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Geographical Location Thailand (1,835 km in the west) Cambodia (435 km in the south) China (505 km in the north) Myanmar (236 km in the north-west) Vietnam.

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Presentation on theme: "Geographical Location Thailand (1,835 km in the west) Cambodia (435 km in the south) China (505 km in the north) Myanmar (236 km in the north-west) Vietnam."— Presentation transcript:

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2 Geographical Location Thailand (1,835 km in the west) Cambodia (435 km in the south) China (505 km in the north) Myanmar (236 km in the north-west) Vietnam (2,069 km in the east)

3 Country’s Profile Land Area :236,800 sq.km2 Land Area :236,800 sq.km2 Population :5.6 Millions (2005) Population :5.6 Millions (2005) Population Density:24 persons/sq km Population Density:24 persons/sq km Population Growth Rate: 2.8% Population Growth Rate: 2.8% Labor Force :2.17 Millions Labor Force :2.17 Millions Religion:Buddhism (85%) Religion:Buddhism (85%)

4 Regional Population/Market Access (2004) Lao P.D.R.: 5.6 Millions Thailand:61.6 Millions Cambodia:12.5 Millions Vietnam:80.5 Millions Yunnan Province:43.0 Millions Myanmar:48.9 Millions In Total:252 Millions inhabitants

5 Open Door Policy New Economic Mechanism: 1986: Shifting from planned economy to a market oriented economy Privatization of state enterprises Open for FDI

6 Shares of Private Investment

7 Approved and Implemented FDI in Lao PDR from Y2000 to 1 st half 2005.

8 8 Approved Foreign Investment in Lao PDR by Sector 1988-March/2005 NoSectorsProjectsTotal Investment Cost 1Electricity Generation242,317,300,000 2Telecommunication17677,204,647 3Hotel-Restaurant93586,374,232 4Industries-Handicrafts243350,174,752 5Other Services204259,116,903 6Wood Industries62186,933,048 7Agriculture152254,627,242 8Construction58120,837,626 9Mining86458,400,591 10Trading176111,556,192 11Banking1081,800,000 12Garment8572,068,398 13Consultances5811,591,322 Grand Total12685,487,984,953

9 LAO PDR IN THE GLOBAL ECONOMY Member of international organization ( MIGA, ASEAN, ASEAN-Japan Centre, WORLD BANK, ADB, IMF…) Member of international organization ( MIGA, ASEAN, ASEAN-Japan Centre, WORLD BANK, ADB, IMF…) GSP Privileges : 42 countries ( EU, CANADA, JAPAN, CHINA, ….. ) GSP Privileges : 42 countries ( EU, CANADA, JAPAN, CHINA, ….. ) GSP Privileges : 42 countries ( EU, CANADA, JAPAN, CHINA, ….. ) GSP Privileges : 42 countries ( EU, CANADA, JAPAN, CHINA, ….. ) NTR with USA (04/02/2005) NTR with USA (04/02/2005) Bilateral Investment Treaties with 23 countries (Investment Promotion and Protection) Bilateral Investment Treaties with 23 countries (Investment Promotion and Protection) Bilateral Investment Treaties with 23 countries (Investment Promotion and Protection) Bilateral Investment Treaties with 23 countries (Investment Promotion and Protection) In process of joining WTO In process of joining WTO

10 GEOGRAPHY Lao PDR is being transformed into LAND LINKED country and Transit country in the region

11 On-going project Thai, ADB, China share 1/3 Thai, ADB, China share 1/3 (soft loan) Start 2004, complete 2007 Start 2004, complete 2007 Jinghong 1,200 Km. Chiang Rai Luang Namtha Kunming THAILAND LAOS CHINA Chiang Khong

12 On-going project Second Mekong Bridge (Mukdaharn – Savannaket) Second Mekong Bridge (Mukdaharn – Savannaket) Soft loan from JapanSoft loan from Japan Cost = 4,753 Mil Yen.Cost = 4,753 Mil Yen. Under constructionUnder construction Complete end 2006Complete end 2006 A. Chumpae Kon Kaen Kalasin Mukdaharn/ Savannaket Seno Maung Pin Dansavan/ Lao Bound Dong Ha Danang HAI VAN PASS TUNNEL Second Mekong Int’l Bridge Project Cambodia Lao PDR Vietnam

13 Showcase, Short-Term Medium to Long-Term Andaman Sea Tavoy Khon Kaen Nakon Ratchasima Mukdaharn Ubon Ratchathani Siem Reap Stung Treng Quy Nhon Quang Ngai Ca Mau Trat Luang Prabang Muang Xai Dien Bian Phu Kanchanaburi Three Pagoda Pass Thaton Payagg i Mae Sot Thanbuzayat Meiktila Bagan Lashio Kentung Jinghong Bo Ten Nan Poipet Ranong Kaw Thong Sihanouk Ville (Road Project) Nakhon Phanum CT25a CM12 CT56 CT25b CL14 LT30 LT32 LT29 MT36 LT34 LM16 LT28 MT40 MT38 MT37 Showcase, Short-Term Medium to Long-Term On-going project III CL14: Stung Treng – Champasak and Preah Vihear – Champasak No progress on Cambodia sideNo progress on Cambodia side Section in Lao PDR is completed.Section in Lao PDR is completed. IV CM12: Road linkage under Asian Highway project Cambodia: Poipet –Sisophon (48 km)Cambodia: Poipet –Sisophon (48 km) Under ADB loanUnder ADB loan

14 Showcase, Short-Term Medium to Long-Term Andaman Sea Tavoy Khon Kaen Nakon Ratchasima Mukdaharn Ubon Ratchathani Siem Reap Stung Treng Quy Nhon Quang Ngai Ca Mau Trat Luang Prabang Muang Xai Dien Bian Phu Kanchanaburi Three Pagoda Pass Thaton Payagg i Mae Sot Thanbuzayat Meiktila Bagan Lashio Kentung Jinghong Bo Ten Nan Poipet Ranong Kaw Thong Sihanouk Ville (Road Project) Nakhon Phanum CT25a CM12 CT56 CT25b CL14 LT30 LT32 LT29 MT36 LT34 LM16 LT28 MT40 MT38 MT37 Showcase, Short-Term Medium to Long-Term Next stage projects CT56: Chong Chom – Siem Reap LT29: Muang Ngeon – Loung Prabang MT40: Three Pagoda Pass – Thanbuzayat Field reconnaissance will start mid LT34: Mekong Bridge at Chiang Kong/Houay Sai ADB will start FS & DE in 2005ADB will start FS & DE in 2005 MT37: Mae Sot – Pa an - Thaton (Section Foothill – Pa an – Thaton) MT38: Kawkariek – Mawlamyine - Thaton LM16: Lao – Myanmar Friendship Bridge over Mekhong River Preliminary survey complete, wait for funding (Japan)

15 Law on the Promotion of Foreign Investment (2004) Law on the Promotion of Foreign Investment (2004)  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  Employment of skilled and expert foreign personnel (up to 10% of total employees of an enterprise)  Long term land lease (50-75 years) Government’s Investment Policy

16 Government’s Investment Policy (con.)  3 Forms of Foreign Investment: 1) Business Cooperation by contract 2) Joint Venture between foreign & domestic investor 3) 100% foreign owned enterprise  Representative Office & Branch: + Foreign Company can open its Representative Office in Lao PDR to collect information, study the feasibility of investment and coordinate matters for the purpose of applying for investment. + Foreign Banks, Financial Institutions, Insurance Company, Consulting firms, Airlines can open their branches in Lao PDR.  Investment Term: The investment term of a foreign enterprise depends on the nature, size and conditions of the business activities will be fifty(50) years and extendable to seventy five (75) years.

17 Promoted Activities eligible for incentives: Promoted Activities eligible for incentives: 1. Production for export; 2. Activities relating to agriculture or forestry, and agricultural, forestry and handicraft processing activities; 3. Activities relating to industrial processing, industrial activities using modern techniques and technology, research and development, and activities relating to the protection of the environment and biodiversity; 4. Human resource development, skills development and public health; 5. Construction of infrastructure; 6. Production of raw materials and equipment to be supplied to key industrial activities; and 7. Development of the tourism industry and transit services. Government’s Investment Policy (con.)

18 Promoted Zones Promoted Zones Zone 1: Mountainous, Plain and plateau zones with no economic infrastructure facilitate investments, which will be entitled to a profit tax exemption for 7 years and thereafter will be subject to profit tax at the rate 10%. Zone 2: Mountainous, Plain and plateau zones with a certain level of economic infrastructure suitable to accommodate investments to some extent, which will be entitled to a profit tax exemption for 5 years and thereafter will be subject to a reduced profit tax rate of half of fifteen 15% for 3 years and thereafter a profit tax rate of 15%. investments to some extent, which will be entitled to a profit tax exemption for 5 years and thereafter will be subject to a reduced profit tax rate of half of fifteen 15% for 3 years and thereafter a profit tax rate of 15%. Zone 3:Mountainous, Plain and plateau zones with good infrastructure to support investments, which will be entitled to a profit tax exemption for 2 years and thereafter will be subject to a reduced profit tax rate of half of 20% for 2 years and thereafter a profit tax rate of 20%.

19 Government’s Investment Policy (con.) In addition to the incentives mentioned above, FDI shall be entitled to the following incentives: an exemption of minimum tax;an exemption of minimum tax; the profit used for the expansion of business activities will be exempted from profit tax during the accounting year;the profit used for the expansion of business activities will be exempted from profit tax during the accounting year; Exemption of import duties and taxes on equipment, spare parts, vehicles directly used for promotion and raw materials;Exemption of import duties and taxes on equipment, spare parts, vehicles directly used for promotion and raw materials; Exemption of export duty on export products.Exemption of export duty on export products. 10% income tax on expatriate employees10% income tax on expatriate employees Loss carry forwards: 3 yearsLoss carry forwards: 3 years Additional tax holidays, reduced tax rates for large projects with special concession are available upon negotiationAdditional tax holidays, reduced tax rates for large projects with special concession are available upon negotiation

20 POTENTIAL SECTORS  Energy  Mining  Agribusiness  Tourism  Construction Material  Light industry  Service

21 INVESTMENT SECTORS ELECTRICITY GENERATION: Abundant water resources produced by tributaries of Mekong river Abundant water resources produced by tributaries of Mekong river Estimated electricity generation potential: Estimated electricity generation potential: over 23,000 MW (only about 2% currently exploited) Investment in BOT hydro-electric facilities will be substantial Investment in BOT hydro-electric facilities will be substantial Investment in ancillary support services will increase Investment in ancillary support services will increase

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23 MINING SECTOR: Mining industry is at an early stage of development Mining industry is at an early stage of development Mining sector presents numerous potential opportunities for investment and development. Mining sector presents numerous potential opportunities for investment and development. Mineral deposits : tin, lead, zinc,iron ore, cooper, gold, gypsum, lignite, sapphires, … Mineral deposits : tin, lead, zinc,iron ore, cooper, gold, gypsum, lignite, sapphires, … Some concessions granted to foreign investors Some concessions granted to foreign investors

24 Focus in Agro-Forest Processing Highest ratio of forest area Highest ratio of forest area Large stands of tropical hardwoods including teak, mahogany and rosewood Large stands of tropical hardwoods including teak, mahogany and rosewood Suitable land for various tree Plantation Suitable land for various tree Plantation Plenty of productive land Plenty of productive land Long term land lease (50-75 years) Long term land lease (50-75 years)

25 Agro-Forest in Lao PDR 44 projects in Lao PDR = us$. 44 projects in Lao PDR = us$. Some achievement and large scale projects : Some achievement and large scale projects : - BGA Lao Plantation (Newz): ha = us$; - CITYLAND Resources (Malaysia): ha = us$; - Daklak Rubber (Vietnam): ha = us$; - Vietnam General Rubber(Vietnam): ha= us$; - Paksong Highland (Thailand): ha = us$.

26 Investment in Agro-Forest of Top 7 countries. NoCountry Capital (USD) 1Thailand63,311,209 2Vietnam55,985,414 3 New Zealand 49,000,000 4Malaysia18,448,386 5China12,003,720 6France13,079,047 7Korea12,794,750

27 Agro-Forest in Lao PDR Main issues in Agro-Forest: Main issues in Agro-Forest: - Land approved level: District not over 3 ha with approval from province District not over 3 ha with approval from province Province not over 100 ha with approval from MAF; Province not over 100 ha with approval from MAF; MAF not over ha with approval from GOL; MAF not over ha with approval from GOL; Government ha up with adoption from NA; Government ha up with adoption from NA; - Fees rate between 6 -9 US$/ha/year.  Long term land lease ( years)

28 Tourism 1.Eco-tourism 2.Culture-Tourism 3.Agro-Tourism

29 Eco-tourism Clean air Beautiful landscape Attractive for health- improving purposes

30 Culture-tourism Rich in well-preserved culture and traditions World heritage sites

31 ADMINITRATION OF THE FDI SYSTEM FDI system is administered by DDFI FDI system is administered by DDFI DDFI acts as One-Stop-Shop DDFI acts as One-Stop-Shop DDFI manages the investment application process advices for investors: - investors in filling out investment application forms; - processes/obtains the foreign investor’s business and tax licenses; - assists investors in obtaining other necessary permits and licenses; - grants investment incentives. DDFI manages the investment application process advices for investors: - investors in filling out investment application forms; - processes/obtains the foreign investor’s business and tax licenses; - assists investors in obtaining other necessary permits and licenses; - grants investment incentives.

32 Thank You For Your Attention


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