Transcript Slide 1
Foreign Direct Investment Policy in the Lao PDR
Presented by Houmpheng Souralay Director General, Department of Investment Promotion May 28 , 2007 Bangkok, Thailand.
Themes of Presentation:
General Information on FDI in Laos Government Policies on FDI Potential Sectors with focus on Hydropower, Mining, and Agriculture
Country’s Profile
Land Area Population Population Density Population Growth GDP Per capita GDP Labor Force Religion : : : : : : : : 236,800 sq. km 5.6 Millions (2005) 24 persons/sq km 2.4 percent 2.7 billion USD 491USD 2.9 Millions Buddhism
Some Macroeconomic Data
GDP (average 2001-05)%
Agriculture (3.4%); Industry (11.3%); Services (6.7%)
GDP (Expected 2006-07)% 6.2
7.5
GDP per capita (average 2001-2005)
GDP per capita (Expected 2006-2007) 491 591
Changes in Economic Structure (2001-2005)
2001 2005
Open Door Policy
•
New Economic Mechanism:
1986: Shifting from planned economy to a market oriented economy •
Privatization of state enterprises
•
Open for FDI
Shares of Private Investment
22.0% 14.2% 63.8% 2001 Foreign Domestic Private Public 59.9% 4.4% 35.7% 2005
$3,000
Approved and Implemented FDI in Lao PDR
200 $2,680.0
158 $2,500 $2,000 Implemented No. of Projects 131 Line 159 127 150 $1,500 100 $1,249.0
$1,000 52 50 $500 $492.0
$93.0
$465.0
$155.0
$533.0
$299.0
$405.0
$0 0 2001 2002 2003 2004 2005 2006 2007
No 1 2 3 4 5 6 7 8 9 10 11 12 13 Approved Foreign Investment in Lao PDR by Sector from 2000- March 2007 Sectors Projects Value of Investment (US$) Electricity Generation Agriculture Mining Industry & Handicraft Trading Construction Services Hotel & Restaurant Telecom Wood Industry Banking Garment Consultant Grand Total 37 142 134 176 92 23 154 57 3 35 8 25 29 919 2,944,252,200 711,359,290 585,089,892 443,153,920 266,071,089 159,686,874 184,188,467 160,409,247 39,940,000 29,307,154 20,096,000 20,285,688 7,613,252 5,572,232,808
Approved Foreign Investment in Lao PDR by Country 2001- March 2007 No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Countries Thailand China Vietnam France Japan India Australia Korea Singapore Malaysia Canada Switzerland Russia Sweden Total Projects 157 223 105 53 29 3 24 99 19 30 9 5 10 3 797 Value of Investment ($US) 1,334,100,051 763,642,466 463,612,212 419,081,879 418,390,583 350,200,000 317,677,196 274,185,705 96,235,000 82,050,392 48,531,750 31,050,000 15,675,310 13,090,000 5,490,268,785
LAO PDR IN THE GLOBAL ECONOMY
Member of international organization ( MIGA, ASEAN, ASEAN-Japan Centre, WORLD BANK, ADB, IMF…)
GSP Privileges : 42 countries ( EU, JAPAN, CANADA, CHINA, … )
NTR with USA (04/02/2005)
Bilateral Investment Treaties with 23 countries (Investment Promotion and Protection)
In process of joining WTO
From Land-Locked to Land-Linked
Lao PDR is being transformed into LAND LINKED country and Transit country in the region
Kunming CHINA 1,200 Km.
On-going project
• Thai, ADB, China share 1/3 (soft loan) • Start 2004, complete 2007
Jinghong LAOS Luang Namtha Chiang Khong THAILAND Chiang Rai
On-going project Kon Kaen A. Chumpae Kalasin Second Mekong Int ’ l Bridge Project Seno Mukdaharn/ Savannaket Dansavan/ Lao Bound Maung Pin HAI VAN PASS TUNNEL
• Second Mekong Bridge (Mukdaharn – Savannaket) •Soft loan from Japan •Cost = 4,753 Mil Yen.
Dong Ha Danang
•Under construction •Complete end 2006
Lao PDR Vietnam Cambodia
(Road Project)
On-going project
Bagan Meiktila Lashio Kentung MT36 Jinghong LT34 LM16 Dien Bian Phu Bo Ten Muang Xai LT28 Luang Prabang LT29 Nan i Payagg Thaton MT37 Mae Sot MT38 Thanbuzayat Andaman Sea MT40 Tavoy Three Pagoda Pass Kanchanaburi Nakhon Phanum LT30 LT32 Khon Kaen Nakon Ratchasima Mukdaharn Ubon Ratchathani CT56 CT25b CL14 Siem Reap Kaw Thong Ranong Trat CT25a Sihanouk Ville Stung Treng Ca Mau Quang Ngai Quy Nhon
III
CL14: Stung Treng – Champasak and Preah Vihear – Champasak •No progress on Cambodia side •Section in Lao PDR is completed.
IV
CM12: Road linkage under Asian Highway project •Cambodia: Poipet –Sisophon (48 km) •Under ADB loan
Advantages:
Comparative Advantages
: Rich Natural Resources Large Area of Fertile Agricultural Land Varieties of Tourism Development Sites Virtually no damaging natural disaster
Competitive Advantages
: One of the most Politically Stable Country in the Region Socio-Economic and Financial Stability High Security (Low Crime Rate) Low Labor Costs GSP Privileges given from 42 countries Liberal Laws and Regulations creating favorable business and investment environments
Government’s Investment Policy
Law on the Promotion of Foreign Investment no.11/NA (2004) and its Implementing Decree no. 301/PM (2005)
Welcome every business sector and activity not detrimental to national security, environment, and public health and safety All investment is
guaranteed against expropriation and nationalisation
without compensation
Remittance of dividends an profits
back home or to third countries is allowed through banking system Long
Investment term
and
land lease
(50-75 years)
Government’s Investment Policy (con.)
Forms of Investment
: 1) Business Cooperation by contract 2) Joint Venture 3) 100% foreign owned
Representative Office
: to collect information, study investment opportunities.
Branches
: Foreign Banks, Financial Institutions, Insurance Companies, Consulting firms, and Airlines.
Government’s Investment Policy (con.)
Promoted Activities eligible for incentives:
1.
2.
3.
4.
5.
6.
7.
Production for
export
;
Agro-processing and forestry
;
Industrial processing
;
Human resource health
; development and
public Construction of infrastructure
;
Production of raw materials
equipment to be supplied to key industrial activities; and and Development of the
transit services
.
tourism industry
and
Government’s Investment Policy (con.) Investment Incentives: Profit Tax: Zone 1: 10% profit tax 7 years exemption Zone 2: 15% profit tax 5 years exemption and 3 years half reduction Zone 3: 20% profit tax 2 years exemption and 2 years half reduction
Government’s Investment Policy (con.) Other incentives: Exemption of import duties and taxes on raw materials and capital equipment; Exemption of export duty on export products; 10% personal income tax on expatriate employees; Additional tax holidays, reduced tax rates for large projects with special concession are available upon negotiation
Special Economic Zone (con.)
S-S SEZ located in the middle of EWEC Savannakhet is the most populated province with potential workforce Road no. 9 and 2 nd Mekong Friendship Bridge provides access to seaports in Vietnam (500km) and Thailand (600km) Tax Incentives: Tax Holidays: 2-10 years Profit Tax: 8% and 10% Personal Income Tax: 5% Loss Carried Forward: 5 years
Special Economic Zone
Savannakhet-Seno SEZ (S-S SEZ) established in 2003 by S-S SEZ Decree of the PM no. 148/PM dated Sept. 29 2003.
Site A: Site B: 305 ha 20 ha
Layout of Site A
Layout of Site B
POTENTIAL SECTORS
Energy
Mining
Agribusiness
Tourism
Construction Material
Light industry
Service
INVESTMENT SECTORS ELECTRICITY GENERATION:
Abundant water resources
produced by tributaries of Mekong river Estimated electricity generation potential: over
18,000 MW
BOT
Investment in hydro electric facilities will be substantial Investment in ancillary support services will increase
Hydropower Development of
Lao
PDR
Electrified Area •Today total installed capacity of 700 MW •Electricity export representing 30% of total country’s export revenues •Population electrified app. 46% and the rest under electrification •Industry growth of about 7% per annum •Neighboring countries: •electricity demand growth in neighboring countries notable •price of fueled energy subject to fluctuation of fuel price in the world market •Need of diversification of energy sources
Long Term Development of Sub Regional Interconnection 500kv Transmission Line Facilities (Jinghong) China-(Luang Namtha) Laos-Thailand (Hating) Vietnam-Nam Theun 2 (Laos)-Thailand (Pleiku) Vietnam-Ban Sok /Sananakhet (Laos)-Thailand
Long Term Development of Regional 500-kv Interconnection
MINING SECTOR:
Mining industry is under developed Mining sector presents numerous potential opportunities for investment and development Mineral deposits : tin, lead, zinc, iron ore, cooper, gold, gypsum, lignite, sapphires, … Concessions granted to foreign investors
AGRICULTURE-FORESTRY
: Highest ratio of forest area Large stands of tropical hardwoods including teak and rosewood Suitable land for various tree Plantation Plenty of productive land Long term land lease (50-75 years)
Main Issues in Agro-Forest
Land approved level:
<10.000 ha by MAF with approval from GOL;
>10.000 ha by GOL with adoption from NA;
Fees rate between 6 -9 US$/ha/year.
Profit tax exemption period starts from the date of making profit
Some Major Agro-Forest Projects in Lao PDR
Oji Lao Plantation (Japan): 50.000 ha = 49 m USD
Daklak Rubber (Vietnam): 10.000 ha = 30 m USD
Viet-Lao Joint Stock Rubber(Vietnam): 10.000 ha =22 m USD
Paksong Highland (Thailand): 26.000 ha
Agarwood Lao Group (Thai/Lao):
Mitr Lao Sugar Co. Ltd. (Thailand) = 8 m USD = 10 m USD = 22.5 m USD
Savannakhet Sugar Corp. (Thailand) = 10 m USD
Birla Lao Pulp & Plantations Co. Ltd. (India): 50,000 ha = 350 m USD
Culture-tourism
• Rich in well-preserved culture and traditions • World heritage sites