Article from Vientiane Times, Monday November 2, 2009 ISSUE 255; Page 8
Phonsavanh Vongsay
The Ministry of Industry and Commerce and a Taiwanese investor plan to complete land clearance and infrastructure construction of a planned industrial and trade park within the next six months.The industrial area will be located at Km 21 in Xaythany district, Vientiane.A joint agreement on the development of the project was signed between the Ministry of Planning and Investment and Nam Wei Development Co Ltd last Friday in Vientiane.“The area will be 110 hectares and is in a different area from the current Vientiane industrial zone,” said the Office Head, Ministry of Industry and Commerce, Mr Bounmy Manivong, in an interview at the ceremony.The two parties hope to build 147 factories, including assembly plants for bicycles, computers, garments, pick-ups, plastic products and shoes. “The area is intended to manufacture goods for export,” he said.It will also have a shopping centre, trade buildings, vocational institutions, schools, a hospital and a hotel. “It will be a model industrial and trade area in Laos,” he said.The project, named the Vientiane Capital Industrial and Trade Area, or VITA Park, is located in Nonthong village. The two parties will operate the area for 75 years. “The company can negotiate with the government if it wants to extend the agreement,” Mr Bounmy said.Laos will contribute the land as its share of the investment.The company will invest in infrastructure and facilities to encourage local and foreign businesses to invest in industry, trade and services. It will build facilities for investors to lease or rent.“We think that after six months or a year, there will be many factories built,” Mr Bounmy said.Laos would benefit from greater production leading to an increase in exports, tax revenue and duty collection.Employment is expected to grow to 60,000, with an eventual goal of 200,000. It will be a way to reduce poverty, he said.However, the two parties are unable to identify costs as yet. They will have to conduct a feasibility study and design following the agreement.“We will also draft a decree to manage and administrate the factories and the area as per the Prime Minister’s suggestion,” he said.The joint agreement ceremony was attended by 70 people including foreign investors from countries that are interested in investment in the scheme. It was in line with a memorandum of understanding signed between the company and the Lao government last May.
Article from Vientiane Times, WEDNESDAY OCTOBER 28, 2009 ISSUE 251 (Page 
Phonsavanh Vongsay,
The nation’s small and medium sized enterprises (SMes) promotion and development committee expects to continue the improvement of its online business registration system nationwide in fiscal year 2009-2010.SMe Promotion and Development office Head, Mr Somdy Inmyxai, made the comments at the 4th committee ordinary meeting yesterday in Vientiane.“We have improved the system to facilitate its use in seven provinces, with links directly to the centre in Vientiane,” Mr Somdy said.He said the committee also plans to complete planning for and initiate funding for SMes in the upcoming year.These are just some of the activities the committee hopes will promote the growth of the SMe sector.Studies have shown that SMe operations are increasing in size and effectiveness despite the global recession.“Growth was experienced by 49 percent of the 400 SMes studied in 2005, and 59 percent of 500 SMes in 2007,” Mr Somdy said.The result was a good one thanks to set up and registration being easier than in the past, after the government had improved the enterprise law.The study also showed that 31 percent of businesses needed to submit more than 10 sets of documents to set up a business in 2005. “However, only 10 percent needed this number of documents in 2007,” Mr Somdy said. “The 2009 study result will come out soon.”With SMes increasingly seen as a backbone of economic growth, the government has paid attention to promoting and facilitating their growth quickly, improving legal frameworks to allow their establishment.Yet Minister of Industry and Commerce Dr Nam Vinhaket said more needed to be done to facilitate business start ups.“as Mr Somdy said, some businesses had to pay 3 percent of their investment cost to a middleman or broker for document work, to register for a licence.”“It is a frightening figure,” Mr Somdy said.The SMe sector is the basis of the national economy comprising 99.8 percent of businesses. “Positive growth in the Lao economy depends on the development of this sector,” Dr Nam said.“once SMes grow more strongly, we will see stronger national economic growth.” “If this sector is not experiencing growth, the national economy will also fail to do so.”“In the past, those who wanted to open a business had to wait for approval from the government. Now they can register more easily if they abide by the law. Ministry offices will sign and stamp their proposal faster,” Dr Nam said.He said the SMe sector was strengthening thanks to cooperation with international organisations in technical cooperation, research, training and workshops. “So far they have provided support to the sector worth more than 67.7 billion kip (US$8 million),” Mr Somdy said.Current project cooperation efforts are managed under the Lao-german Human resource Development for the Market Economy Programme, a joint effort combining the German development organisations of the Deutsche Gesellschaft fur Technische Zusammenarbeit, the German Development Bank, German Development Service and Integrated CIM Experts.Small enterprises are classified as those with an average number of employees not exceeding 19 persons, total assets not exceeding 250 million kip, or an annual turnover not exceeding 400 million kip.Medium enterprises are those with an average number of employees not exceeding 99 persons, total assets not exceeding 1.2 billion kip or an annual turnover not exceeding 1 billion kip.
Article from Vientiane Times, TUESDAY OCTOBER 27, 2009 ISSUE 250
The inflow of investment into Laos is expected to see a big jump this year despite the global recession, according to data released by the Ministry of Planning and Investment. The data shows the government has already given the green light to 208 projects nationwide in the past nine months, valued at about US$4.3 billion. This figure exceeds total investment in 2008 of about US$1.2 billion.
Most investment projects are in mining, hydroelectric power, industrial tree plantations such as rubber, and light industry such as garment manufacture and electrical equipment assembly, according to investment officials. Vietnam topped the list of investors in Laos for the second year, with investments valued at about US$1.4 billion. China comes in second with investments of US$932. Million and Thailand has the third highest investment in Laos with US$908 million. Republic of Korea is ranked fourth with investments of US$74 million.
Investment Promotion Department Director General Houmpheng Souralay said the main reason for the increase in investment this year was that businesses had realised the investment potential of Laos. Laos has plenty of fertile land suitable for tree plantations, large mineral deposits that can be supplied as raw materials to major industries, and rivers that can be harnessed for hydropower. Mr Houmpheng said the government’s efforts to streamline the investment process had also helped to encourage local and foreign businesses to invest in Laos, as they could now submit investment proposals through a one-stop service unit at the Ministry of Planning and Investment.
The one-stop service unit allows investors to submit proposal documents at just one place, where officials liaise with the sectors concerned to consider approval of the project. Officials said although Laos has approved more investment projects this year, it did not reflect the true inflow of investment into the country. Some investors had suspended their projects as they were unable to obtain the capital they needed from banks due to the recession. They also said investors wanted to get permission for concession projects from the Lao government first and wait until the recession was over to get the funding they needed. Mr Houmpheng admitted the ministry was unable to obtain accurate reports from commercial banks on the true amount of foreign investment in Laos.
Vientiane Times, August Friday 14, 2009
Somsack Pongkhao
The Ministry of Commerce and Industry intends to establish a trade portal to facilitate business operations in Laos. However, trade officials are yet to confirm when the trade portal would be established as they need some time to prepare the proposed scheme. The portal is one of five priority projects to facilitate business in Laos approved at a national meeting in 2006.
A trade portal is a ‘customer centred’ web-based team application that provides flexible, pro-active, efficient and interactive services and communication to all users. Deputy Director General of the ministry’s Import-Export Department, Dr Laohoua said at a meeting yesterday in Vientiane that the trade portal would not overlap with the current website operated by the ministry. “The portal will include a variety of information in relation to trade from both Laos and other countries,” he said. Dr Laohoua said the ministry’s current website only covers trade information within Laos. The portal would include updated information regarding laws, trade promotion, forms for business operation, marketing and market trends.
Deputy Minister of Commerce and Industry, Ms Khemmani Pholsena said the trade portal would provide information on import and export regulations for businesspeople. “Although our ministry does provide information about import and export, business people have requested the government improves information generating systems in a transparent way,” she said.
At the meeting, Ms Khemmani urged officials to pay attention to learning and exchanging ideas with experts. International consultant, Mr Henri Stetter said global economic and business methods are constantly evolving. What works today, might not work tomorrow.
Mr Stetter said tools such as trade portals allow businesses to become more competitive. “Every successful trade portal needs to have a vision as well as core values. These visions and values are the genetic makeup of the portal and must be clear and known to all stakeholders, staff members and partners,” he said. The role of a trade portal includes business matchmaking, business facilitation and opportunities, he said.
Matchmaking includes trade promotion, country profile, suppliers, product profiles and investment opportunities. Business facilitation includes import and export trends, market surveys, trade statistics, information on tariffs and taxes as well as trade and investment policies
Vientiane Times, Friday August 14, 2009
Phetsamone Chandara
Small and medium enterprises, (SME) typically those with less than 100 employees, are the backbone of the Laos economy making up more than 99.8 percent of businesses. They need strong policies and government support for them to grow and become more efficient.
This was one of the points made when officials from the SME Promotion and Development Office met to discuss a draft decree on the SME Promotion and Development Fund (SMEPDF) which was related to the Prime Minister’s Decree No. 43/PM, dated April 20, 2004. The workshop, held on Thursday, was presided over by the Deputy Minister of Industry and Commerce, Mr Siewsavath Savengsuksa. It was organised by the SME Promotion and Development Office (SMEPDO) and supported by the Lao-EC Development Programme.“Laos is a small country, consequently the economic base will also be small, and small and medium enterprises are very important in the national economic structure,” Mr Siewsavath said at the opening. He said according to economic data from 2006, 83 percent of Lao workers were employed in more than 126,000 SMEs. He said a big problem was that SME promotion and development funds were only allocated for the purpose of employing experts to provide support and advice.
SME’s still needed to acquire investment funding from banks and financial institutions, which tended only to provide short-term funding.Mr Siewsavath said the SMEPDF was a fund aimed at promoting and developing SMEs in-line with the government’s renovation policy. The fund not only provides expert advice and support but assists with access to financial sources.“The committee needs to review the draft decree to permit access to funds to provide investment financing as well,” he said. Mr Siewsavath said people active in this area of research was limited to a small group. In order to achieve the aims of the decree before submitting it to the government, the participants have to brainstorm to discuss specific areas for improvement, he said.
He hopes the workshop will help SMEPDF be more efficient in helping to develop SMEs that are able to compete and link in with the regional and global economy while securing the base of the national economy, especially in terms of employment, income generation and poverty alleviation.
Vientiane Times, Friday August 14, 2009
Ekaphone Phouthonesy
Business people will find it simpler to import goods to Laos if a new Prime Ministerial decree on import procedures is enforced. The new legal document, which Prime Minister Bouasone Bouphavanh signed in July, also aims to move Lao import procedures closer to the rules and regulations of the World Trade Organisation.
The reforms form part of the main conditions for the country to become a member of the global trade group. The Ministry of Industry and Commerce is now drafting a list of the goods which business people will be required to seek permission from authorities to import. This is seen as part of efforts to improve clarity for those importing goods and raw materials to production bases in Laos. Business people said they had faced difficulties in importing goods to Laos in the past, as there had been no clear official guidelines. Many of the businesses said they had to pay a lot of money to get import permission from officials.
According to the decree on import procedure, the new legal framework is scheduled to become effective in September. One of the main benefits that importers will receive from the new decree is that they will be able know the location and process for requesting permission to import the goods. According to the decree, only the ministry shall be authorised to grant import permission to business people.
However in some cases, the good importers must get agreement from other sectors concerned to import some goods. For example, importation of explosive materials for construction work requires an approval from the Ministry of National Defense. The importers should be able to gain import permission within 10 days after submitting a proposal.
Provision of slightly inaccurate import information will no longer necessitate extra payments or delays, in so far as information is largely correct and is not judged to be part of a deliberate attempt to misguide officials. This will relate to description, weight, and value of the goods as prescribed in the import permission, according to the decree. The move aims to dissuade officials from graft and corruption, using the minor mistakes in supplied information as the reason for extra payments.
According to the decree, the government will have the right to allocate quotas of imports to maintain balance of goods circulating the markets. Business people who want to import the goods on which the government has issued quota limits will be treated equally to ensure fair business competition. Those who submit proposals to import the goods mentioned in quota lists will be considered on a first-come first-served basis, with a consideration period of 30 days. The authorities must consider proposals of business people to import the goods fairly and equally if they receive the proposals at the same time, according to the decree.
Currently, Lao-German HRDME Programme will conduct the third enterprise survey during July 2009. Next week, the programme and Department of Statistic (DoS) will conduct a training for 40 enumerators from National Univercity of Lao at Lao National Chamber of Commerce and Industry (LNCCI). After the training, the week after the team will conduct the real field work in 3 districts in Vientiane Capital like Chanthabouly, Saythany and Nasaithong.
Times Reporters (Friday juLy 10, 2009, iSSuE 157)
Foreigners who invest 2.5 billion kip in Laos will gain the right to purchase residential land in Laos after the National Assembly adopted a new investment promotion law. President of Lao National Assembly; Mr Thongsing Thammavong announced on Wednesday that the assembly had passed the new investment promotion law after a majority of the legislators voted to adopt it. Only two assembly members voted against the law, while another abstained from voting.
The assembly has passed the new investment promotion law, which allows the government to use land use rights as investment incentives to encourage foreign business to invest in Laos. However, it is still unclear on the size and number of land parcels eligible foreign businesspeople will be able to purchase. Earlier, a number of assembly members expressed concerns that since the new investment law did not specify amount of the land the eligible investors are able to own, it would create difficulty for the government to enforce the law effectively. The assembly members asked law drafters what the government would do if the investors invested more than 2.5 billion kip.
They wondered if this would mean that the investors might be able to purchase large areas of residential land in the country. They expressed concerns that if the foreigners were allowed to own residential land use rights, it would cause the price of land to increase which would have negative impact on Lao people, especially those who earn low incomes as they sought property on which to reside. The assembly members also had queries as to that what the government would do if the investors invested ,but later faced business bankruptcy.
A representative of the drafting committee, Dr Souvanpheng Bouphanouvong responded that the assembly members should not be overly concerned about the matter. She explained that it was up to the government agencies to discuss and agree on the maximum area and number of piece of land an investor would be able to own, adding that the government would set up specific regulations to manage the issue. She said the main purpose of the law was to allow the government to use land-use rights as investment incentive for foreigners to invest in Laos. According to the assembly records, most of the members agreed with the content of the laws.
However some of them urged the government to correct or simplify some points to make the law clearer and easier for officials concerned to enforce it. The government proposed the National Assembly approve the new investment law following the merging local and foreign investment laws. The government said the move was to create better and fairer investment climate for both local and foreign businesses people, as they will now gain the same tax exemptions. The new investment promotion will help local and foreign investors to seek investment permission as part of a one-stop service.
From right: President of Lao PDR Mr Choummaly Sayasone and Prime Minister Mr Bouasone Bouphavanh at the NA closing ceremony.
Somsack Pongkhao (Vientiane Times Friday July 10, 2009, Issue 157)
The National Assembly yesterday approved the adjustment of the target economic growth rate from 8 to 7.5 percent of Gross Domestic Product for 2008-2009, in line with the government’s proposal. The approval was made based on the vote of a majority of NA members at the closing ceremony of the 7th Ordinary Session of National Assembly Sixth Legislature on Thursday. The NA session, whichstarted on June 22, also approved the adjustment of budget deficit for fiscal year 2008-2009 from 4.56 percent to 5 percent of GDP.
The government proposed to adjust the target for economic growth from 8 to 7.5 percent due to the impact from the global economic slowdown. Assembly President Mr. Thongsing Thammavong said the NA had also approved the targets and directives set in socio-economic development plan and budget plan for 2009-2010 upon request from the government.
The session approved GDP growth of not less than 7.5 percent for 2009-2010, amounting to 54,100 billion kip. The Agriculture and forestry sector covers 30 percent of GDP, industrial sector covers 27 percent and services sector covers 37 percent. The session has resolved to increase revenue figures of state budget for 2009-2010 from 14.62 percent to 15 percent of GDP, an increase from 7,910 billion to 8,115 billion kip.
This revenue will be spent in favour of raising productivity, encouraging socio-economic infrastructure investment in rural areas and to contribute to poverty reduction. The NA urged the government to recover money that its spent without approval from the NA, and to ensure that in future all money earned by its enterprises and instrumentalities was included in the national budget.
The Assembly has agreed to maintain budget expenditure at 20.34 percent of the GDP upon the request of the government. The aim is to stimulate economic growth and reduce poverty to enable the country to fulfill the Millennium Development Goals by 2015 and graduate from the UN’s Least Developed Nation Status by 2020. The NA session also approved three new laws in relation to the Lao Front for the National Construction, water supply and fishery.
It also amended the law on investment promotion. The NA expressed its concern towards the resolution of discrepancies and legal breaches in the area of financial management of many public organisations, and urged the government to addressing this situation in a serious manner. The NA urged the government to actively encourage productivity by providing loans, seeds, fertilizer and other technical assistance for farmers. It urged the government to improve its administrative structure while enhancing financial accountability and counter corruption that involved the abuse of power.
The NA also urged the government to strictly enforce measures towards those who corruptly appropriate property of the State. The closing ceremony was also attended by President of Lao PDR Mr. Choummaly Sayasone, Prime Minister Mr. Bouasone Bouphavanh and NA members from 17 constituencies. They were joined by representatives from the Party, institutes, business units, diplomatic corps and international organisations
Prime Minister Bouasone Bouphavanh yesterday studies documents during a debate over a draft investment law during the ongoing 7th Session of the National Assembly’s Sixth Legislature
Somsack Pongkhao (Vientiane Times, Thursady July 2,2009, Issue 150)
Approval for business ventures across the country may soon become easier as the National Assembly considers adopting a proposal to merge laws on domestic and foreign investment. NA members yesterday debated the draft bill after Minister of Planning and Investment Dr Sinlavong Khoutphaythoune gave a speech about the urgent need to merge the two laws. Separate laws have applied since 2004, but their proposed merger aims to unite and harmonise approaches across the country in a time of economic globalisation. Under the current law, the provincial authorities in Savannakhet, Champassak and Luang Prabang and the Vientiane administration are empowered to approve projects valued at more than US$5 million. Smaller provinces are able to approve projects up to the value of US$3 million.Dr Sinlavong said the current law stipulates a 45-day implementation period, but in reality this often takes longer. He said the delay was due to the time required to obtain comments from relevant sectors prior to reporting to the investment committee meeting. The new draft law will address this obstacle while standardising investment application forms and processes for entrepreneurs.The new draft will also stipulate clearly the duration of profit tax exemption between those who invest in urban and rural areas. The merging of the two laws also aims to turn challenges into opportunities, enabling the country to be competitive and integrate with the region. The government also hopes to facilitate an investment climate that will allow annual GDP growth to reach 8 percent.Creating confidence among domestic and foreign investors is one of the most important factors in attracting investment to Laos and driving development.Dr Sinlavong said in the merger of the two laws, 75 percent of their content will remain in force, 15 percent has been amended and 10 percent is new.The new draft legislation comprises 10 sections, 13 chapters and 100 articles. Feedback has been sought from businesspeople and senior officials at various sessions. Foreign direct investment in Laos has boomed since 2000. The government opened up the country to outside investment in 1986. The value of foreign direct investment increases every year, especially in mining, hydropower, agriculture, tree plantations and the service industry. In 2007-2008, foreign investment was valued at US$400 million. By 2008-2009, the value had jumped to more than US$3.9 billion. The sudden surge in foreign investment can be attributed to several major projects including Sino Lao Aluminium, Houang Ho Power, Vientiane Longthan (hotel, golf course, resort and shopping centre) and Star Telecom. The source of most of these investments is China, Vietnam and Thailand.
