list of public utility charges to show them in the web

site of Ministry of Planning and Investment.


The investment promotion department has not received any complaints from Japanese investors

or other foreign investor regarding the dual price for foreign investors.

Electricity department, Ministry of Energy and Mines has published the Annual Statistic of

Electricity which includes the price of electricity and data of electricity use (a sample of front

page of the book of statistic of Electricity in 2007 is attached)

PROGRESS OF 2010

The investment promotion department in 2010 has not received any complaints from Japanese

investors on the dual pricing practice.

35



6.Land use

6.1 To lift the temporary ban of the license for more than 100 ha land use, still in effect since

last May, as early as possible, and then clarify the procedures for land use license that are to

be newly elaborated.


(1)The GoL has formulated the New Forestry Law which was already approved by the NA

in December 24th

, 2007. This Law clarifies in the articles 74, 75 and 76 regarding the

procedures for foreign investors to obtain the license of land use. The GoL will ensure

the smooth implementation of this process including the completion of the charges/fees

list of land lease and concession by Presidential decree by the end of March 2009.


(1) According to the Article 19 of the decree of the Prime Minister regarding the implementation of

the Law on Land No. 88/PM, dated 03/06/2008, provincial and municipal administration have the

right to issue the land below 100 hectares, which are the land that transfer from one type of

agriculture (for example: paddy land/field) to other type of land (for example: constrution land),

but it is not the right for the grant of a concession. (see the attached file for the sample of the Law

and the Decree of Land)

For the grant of a concession to a foreing investor, now there is a notification of government

secretariat No. 1147/GS, dated 06/07/2009, mention that the government is temporary stop

granting a new concession project over 1,000 hectares. They will reconsider when they complete

land survey, allocation and mapping.

Now the procedures of issue the land use title are mention clearly as the following:

1). For the projects that have concession rights in previous (concession agreement was signed with

government) but have not done for area survey shall work with Ministry of Agriculture and Forestry

and National Land Management Authority for conducting a survey on available land, finding out how

much does state land have, private land, conservation forest, decayed forest that can not rehabilitate by

itself and others, which have to be recognized by local authority including the head of the village in

order to use thoes information for doing feasibility study or business plan and environment and social

impact assessment report. After that, propose the result of land survey to the Ministry of Agriculture

and Forestry for taking a consideration that how much they can provide land in accordance with the

Law on forest (revised in 2007). In addition, also propose to the Water resource and Environment

36

Authority for taking consideration and recognizes on environment and social impact assessment report.

Then, Ministry of Agriculture and forestry will propose to Ministry of Planning and Investment as a

coordinator to propose to the National Land Management Authority for approval and then inform the

Land Management Provincial Office where land area is located in to sign the lease agreement with

investors (as the rate that consent in the agreement between investor and government on

lease/concession fees in previous) and issue the land use registration. Next, Ministry of Agriculture and

Forestry will issue the permit for clearing land to investors.

2). For the projects that completed the land survey (accroding to MOU with government about area

survey, land catagories, feasibility study or business plan and environmental and social impects

assessment report which were approved and regconized by Ministry of Agriculture and Forestry, Water

Resource and Environment Authority, National Land Manegement Authorithy). And, then Ministry of

Planning and Investment will report to government in order to request for negotiating and concession

signing. After investors signed the concession agreement with government, they can propose to

National Land Management Authority and inform the Land Management provincial office to sign the

lease agreement and issue the registration of land use to investors.

In addition, for the details relating to the state land lease and concession must be compliance

with the decree of the Prime Minister regarding the implementation the Law on state land lease and

concession.

For state land lease and concession fees must be complianced with notification of government

secretariat No. 366/GS, dated 04/03/2009 as defined:

- Projects which already set the lease and concession fees in the agreement must be caculated the

lease and concession fees as mention in the agreement.

- Projects which already approved, but still not set detail in leases and concessions fees on an

agreement shall negotiate to make a new agreement on land lease and concession charges in

accordance with the presidential decree on state land lease and concession fees.

Now, the presidential decree on state land lease and concession fees No. 02 was signed on 18

November 2009.

PROGRESS OF 2010

After the 3rd Lao-Japan Public Private Dialogue, the Working Group on the Land Use issue has been

set up and specific concerns of the Japanese investors have been closely discussed with relevant

authorities, particularly the Department of Land Policy and Land Use Inspection of the National Land

Management Authority as well as the Planning and Cooperation Department of the Ministry of

Agriculture and Forestry. The report of the result of discussion can be found in a separate report called

“Short List Report of WG 3”.

37

PROGRESS OF 2011

When a company wants to reclaims 1ha of farmland (paddy field) into industrial factory

around Vientiane capital, the fee for changing the industrial land is totally 300 million kip

(30,000kip per m2). If GOL wants to promote industrialization, we, JCCIV, would like to

propose to make a classification of the “industrial land” for aiming at factory construction.

Regarding the fee for changing the land classification, the Japan side requests to make the land

classification for industrial use. The proposal reference to policy of government which is focused on

the solution of poverty reduction of ethnical people and make the step by step of poverty reduction for

the development of the country from now until 2020, there will be an effort to have 2 million hectares

of farm land, because of in the past there are changing the farm land to be the other kind of land, so

this makes it reducing just only 6 hundred thousand hectares which impacted the policy of the

government for the production of foods especially the rice production. Therefore, the definition of

price of changing land kind the main aims is one measure for the prevention of no changing of farm

land to be other kind of land and enlarge area.

Clear land-use classification has not yet established in the Lao PDR. In fact, the prime minister

decree focus on agricultural protection but does not define the industrial land-use. The

district-wise land-use classification has also not yet established as well.

Department of Land Management is in the process of getting a handle on the land-use situation

over the country. Under the organizational change from NLMA to the Ministry of Natural

Resources and Environment, we would like to continue the required improvement.

We understand the requests from the Japan side concerning fee for changing farmland to small

industrial land, especially for the processing industry of agriculture and forestry products that is

better to locate in the vicinity of agriculture and forestry land. We would like to report this

request to the high level officials of the Government.

When a company requests Land Management Authority to survey the forestry land,

survey fee is 230,000 kip/ha in remote area, it is very big cost for Forestry Company

which will plant very huge land. There is no regulation of forestry land in the presidential

decree in fact, and the “farmland” is applied to calculate the cost. Is it contrary to a

forestry promotion policy, isn’t it? For this reason, it must make a classification of “forestry

land”.

For the target defined of changing especially the trade target and the defined the price of the

measurement of especial construction and agriculture land only, Japan side’s proposal it is should

38

defined the target of changing the industry land and price defined of the measurement of forest

land, as the proposal will conclude the discussion and consideration in the time of the improvement of

presidential decree No 03/PR, 19 November 2008 on the legal activities and approve by government in

its period.

Last year, GOL said it would take into consideration to revise the fee and service charge

and related regulations. Please explain the progress and next step.

Japan side would like to know the progression of last year, Laos side said that it will bring the

problems of fee, services and concerned rules to be considered and reviewed, on the improvement

sector and build legal document in Lao PDR which government will make effort to follow up,

inspection, evaluation of implementing results of legal which is promulgated for focusing to build

correctly legal document and unanimously across the country. Especially the land areas which get

improvement and build the legal activities on land and natural resource which is one of the focal

project and social-economic development plan by the improvement and have plan to build legal

document, step of implementing, to coordinate with concerned sector and directive of government in

its period. In present we are still waiting for the directive of the government for improvement of land

and natural resource area to make the legal quality, suitable to party policy, realizing condition of

policy on, social-economic sector and the international rules.

39



6.Land use

6.2 To inspect how the lands that were already granted the use license have been used and then

make sure their proper use.


(1)The GoL will make efforts to ensure the implementation of the Land Law, the Forest

Law and/or individual MOUs- Concession Agreements as to monitoring the proper use

of lands, some of which were already granted the use license. The responsible ministry /

agency is National Land Management Authority and the Ministry of Agriculture and

Forestry.

(2)For this purpose, the GoL will take steps, including the withdrawal of the use license,

over the lands that are improperly used or not used at all. The responsible ministry

/agency is National Land Management Authority and the Ministry of Agriculture

and Forestry.


(1) Department of Policy and Inspection Land Use, National Land Management Authority: From

March to May 2009, they completed the survey to collect the information on land lease and

concession for local and foreign investors in Laos. They found that now 1,219 companies are

received grant of a concession, including 462 foreign companies and 737 local companies. In

addition, paragrap 3 of the notification of government secretariat No. 1266/, dated 06/07/2009,

mention that to reveiw state land lease and concession in the past. If projects, which operate

comply with laws and regulations and do not cause any impacts to society and environment, are

agreeable to support and continue business. However, if any projects that break laws and

regulation, the government takes measures to address the problems urgently. Recently, National

Land Management Authority has basic statistic of land tax payers within the country. They are

building data base system on state land lease and concession all over the country. They will

continue collecting information in more detail on land lease and concession before they do

analyze, estimate and evaluate.

PROGRESS OF 2010

Same as in point 6.1 above.

PROGRESS OF 2010

Please explain who is the person in charge in central level and local level?

40

To the questions of a company that has land concession from the government but did not get any

project development in many years, how can the company make investment and development in

these lands? to the problems as the reference of the notice of the government No. 1266/……, 22 July

2009 the national land management organization is going to review the inspection of the lease and

land concession in the past, in that some of project had implemented the rule of laws and did not

impact to social situation and environment then there will bean agreement to support them. Opposite

way, if the project had implemented illegally it must hurry to solve such as: remind to cancel

contract for consideration of the investor to interest to in at the area as conditions and complete

standards on the rules to lease or concession;

The Ministry of Natural Resources and Environment supervises the provincial authorities to

survey the land-use situations. For this purpose, we are planning to send the Minister’s letter

to the provincial authorities for requesting the resurvey of the land left undeveloped in spite of

obtaining the concession right.

If there is a problem, the central committee discuss and make site survey. If the investor does

not develop the concession land after receiving warnings three times from the Government, the

Government confiscates the land. Information on the confiscated land is announced to look

for the new investors.

If concession agreement of Company ”A” was approved by province governor and total land

area is more than 150ha, who is the authority to approve concession agreement to

Company “B”, central level or local level?

Any the new investor would like to develop of that area, after the cancellation of the rights

(concession contract) with company which did not development of the land and the company has to

implement the duties towards the government then the government may be consider internal

investors or international investors who are interested to invest on full conditions and are able to

develop of the quality projects, high effectiveness for development or preserve action for using in

the other target of government;

As for F/S, ESIA, forest survey, can Company “B” reuse Company”A”s ones or not?

Incase if government has a proposal to get new investor development on that area, the investor

would like to lease or have concession of land he must be implementing the various rules as defined

in the decree of prime minister No. 135/PM, 25 May 2009 and other laws which are concerned

strictly; meaning must process on the step for the new request of lease or land concession as the

rule of government. For the lease or land concession he must hold the rate which is defined in the

president decree No. 02/PD, dated 18 November 2009 which will be the rate for the basic

calculation. Therefore in this case, the Company B is not able to reuse any document (F/S, ESIA) of

41

the Company A, although the Company B was invested in the same kind project of the Company A.

When the Company A was canceled and withdrawn the rights for the lease or Land concession by

the GOL already, all documents of the Company A do not have any effect in accordance with Laws

and regulations.

Does Company”B” have to pay some money to Company “A” to obtain concession right?

About the company which has the right to get the concession from the government but there is no

development in many years after the government had inspected, the government will break contract,

then government has the right to cancel contract and take back right of concession, so the company

has no right to transfer the right of concession to other investor;

In some area, it seems to purchase and sale of land concession right by company which

does not develop the land. Is it officially approved or not?

About the questions of some area seemed to have purchased the right of concession by the company

which did not develop of the land then there will not be officially approved by government, because

every contract the government has signed with investor before it will be a transfer of the right of

concession to the third person which will be agreed and approved by the government, as the rule of

law;

JCCIV request GOL to provide concession land information where is not developed for

longtime.

About the information of land concession which is not developed in many years as proposed by

Japan side, in current day, the national land management organization is processing to inspect the

lease and land concession by government across the country, so after completion it will form the

information of procession of company for developing with effectiveness or there are no any

development. After that, it will inform the government to make measures of the supporting and

solving the company to conclusion of the clear information for the supply of concerned sector

including investor as the consideration of government

Please explain the total procedure to obtain land concession right for agriculture and

forestry sector.

For the step to request the concession of agriculture and forest land, at the first they have to inspect

of land and studied the possibility of project (studied information of social-economic sector,

natural suitable), forming the technical – economicfeasibility study (FS) by the approval of the

42

organization of forest land and forest management and concerned sector;to form the evaluation

report on the impact to social and natural environment including the suitable measures solving by

the approval of concerned sectors. For the inspection results, to define the limits of land must be

approved by planning and land development department. After that, concessionaire has to request to

the sign contract on development project with the government. After they signed contract on the

development project with the government then they will request to sign the contract of land

concession from government with the land management organization.

Last year, GOL answered to establish a join organization or team from NLMA, WREA and

MAF which will survey for concession application together. Please explain the progress.

After the GOL has improved the government structure bodies to establish four new Ministries. One

of them is Ministry of Natural Resource and Environment (MNRE) that consists of National Land

Management Authorities, Water Resource and Environment Authorities, Forest Management Affair

and Geology Affair.

Currently, MNRE is going to improve the ministry’s structure and to definite the role of every

departments of the ministry. And after these improvements are completed it will be able to be the

base for definition the regulation, role and plan for working together which has more effective

between management, land use, forest, Natural resource and environment. Therefore, in case that

the investor proposes lease or concession of GOL’s land, it makes the investor more comfortable and

provides faster procedure than before. It ensures a benefit of the government, people and investor.

MNRE will make serious efforts for simplifying the application procedure of obtaining land

use right. In the past, there were problems concerning the application of land concession, for

example, investors do not conduct EIA, and investors submit the application quite different

from the actual situations.

MNRE will have jurisdiction over the every screening authorities for land concession to

improve the application procedure.

43



7.Labour

7.1 To further strengthen the governmental efforts for developing human resources, including

Japanese and English language education, and for making good use of these human resources.


(1) The GoL will make the best use the Japanese technical cooperation through JICA for

the purpose of human resources development, and also will make efforts to strengthen

the vocational training to provide skilled labor.

(2) The GoL will continue to make efforts to promote English education.

(3) The GoL will continue to make efforts on Japanese language education for the Lao

nationals such as broadcasting “Erin’s Challenge” at the Channel 1 of the Lao National

Television from October 2008.

(4) The GoL will preferentially allot officials who can speak Japanese to the Ministries/

Agencies concerned to the foreign investment.


Ministry of Labour and Social Welfare (Development Department):

(1) The standard planning approved of labour skill development:

At this moment, the draft of decree on the construction and skill labour

development was approved by the meeting of secretariat of government in June

2009. At this moment its contents are being approved and it is expected to be

completed at the end of the 2009.

At this moment, the preparation for constructing the standard of national labour

skill, which is received fund from Republic of Korea.

The problems that Lao labour doesn’t meet the international standard and can

not be administrator: Lao PDR allows hiring foreign labour for that position in

order to facilitate doing business in Lao PDR accordance with the point of

agreement on the permission of import foreign labour working in Lao PDR No.

5418/ Labour and social welfare, dated 10 December 2007.

Ministry of Education:

“The Strengthening Technical Vocational Education and Training” started in

2009, financed by Asian Development Bank sourced from JSF (Japan Special

Fund). The Project includes complete assessment of TVET sector in Lao PDR

44

and detailed labor market assessment.

(2) The GoL will start to introduce the English class in the third grade of primary

school in 2009-2010 fiscal year.

The GoL promotes and encourages local and foreign investors to open foreign

languages schools in Laos. Now there are a number of private schools that teach

foreign languages including English.

(3) National University of Laos offers Japanese courses in the Faculty of Letters and at

the Japan Center where technical assistance is provided by the Government of Japan.

“Erin’s Challenge” is used to broadcast on Saturday and Sunday.

(4) The GoL willing to have students who graduate from overseas especially Japan to

work with the GoL, which is always welcome to receive them.

Note: suggestion from Lao side on (4): we would like to request Japanese Government

as a provider scholarship for Lao students to put condition or requirement to the

scholarship receivers such as after graduate they have to work with Lao government

in any related areas.

PROGRESS OF 2010

Lao-Japan Human Resource Development Institute under the National University of Laos:

(1) The National University of Laos (NUOL) established the Lao-Japan Human Resource

Development Institute (LJI) on May 20, 2010 as succeeding organization of Lao-Japan Human

Resource Cooperation Center (LJC) with an assistance of JICA. LJI seeks to establish itself as an

institute of excellence for developing human resources in business management field who will

play an active role in socio-economic development as well as in business under the ASEAN

Economic Integration.

(2) Japanese Language Program is provided by LJI aiming to spread Japanese language and improve

the quality of Japanese language education. Standard course consists of basic classes (450 hours)

and intermediate classes (150 hours). Besides, special course are provided for: preparation for

Japanese Language Proficiency Test (JLPT), preparation for the study in Japan, culture exchange

with Japanese students, and education entrusted by companies. Up to August 2010,

approximately 4,000 persons participated in Japanese language courses. In addition, 104 persons

are leaning Japanese language in 8 classes under the Japanese language program.

Department of Technical and Vocational Education, MOE:

(1) In March 2010, final report of labor market assessment was prepared under ADB’s Technical

45

Assistance for preparing the strengthening technical vocation education and training (TVET)

project.

(2) In July 2010, it was announced to provide a $23 million grant from its concessional Asian

Development Fund for the Strengthening TVET Project. It targets improvements in quality,

access, governance and private sector involvement in the vocational training sector, and

complements earlier ADB-assisted projects in basic and post-secondary education.

http://pid.adb.org/pid/LoanView.htm?projNo=42278&seqNo=02&typeCd=2&projType=GRNT

http://www.adb.org/ADF

http://www.adb.org/ADF

46



7.Labour

7.2 To ensure reasonable business operations as to employment / dismissal and working hours.


(1) In recognition of the importance of reasonable labor-related business, the GoL has taken

note of the Japanese recommendation in this regard and will keep consultation with the

Japanese side to address their concerns particularly regarding to Over Time payment,

which is regarded as very costly by some Japanese business. The GoL will try to address

the issue on a case-by-case basis as much as possible.


The definition of lowest salary accordance with the notice of the Ministry of Labour

and Social Welfare No. 1450/ Labour and Social Welfare, dated 30 April 2009 and

the decree on the lowest labour salary in the business area No. 64/ Prime Minister,

dated on 21 March 2005.

Japanese side proposes that business is charged a large amount of money to pay for

over time wage. This issue should be resolved and revised in the future as following:

The revised Labour Law was adopted by National Assembly on December 27,

2007. The overtime wage charge is complied with the old law. Therefore, this

issue will be raised again next time when there is a revision of Labour Law in

order to meet the real situation from time to time.

the suggestion of how to reduce the expenditure of overtime wage:

For the Japanese company who invests in Laos which has the problem with

paying overtime wage can contact with the Labour Management Department,

Ministry of Labour and Social welfare for solving a problem and receiving a

good resolution.

The work shift can be divided into 3 shifts: Morning shift, Afternoon shift and

Evening shift.

The other option is to exchange lesson with the restaurants and hotels.

Ministry of Labour and Social welfare is pleasure to cooporate and discuss with

Japanese side on issues and difficulties that investors are facing in order to address

problem together.

47

PROGRESS OF 2010

(1) Minimum Salary

The definition of lowest salary is defined by the notice of the Ministry of Labour and Social Welfare

No. 1450/ Labour and Social Welfare, dated 30 April 2009 and the decree on the lowest labour salary

in the business area No. 64/ Prime Minister, dated on 21 March 2005.

(2) Overtime Payment

According to the article 16 of current Labour Law (No.06/NA, dated 27 December 2006), the working

hours of an employee shall be 6 days per week, and should not exceed 8 hours per day or 48 hours per

week, irrespective of the type of salary or wages paid. With regard to weekly rest and public holidays,

the article 19 of the law stipulates that workers have the right to at least one day’s rest within a week,

which may be Sunday or any other day as agreed between the workers and the employer. Public

holidays shall be determined by the government.

The article 48 of the law stipulates that overtime worked shall be paid for on the basis of the following

percentages of the hourly wages of a regular working day for each hour worked:

Overtime worked in the daytime on a regular working day: 150%

Overtime worked at night on a regular working day: 200%

Overtime worked in the daytime on a day of weekly rest or holiday: 250%

Overtime worked at night on a day of weekly rest or holiday: 300%

If a worker is assigned to work on a night shift, he shall be paid an additional bonus of not less than

fifteen percent (15%) of the regular hourly wages for each hour worked from 10:00 a.m. to 5:00 a.m.

the next morning.

Japanese side proposes that business is charged a large amount of money to pay for overtime wage.

This issue should be resolved and revised in the future as following:

The revised Labour Law was adopted by National Assembly on 27 December 2006. The

overtime wage charge is complied with the old law. Therefore, this issue will be raised again

next time when there is a revision of Labour Law in order to meet the real situation from time

to time.

48



8.Preferential treatment for foreign investment(Special Economic Zone)

8.1 To make efforts to improve the Savan-Seno Special Economic Zone, while making effective

use of the existing infrastructure, towards establishing industrial parks.


(1)The GoL will make the best use of the Savannakhet airport, reopen from August 2008,

to facilitate the transportation in the area and overseas. The GoL will be very appreciate

additional assistance by Japanese government to improve infrastructure such as supply of

electricity, water, waste-disposal service, road and telecommunication systems including

high-speed broad-band internet connection.


(1) For the best use of the Savannakhet Airport, the Japanese experts of the METI of Japan

completed the feasibility study on the development and the use of the Vientiane and

Savannakhet Airport.

(2) The facility of basic infrastructure in the Savan-Seno Special Economic Zone are:

1. Electricity Supply

a. Electricty throughout Savannakhet is total of 64 MW:

- Pak Bo station = 40 MW

- Keng Kok station = 20MW

- Dansavan Station = 4MW

b. Electricity was used 30MW

- Electricity was used 30MW

- Electricity left 34 MW

- The consumption need in a year is increased 10%/year

2. Water Supply

a. Water production capacity is average of 15,000 m3 / day

b. The water consumption need daily is average of 24,000m3/day

3. Flight

a. Vientiane-Pakse-Bangkok: Wednesday, friday and Sunday

b. Luangprabang-Pakse-Siem Reap: Thursday and Saturday

4. Rubbish Disposal

The rubbish disposal in the Kaison district is using bury method, but in the Sork Village that

far away from downtown of Kaison district around 15km is not using bury method.

49

- Rubbish in Kaison district is 47 tons/day

- Capacity of collecting rubbish is 30 tons/day

- Capacity of rubbish disposal of the land field is around 30 tons/day and still can use in 7-8

years.

The progress of the Savan-Seno SEZ is available in the executive report of the Savan-SENO SEZ

Authority (Lao version)

PROGRESS OF 2010

The following achievements were observed in development of Site C of Savan-Seno SEZ in October

2010:

Completed construction work including, land reclamation, road, and electric wiring for the

first phase development (50 ha)

A factory of Lao Tin Smelting and Refining Co., Ltd. was built in the first phase zone.

It is planned to build a factory for manufacturing aircraft parts.

Near the Mekong River, an expansion project of water plant has begun to increase capacity from

15,000 tons per day to 22,000 tons per day by the subsidiary of Savan Pacifica.

PROGRESS OF 2011

The following achievements were observed in development of Site C of Savan-Seno SEZ in

November 2011:

The first phase development (50 ha) has completed including every utility supplies. The

second phase development is ongoing.

So far 24 investors have been approved. Savan Park made presentation to Japanese

investors twice in 2011: at the investment seminar in Savannakhet province in September

organized by MPI, EOJ, JETRO and AJC; and at the investment seminar in Tokyo in

November organized by MPI and AJC.

50



8.Preferential treatment for foreign investment(Special Economic Zone)

8.2 To make efforts, while viewing the development of the Savan-Seno Special Economic Zone,

to improve the systems and infrastructure in the suburbs of the Vientiane Capital as well that

keep the establishment of Special Economic Zones in sight.


(1) The GoL will take the following steps in collaboration with the GoJ (first with JICA);

To seriously address the establishment of the Export Processing Zone-Industrial park in

Vientiane Capital in order to foster more and more foreign investment.

In this regard, to determine the responsible entity for development and establish the

implementation system for EPZ - Industrial Park.

At the same time, to prepare the laws and regulations necessary for management and

promotion of EPZ - Industrial Park.


1. Zone and industrial Park Development survey:

Industry Department and JICA experts are doing feasibility study on export processing

zone development in Vientiane. The study is on going and now they finished the filed survey

and the interim report is in the process. They have a plan to hold the meeting in December 3,

2009 to report on the progress of the project to related sectors.

The study plan of the JICA Study Team expects to complete and submit the final report

to Lao government in middle of 2010.

2. Zone and industrial Park Management Authority:

There is nomination letter number 057/PM, dated 11/06/2009 that assign responsible

committee for developing zones. Standing Deputy Prime Minister Somsavat Lengsavad is a

chairman of the committee and Minister of Industry and commerce Dr. Nam Viyakhet is a vice

and acting chairman of the committee and there are five people from line ministries. Therefore,

total numbers are seven people in the committee.

Initially, Industry Department, Ministry of Industry and Commerce is assigned to be a

secretariat for the committee.

3. Drafting the decree on the Zone and industrial Park:

Industry Department, Ministry of Industry and Commerce has revised the draft of the

decree on the Zone and industrial Park, which will be a common version used within the

51

country, in order to make it become a decree on specific zone and industrial park and export

processing zone in Vientiane.

PROGRESS OF 2010

Institution Building for Specific and Special Economic Zones

(1) Establishment of NCSEZ: Decision of Prime Minister No.165/PMO dated 14 December 2009

was promulgated to designate the NCSEZ to guide the development of SEZ in Lao PDR. NCSEZ

consists of: Standing Deputy Prime Minister (Chairman), Minister of MPI (Vice-Chairman,

permanent), Minister of MOIC (Vice-Chairman), Minister of MPWT(Vice-Chairman), Minister

of MOF (Member), Minister of MOJ (Member), and Vice Minister of NLMA (Member).

NCSEZ has rights and responsibilities to: instruct and manage the SEZs nationwide; formulate

the policy and legislation on the development and management of SEZs; create the plan and

strategic roadmap on tasks; discuss on funding and international cooperation for development

SEZs; supervise the tasks for Savan-Seno SEZ; and formulate the personnel structure, roles and

responsibilities of a management board for each SEZ.

(2) Establishment of S-NCSEZ: Secretariat to National Committee for Special Economic Zone

(S-NCSEZ) was established to facilitate the investors in setting up and developing economic zone

such as industrial park, export processing zone, logistic park, tourism development zone, new

modernized township, border free trade zone and so on. S-NCSEZ is operating under direct

supervision of the National Committee.

(3) Investment Promotion Law: Under the new investment promotion law, the investors can invest

into special economic and specific economic zones either as developers of the zone or investors

in the zone.

(4) Prime Minister’s Decree on special economic and specific economic zones: Prime Minister’s

Decree No. 443/PMO dated 26 October 2010 was promulgated for special economic and specific

economic zones, with Decision No. 47 of National Assembly dated 26 October 2010 approving

the decree. The decree grants rights for NCSEZ to consider and approve the establishment of

special and specific economic zones national wide. NCSEZ is chaired by Standing Deputy Prime

Minister, Mr. Somsavath Lengsavath, and consists of 19 members from relevant ministries.

(5) Approved SEZ: GOL began developing economic zones a decade ago in an effort to attract

investment, and create jobs and income for local people. At the moment, there are five SEZ that

have been approved in Laos: (i) Savan-Seno Special Economic Zone (Savannakhet Province), (ii)

Borten Dankham Economic Zone (Luang Namtha Province), (iii) Golden Triangle Economic

52

Zone (Bokeo Province), (iv) The Nonthong Specific Industrial Zone (Vientiane Caapital), and (v)

Phouskyo District Area (Khammouane Province) .

(6) Development of SEZ: GOL plans to establish a number of special economic zones, particularly in

remote and former revolutionary stronghold areas, with the aim of mobilizing investment in rural

regions of the country. According to a report from MPI, poverty in Laos has been reduced but

inequality between urban and rural residents persists. One of the main reasons for special

economic zone is that businesses do not want to invest in rural areas. GOL hopes that establishing

the special economic zones in remote areas will attract investment, and create jobs and income

for local people.

GOL is encouraging the private sector to develop special and specific economic zones in Laos

since it lacks funding to build infrastructure in industrial and service parks. GOL is now

conducting feasibility studies on establishment of special economic zones at four sites over the

country.

VITA Park (the Nonthong Specific Economic Zone) in Vientiane Capital

(1) MOIC and a Taiwanese investor are going to develop the industrial park in Vientiane Capital. A

joint agreement on the development of the project was signed between GOL and Nam Wei

Development Co., Ltd. on October 30, 2009 in Vientiane Capital.

(2) The area will be 110 ha and is in a different area from the current Vientiane Industrial Zone. The

two parties hope to build 147 factories, including assembly plants of bicycles, computers,

garments, pick-ups, plastic products and shoes. The project, named the Vientiane Capital

Industrial and Trade Area, or VITA Park, is located Nonthong village.

(3) The two parties operate the area for 75 years. GOL will contribute the land as its share of the

investment. The company will invest in infrastructure and facilities to encourage local and

foreign business to invest in industry, trade and services.

(4) National Committee for SEZ promulgated the Decision No. 02 dated 01 November 2010 for

accepting VITA Park as the Nonthong Specific Economic Zone. VITA Park project will be

executed by the Joint Venture Company between GOL and Taiwanese developer in compliance

with Prime Minister’s Decision on Special Economic Zone and Specific Economic Zone in the

Lao PDR (No.443/PMO).

The Feasibility Study on Vientiane Industrial Park

(1) At the request of GOL, Preparatory Survey on Industrial Zone Development in Lao PDR was

53

conducted by JICA Study Team from February 2009 to June 2010. A feasibility study on an

industrial park in Vientiane Capital (VIP) was one of the objectives of the Study.

(2) VIP is to be located in the Vientiane Industrial Zone that lies astride Xaythany and Xaysetha

districts of Vientiane Capital. A total land area of VIP is 140 ha. Among this, an area of 96.5 ha is

to be lent to investors and the rest is used as common area such as a center building, retention

pond, power sub-station, road, channel, buffer green, workers residential area, amenity area, and

technical training center.

(3) VIP will create employment and contribute to the industrialization in Lao PDR. It is offered that

VIP should invite wide range of investors without regard to local or foreign investors; domestic

or export market oriented investors; and utilization of local or import raw materials. VIP will

expand investment opportunities in manufacturing electrical parts, metalworking, non-ferrous

metal, food processing, daily goods, textile and apparel, and so on.

(4) The feasibility study report provides technical plans for developing infrastructure in VIP and

financial /economic evaluations. The feasibility study report also provides recommendations for

implementing the project smoothly such as those on approval of FS and draft EIA report, land

acquisition, resettlement, legal arrangements, institutional set-up, funding schedule, and

procurement method. It is recommended to discuss the technical training center and housing to

be located adjacent to VIP, and to harmonize with the infrastructure outside of VIP.

PROGRESS OF 2011

(1) National Committee for Special Economic Zone Secretariat Office (S-NCSEZ) under

Government’s Office has presented twice to Japanese investors in 2011 at the investors seminars

in Tokyo, in January and November.

(2) According to the latest information of S-NCSEZ, the following 6 SEZ’s have been officially

approved up to the end of November 2011.

Savan-Seno Special Economic Zone by Lao Government-Malaysia investor in Savannakhet

province,

Boten Special Economic Zone by Chinese investor in Luangnamtha province,

Sarmliem Dan Kham Special Economic Zone by Chinese investor in Bokeo province,

PhouKieu Nakhon Specific Economic Zone by Lao investor in Khammouane province,

Vientiane Industry and Trade Specific Economic Zone by Lao Government-Taiwanese

investors in Vientiane Capital, and

Saisetha Specific Economic Zone by Chinese investor in Vientiane Capital

(3) According to the latest information of S-NCSEZ, the following 4 SEZ’s are officially under

consideration as of the end of November 2011.

54

Friendship Bridge SEZ Number 3 in Khammouane province,

Golf Long Thanh SEZ in Vientiane Capital,

Xiengkhuang Specific Economic Zone in Champasack province, and

Dongphosy Specific Economic Zone in Vientiane Capital

55



9.Logistics

9.1 To simplify the systems and procedures concerning custom clearance and immigration

control so that investors will be able to do their business in an easier way. For example, it is

desirable to increase the number of one-stop shops along the borders with Vietnam and

Thailand.


(1)In the light of the usefulness of single-stop / single-window service at Dansavanh (Laos)-Lao

Bao (Vietnam), the GoL will continue to increase the number of single-stop / single-window

service and simplify the procedures at the border areas.

◎Target number: 5

North-South Economic Coridor (1):

- Border Crossing: Houixay (Lao) - Chieng Khong(Thiland)

East-West Economic Corridor (1):

- Savannakhet (Lao) - Mukdahan (Thailand)

Other Border crossing (3):

- Thanaleng (Lao) - Nongkhai (Thailand)

- Nam Phao (Lao) - Cau Treo (Vietnam)

- Wang Tao (Lao) - Chong Mek (Thailand)

◎Priority

(1) Savannakhet (Lao) - Mukdahan (Thailand)

(2) Thanaleng (Lao) - Nongkhai (Thailand)

(3) Densavan-LaoBAo

(4) Wang Tao (Lao) - Chong Mek (Thailand)

(5) Border Crossing: Houixay (Lao) - Chieng Khong(Thiland)

(6) Nam Phao (Lao) - Cau Treo (Vietnam)

◎Target deadline date: 2009-2010

(2) The GoL will take the following specific steps of the simplified procedures:

Step 1. Joint Customs Inspection in Common Control Area (CCA) at Country of

Entry, as Single Stop Inspection (SSI).

Step 2. Joint Customs and Quarantine Inspection in CCA

Step 3. Joint Clearance/Processing of Customs Documents at Country of Entry.

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Step 4. Single Window Inspection / Single Stop Inspection (SWI/SSI): Joint Customs and

Quarantine Inspection in CCA and Clearance/Processing of Customs, Quarantine,

and Immigration Documents at Country of Entry.


The government has ratified all annexes and protocols of the Mekong Sub-Region

Cross-Border Transport Agreement (CBTA) (Total of 20 documents).

The following Memorandum of Understand (MOUs) and other related documents have

been considered and concluded:

- Bilateral MOUs between Lao PDR-Vietnam, and Lao PDR-Thailand to initiate the

implementation of the Cross-Border Transport Agreement (II CBTA) at Dan

Savanh-Lao Bao and Moukdahan-Savannakhet border check points.

- The MOU between Lao PDR, Vietnam and Thailand to initiate the implementation

of the Cross-Border Transport Agreement at Dan Savanh-Lao Bao and

Moukdahan-Savannakhet border check points.

- The MOU between Lao PDR, Vietnam and Thailand on the cooperation for the

most effective use of the Second Friendship Bridge and transportation infrastructure

along the East-West Economic Corridor (EWEC).

- The MOU between Lao PDR, Vietnam and Thailand on the implementation of

Joint Road Transportation of Tourists.

Road number 9 Service fee have been examnined which followed up the protocol 2 of

CBTA.

Concluded the negotiation and signed the Memorandum of Understanding on

Implementation of the Cross-Border Transport Agreement at Bo Ten Border (Lao

PDR) and Bo Han Border (China).

Completed the third round of negotiation of the Memorandum of Understanding on

Land Traffic Rights exchange and the Custom related issues of the East-West

Economic Corridor. In addition, the Inaugural Ceremony of the Transportation Truck

Caravan along the East-West Economic Corridor between three countries, Lao PDR,

Vientnam and Thailand, has been officially held in June 2009.

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PROGRESS OF 2010

(1) The 3rd Joint Committee Meeting on CBTA was organized at Vientiane on 16th and 17th June

2010.

(2) The following Memorandum of Understand (MOUs) and other related documents were

considered and concluded besides those reported in the previous year:

The MOU between Lao PDR, Cambodia and Vietnam was discussed three times by

2009, and the draft MOU had been prepared.

The MOU between Lao PDR, Thailand and China was discussed, and the final draft

MOU had been prepared in September 2010.

(3) Ministry of Public Works and Transportation (Transportation Department) is conducting the

following projects regarding to CCA and road side station.

CCA construction project at Dansavanh: 90% completion as of December 2010. Taking over

inspection is scheduled in February 2011. The project is financed by the Japan ASEN

Integration Fund (JAIF) part A.

Roadside station construction project including training of operation and management at

Phalanxai District: Completed in December 2010 and to have taking over inspection in

December 2010. The project is financed by the JAIF part A.

Study on transport facilitation committee establishment in Savannakhet financed by the JAIF

part B. The study is coming to complete in December 2010.

Feasibility study on Roadside Station at Seno financed by the JAIF part B. The study is

coming to complete in December 2010.

Feasibility study on Roadside Station along NR9 financed by the JAIF part B. The study is

coming to complete in December 2010.

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9.Logistics

9.2 To coordinate with Thailand and Vietnam so that it will become unnecessary to change of

vehicles and to reload merchandise from one vehicle to another at the borders, thus trying to

facilitate logistics.


(1)The GoL will continue with the negotiations with Vietnam and Thailand for the GMS

cooperation concerning the change of vehicles and enhance the single-stop/single-window

system at the international borders between Laos and Vietnam and between Laos and

Thailand with a view to bringing about the conclusion by mid-2009.


(1) There is an exchange of the right for transport that allows foreign trucks passing and crossing broader

without shifting goods to other trucks.

The initial implementation of the Memorandum of Understanding (MOU) on Cross-Border

Transport Agreement (IICBTA) at Dansavanh-Lao Bao Border have been completed, especially

on the Single Stop Inspection (SSI) by the custom officials at the Common Control Area

(CCA), and the Single Window Inspection (SWI) at the country of Entry.

Primary implementation the Memorandum of Understanding on Implemention Cross-Border

Transport Agreement at Dansavanh-Lao Border and Savanhnaket-Moukdahan Border,

especially, acknowledgement of customs documentary of Single Window inspection(SWI) .

Completed the initial draft of the Guide book for “Implemention of Cross-Border Transport at

Dansavanh-Lao Bao border and Savanhnaket-Mokdahan border”, and have organized trainnings

for concerned officials at the Border Check Points.

Completed the final Negotiation of the Memorandum of Understanding between and among

Customs Authorities and Issuing/Guaranteeing Organizations/Institutions from the Greater

Mekong Sub-region (GMS) Countries on the Customs Transit and Temporary Admission

System (CTS) for Implementation of the GMS Cross-Border Transport Agreement). It is now

ready to be concluded.

Concluded the Memorandum of Understanding between Issuing/Guaranteeing

Organizations/Institutions of 3 countries: Laos, Vietnam and Thailand.

Primary Translation of the Customs Transit and Temporary Admission System implementation

guideline from English into Lao.

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Completed the Draft Interim Agreement between and among Customs Authorities and

Issuing/Guaranteeing Organizations/Institutions from the Greater Mekong Sub-region (GMS),

Countries along the East-West Economic Corridor (EWEC) on the Customs Transit and

Temporary Admission System (CTS) for Implementation of the GMS Cross-Border Transport

Agreement.

Completed the Draft Interim Agreement between and among the Issuing/Guaranteeing

Organizations/Institutions of the Lao People’s Democratic Republic, the Kingdom of Thailand

and the Socialist Republic of Viet Nam on the Customs Transit and Temporary Admission

System (CTS) for Implementation of the GMS Cross-Border Transport Agreement.

(2) Ministry of Finance recently set up the scanners in Four border areas namely: Friendship Bridge 1,

Friendship Bridge 2, Densavan- Laobao and Wang Tao-Chong Mek.

Joint Single Stop Inspection (SSI) between Laos and Vietnam is operating Common Customs

Control Area (CCCA Phrase II), but Lao has not started to implement (SSI) with Thailand yet due to the

difficulty of incomplete infrastructure as setting plan.

Using CTS has three forms including: Transit and Inland Customs Clearancve Document; Motor

Vehicle Temporary Admission Document; and Containner Temporary Admission Document in order to

compliance with the frame of GMS-CBTA, the process is on going due to the Lao International

Transportation Association (LITA) is not be able to sign the Guaranteeing agreement with Custom

Department.

Progress of 2010

(1) There is an exchange of the right for transport that allows foreign trucks passing and crossing

border without shifting goods to other trucks for East-West Corridor and South-North Corridor.

(2) Completed the final Negotiation of the Memorandum of Understanding between and among

Customs Authorities and Issuing/Guaranteeing Organizations/Institutions from the Greater

Mekong Sub-region (GMS) Countries on the Customs Transit System (CTS) for Implementation

of the GMS Cross-Border Transport Agreement). Based on that the Lao International Freight

Forwarders Association (LIFFA) conducted a trial operation between Lao and Thailand in 2009.

(3) Officials of MPWT had many training on traffic safety, cargo handling, etc. which was organized

by Ministry of Land, Infrastructure and Transport.

(4) Ministry of Finance recently set up scanners in four border areas namely: Friendship Bridge 1,

Friendship Bridge 2, Densavan - Lao Bao and Wang Tao - Chong Mek.

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(5) Joint Single Stop Inspection (SSI) between Laos and Vietnam is operating, although the Common

Customs Control Area (CCA Phase II) has not yet been built. However, Laos has not started to

implement SSI with Thailand yet due to difficulty in the legal system in Thailand.

(6) Using CTS has three forms including: Transit and Inland Customs Clearance Document; Motor

Vehicle Temporary Admission Document; and Containner Temporary Admission Document in

order to compliance with the frame of GMS-CBTA, the process is on going due to the Lao

International Freight Forwarders Association (LIFFA) is not be able to sign the Guaranteeing

agreement with Custom Department.

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9.Logistics

9.3 To improve the logistics network and make better the related systems and infrastructure in

the suburbs of the Vientiane Capital.


(1)The GoL will make efforts to establish logistics parks in the Vientiane Capital and in the

Savannakhet City at the earliest date.


(1) Ministry of Public Works and Transportation (Transportation Department): Currently, JICA experts

are doing project on the comprehensive study on logistic system in Laos.

Cooperated with Japanese expert commitees in order to implement the facilitaion systems

improvement project of East-West Economic Corridor in frame of the Joint Asia Integration Fund in

part A, which completed in detailed design of facilitate improving of Customs section at Dansavanh

Border and built parking place at Palanxay.

Completed 3 projects presenting to japanese government in the frame of Joint Asia Integration Fund

(JAIF) in part B, and it was regconized as following: (1) Integrated Transport Facilitation Center on

National Road 9 and CBTA Cluster, (2) Road Safety Measures on Road 9, and (3) Roadside Station

at Seno Intersection

The committees added comments and request the Vietnam, Cambodia and Myanmar projects to be

provided assistant from Japanese government in frame of Joint Asia Integration Fund in part B

which is a part of plan to transform logistic corridor into economic corridor.

Took part in the promotion of the combined use of various types of transportions such as

transporting containers, negotiation of various transportation types integrating (land Road, water

way, air way and railroad ).

Progress of 2010

(1) At a request of MPWT, a feasibility study on Vientiane Logistics Park (VLP) was conducted by

the JICA study team in 2010. Around Thanaleng Station was selected as the most optimum

solution amongst the 4 options.

(2) Through the comprehensive freight demand forecast, it was established that the VLP would

mainly handle import and export cargo from Thailand. Due to its geographic advantages, it is also

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expected that it will, in the future, become a transshipment center for the transit cargo between

Yunnan and Thailand. Also, using the trunk road network linking with Vientiane, the VLP is

expected to have a function as the distribution center for the northern and central parts of Lao

PDR.

(3) The areas required for the VLP was calculated as 34.9 ha, including the oil terminal area.

(4) In accordance with the 25th SEA Games and 450th anniversary of Vientiane, major roads such as

NR13S and 450th have completed. District Road No 108 which runs industrial area has been also

improved.

(5) Based on feasibility study prepared by the JICA Study Team, the Lao Government requested a

loan to Japanese Government to construct VLP. In addition to VLP, the Lao Government

requested a loan for logistic parks in Savannakhet and Champasack provinces.

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9.Logistics

9.4 To revise the existing aviation agreements so as to ensure the operation of large

aircraft-carriers capable of transporting large-sized containers (= increasing the capacity of

aircraft-carriers) in taking account of the outcome of the ASEAN transport ministers' meeting

on November 1, 2007, which refer to the opening of the airways to link the capital cities by

the end of 2008.


(1)The GoL will welcome the first Japanese charter flight operation between Narita and

Vientiane next February and encourage the airline companies concerned to address the issues

that Japanese businesses face in operating the large aircraft-carriers.

(2)The GoL will follow the gradual liberalization of regional aviation which was agreed at the

ASEAN transport ministers’ meeting held in Manila in early November 2008.


(1) The GoL is willing to have direct fight operation between Japan and Laos and welcomed the 1st

chartered flight between Japan and Laos flied in February 2009.

(2) Ministry of Public Works and Transportation (Transportation Department):

Referring to the two multilateral agreements of ASEAN countries: liberalization of air

transportation for goods and passengers. Laos signed the agreement with ASEAN member in 2008

on the Liberalization of air transportation in ASEAN.

Protocol on the revise of Memorandum of Understanding of ASEAN air transportation service of

goods is to increase the right of air transportation service up to 250 tone per week, which already

signed by (10 ASEAN countries) in 2007. Now in the internal proceeding process of each country

before implementing the agreement. Laos requests the Ministry of Foreign Affairs to send the

diplomat letter to the ASEAN Secretariat about readiness in implementing this MOU.

Lao and Japan have not signed the ASA yet. In the past, the Aviation Department, Ministry of

Public and Work met and dicussed with the negotaitors deligation from the Ministry of Land, basic

infrastructure and transportation of Japan, in Tokyo. Japan side is not willingness to sign ASA with

Laos yet. If Lao side is interested to sign the ASA, Laos has to conduct the study market demand

and other information related to investment, tourism and transportation between to countries. Then,

Japan side will reconsider to negotiate when it is needed.

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Recently, Laos signed ASA with Kuwait, Hongkong, Makao, China, and soon with Korea, and

now negotiating with USA.

Wattay airport expansion was planned. As of November 2009, the request to Japan was made for

the support.

Progress of 2010

Department of Civil Aviation

(1) The Sixteen ASEAN Transport Ministers (ATM) Meeting held on 11 November 2010 in Brunei.

In further supporting the initiative of ASEAN Single Aviation Market (ASAM), the Ministers

encouraged all ASEAN Member States to ratify and implement the already-concluded

agreements to implement the ASEAN Open Skies Policy, i.e. the ASEAN Multilateral

Agreement on Air Service (MAAS), the ASEAN Multilateral Agreement on the Full

Liberalization of Air Freight Service (MAFLAFS) and the ASEAN Multilateral Agreement on

the Full Liberalization of Passenger Air Service (MAFLPAS).

(2) MAAS and MAFLAFS are on the processing of internal procedure for ratification/acceptance.

However, MAFLPAS was just signed and has not yet been entered into the internal procedure for

ratification / acceptance.

(3) The Lao and Thai governments previously concluded Air Service Agreement (ASA), which

stipulates Lao Airlines and Thai Airways International (TG) shall not exceed 2,100 seats a week

on the route of Bangkok-Vientiane. In accordance with ASA, TG operates B737-400 (142 seats)

for two round-trip flights per day at different hours from Lao Airlines’ flights to prevent

competition.

(4) Only in the following cases, Department of Civil Aviation allows TG to operate the larger aircraft

having seats more than the above limit, for example, A300-600 with 250 seats, on the route of

Bangkok-Vientiane.

In view of the circumstances in Lao PDR, TG is requested to increase number of seats on

temporary basis, for example, in the case of SEA Game and 450th Anniversary of Vientiane

as the Nation’s Capital.

When TG has difficulty in allocating B737-400 for the operational reasons such as tight

assignment due to maintenance, Department of Civil Aviation allows TG to operate a large

65

aircraft to substitute B737-400. In this case, TG is allowed to carry not over 150 passengers

regardless of the number of seats of a substitute aircraft to follow the ASA. Department of

Civil Aviation counts the number of passenger on the passenger list.

(5) After the Lao government ratifies MAAS and MAFLAFS, TG has freedom to operate A300-600

on the route of Bangkok-Vientiane. Since A300-600 can carry large-sized containers, air cargo

transport capacity will increase in association with passenger’s seats. Air cargo transport

enhances the convenience for carrying small and light goods especially in urgent and temporary

cases, boosting trade and investment opportunities in Vientiane Capital.

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9.Logistics

9.5 To try to resolve the issue concerning one-way loading of container trucks by consulting

with the neighbouring countries.


(1)The GoL will prepare a list of problems concerning to transportation, including one way

loading, with the neighboring countries at the annual meeting with Thailand, China, Vietnam

and Cambodia respectively and come across the solutions of these problems by mid-2009.

(2)The GoL will make its best efforts in collaboration with the Japanese government to

promote and attract more Japanese manufacturers to establish their production/assembling

factories in Laos to create more demands for both way loading of container trucks, i.e. for

importing production/assembling materials and exporting finished/assembled products.


(1) The transportation volume from Thailand to Vietnam is 15 times more compared to that of Vietnam to

Thailand. Thailand to Laos is 2.5 times more compared to Laos to Thailand. Laos / Vietnam import and

export is well balanced. This means, Thailand with other countries transportation is unbalanced or causes

the problem of one way loading. It seems that there is not very effective counter measures exisits, but the

following could be considered.

1. The freight of the departure from Laos increases by SEZ planned and more industries in Vientiane.

2. If rail transportation becomes possible by maintenance of VLP, big capacity with low unit price

commodities may switch to railway transportation. The ratios of one way loading by trucks may

decrease thereby.

(2) The GoL is willing to promote and encourage Japanese investors to enlarge investment in Laos. In

addition, In the mid of September 2009, the Minister of Planning and Investment is going to Japan

for promoting FDI.

Progress of 2010

(1) Transport Sector

a) Aiming at logistics capacity development, action plan consists of 27 items was proposed to

Ministry of Public Work and Transportation by JICA study team.

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b) The national logistics strategy prepared by the JICA study team also proposed the way to

increase of return haulage and reduction of transportation cost. According to that,

development of the logistics in Lao PDR can be achieved by establishment of the following

three key strategies: (i) Integration of Cargo Flow, (ii) Business Stimulation, and (iii)

Market Expansion. The outcomes of implementation of these strategies, from a national

perspective, include increase in return haulage, reduction in logistics costs, and increase in

transport volume. From the perspective of the private sector, the implementation of the

strategies would engender more logistics business opportunities, improvement of logistics

services, and more profits.

(2) Industry and Trade Sector

For decreasing one way truck, it is necessary to increase exporting goods produced from

domestically available raw materials such as farm products and mineral resources. It is also

necessary to promote the packaging industry making bottles, cans and carton boxes to support

the exporting industry. Otherwise, it is difficult to decrease one way truck, because increase in

exporting processed goods is followed by increase in importing packaging materials at the

same time.

Positive activities to reduce one way truck have not been observed so far in the industry and

trade sector.

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10. Protection of the intellectual property rights

10.1 To make further endeavours to take necessary control and regulatory measures against

the infringement of intellectual property rights.


(1)The GoL will issue at the earliest date the decree based on the Law on Intellectual Property

Rights, approved at the National Assembly in December 2007, and will take necessary

measures so as to protect the intellectual property rights in Laos.


(1) Property right Division: expect to have the decree to implement the law on Property right in 2010.

The National Authority for Science and Technology (NAST) has formed a team to be

responsible to draft the decree to implement the Law on Intellectual Property, which

headed by the Director of Industrial Property Division. The draft of Decree is still with

Head of Division before submission to Head of Government through Department as well

as NAST and Ministry of Justice for comment.

PROGRESS OF 2010

The works on the draft of the PM decree to implement the Law on Intellectual Property are still

ongoing. The decree is expected to be completed by end of 2011.

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11.Relations with the provinces

11.1 To make sure that the authority to issue licenses and approvals, including the certificate

of origin, will be transferred to the provincial governments as much as possible and that

necessary procedures can be processed there smoothly, for the companies doing business out

of the capital city regard as a burden their trips coming up to the Vientiane Capital each time

they need to clear the license-and-approval-related process at the central governmental

ministries.


(1)The GoL will amend the PM Decree no. 300/PM and 301/PM on the implementation of

Domestic Investment and Foreign Investment Promotion Laws No. 10/NA and 11/NA

respectively no later than the end of 2008. The amendments will delegate greater authority to

provinces to issue licenses and approvals which will include among others the following

authorities:

- Approve investment activities (Category 1) with no limitation on investment capital

value.

- Approve the investment incentives (exemption/reduction of import duties) on the

importation of raw material, machinery and equipment, and other production inputs.


(1) Ministry of Planning and Investment (Investment Promotion Department): The draft of law on

investment promotion has been approved by the National Assembly (NA) in July, 8th 2009. Now

the NA secretariats are revising and editing some articles in order to compliance with the

comments and proposal of NA members. Expected that the President of NA will sign the Law on

Investment soon. Then, MPI will propose to the Presidential office for issuing the Presidential

decree on the promulgation of the amended Law on Investment. MPI is also preparing draft of

the decree of the Prime Minister regarding the implementation of the amended law, when the

Presidential decree is issued, MPI will propose to the Prime Minister to issue the decree of the

Prime Minister regarding the implementation of the amended law.

PROGRESS OF 2010

(1) As annexes to the Implementing Decree of amended Investment Promotion Law, there will be

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a list of concession related business activities that can be approved by provincial authority.

(2) The Ministry of Industry and Commerce has issued the Ministerial Agreement No. 2036,

dated 12/10/2010 delegating the authority to provincial department of industry and commerce

in every provinces to issue the Preferential Certificate of Origin, e.g. form A, D, E, AK, AJ,

and etc..

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11.Relations with the provinces

11.2 To improve the transportation infrastructure facilities, including airports, out of the

Vientiane Capital.


(1)The GoL will make the best use of the airport at Luang Prabang, Luang Namtha,

Savannakhet and Pakse which have been or will be improved, renewed and reopened

respectively, and continue to have better connection inside and out of the country.


Luangprabang Airport are rebuilt and reconstructed that expect to complete in 2014. This airport

will available for landing B 737 and A 320 (150 seats)

Luangnumtha Airport completed in 2008 that is available for landing such as ATR 72 and F 70.

Pakse Airport is under renovation and expects to complete in 2010 and will is available for

landing airplanes B 737 and A 320 (airplanes 70 seats).

Japanese experts from METI has finished feasibility study on Vientiane and Savannakhet

Airports development. They found that the existing airport in Savannakhet can meet with the

demand in the present. However, whenever there is an increasing of demand, the airport is

needed to improve.

Progress of 2010

(1) Railway construction plan between Kunming and Vientiane

Chinese government signed an agreement with Laos to cooperate in building the railway on 7

April 2010. This project is a part of the Kunming-Singapore rail link. This project aims to boost

trade relations between ASEAN member countries and China, after the two parties reached an

agreement on ASEAN-China Free Trade in 2009.

China has agreed to support Laos to construct a railway from the Lao-Chinese border checkpoint

at Boten to Vientiane with a length of about 420km. Officials of Laos and China were joining

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forces to conduct a feasibility study of the railway. The feasibility study is schedule to be

finalized by the end of 2010. After completion of the feasibility study, they will seek investment

permission from the Lao government to build and operate the railway. The railway will be

designed to accommodate a medium high-speed train, which can run at about 200km per hour.

Although the route map of railway is not available at present, it was informed that there would be

5 main stations: Luangprabang, Vang Vieng, Vientiane Provice, Bolikhamxay, and Vientiane

Capital.

China agreed to provide 70% of the cost as a low interest loan and the rest will come from a joint

Chinese-Lao venture responsible for investing in and operating the railway. The cost of the

railway construction from Boten to Vientiane is still unknown.

Laos will benefit from having the railway because it would enable the landlocked country to

export goods to the world market for cheaper. At present, Laos uses Thai truck services to

transport goods from Laos to Thailand’s seaport, making the cost of exporting higher.

Construction of the ASEAN-China railway is expected to kick off within the next five years.

However, it is unable to confirm when the 420km railway from the Laos-China border to

Vientiane will be operational.

(2) Stretch of Railways from Thanalaeng to Central Vientiane

At present, Laos has only a 3.5km section of railway, running from the middle of the

Vientiane-Nong Khai Friendship Bridge to Thanalaeng train station. This project was funded by

the Thai government. The Thai government has promised to provide financial support to build a

further 9km stretch of railway from Thanalaeng to a planned station in central Vientiane.

(3) New Bridge between Vientiane and Nong Khai for Train

At present, road traffic on the bridge must be closed off for two hours when a train crosses the

river, which occurs twice daily.

Lao Ministry of Public Works and Transport reached the agreement with their Thai counterparts

for building a new bridge across the Mekong River between Vientiane and Nong Khai to carry

trains. Laos government asked the Thai government to redirect funds previously approved by the

Thai cabinet for Laos to build a 9km railway from Thanalaeng train station to the planned

Vientiane train station. The cancellation of that project would avoid duplication with the

proposed high speed train link from China to Laos and Thailand.