Lao Voices

Investing in Laos takes time and perseverance. Any potential investor should study Laos’ rules and regulations carefully in order to be abel to create a successful business in Laos.

According to the Worldwatch Institute, any foreign investor seeking to establish Lao operations must submit project proposals to the ForeignInvestment Management Cabinet (FIMC) committee for investment and foreign cooperation in the office of the Prime Minister. The proposal is then creened by the relevant line ministries and adjudicated by the prime minister’s office.

Although the law requires that this process be completed within 60 days, in practice the pre-approval waiting period often takes one year (!) or more. A recent study found that of 200 investment applications received in 1996, 75% were still pending with FIMC by mid-1998.

The screening process at FIMC takes into account the financial and technical feasibility of the project;input from the relevant line ministry; and whether the proposed project conflicts with government policy. In general, the decision-making process from FIMC through the line ministry and up to the Prime Minister’s office is lengthy, opaque, and inconsistent.

Potential investors report great difficulty in determining the progress of their applications through the bureaucracy, or in obtaining timely feedback on possible objections to their proposals.

Because of the lack of transparency in the entire process, the reason for the holdups-and thus any possible discrimination against foreign investors-is frequently difficult to identify.

Besides the investment license, foreign investors are required to obtain at least four other permits from
other ministries, including:

• a business registration, which must be annually renewed, from the ministry of commerce;
• a tax registration from the tax department in the ministry of finance;
• a business logo registration from the ministry of interior;
• a permit or permits from each line ministry related to the investment (i.e., ministry of industries for
manufacturing; ministry of communications for transportation etc.);
Investment Overview Foreign Investment Climate
Laos Review 2007 82
• appropriate permits from local authorities;
• an import-export license, if needed.

Transparency of Regulatory System
All the principal laws, regulations, decrees and guidelines governing international trade and investment,as well as the protection of the intellectual property, are available publicly, although not all have been officially translated into English. Laws and their schedules for implementation are customarily published in the Lao daily newspapers.

While Laos’ body of commercial law is slowly developing, foreign investors most frequently cite inconsistencies in the interpretation and application of existing laws as among the greatest impediments to investment.
The lack of transparency in an increasingly centralized decision-making process, as well as the difficulty encountered in obtaining general information, augment the perception of the regulatory framework as arbitrary and inscrutable.