geographical location thailand (1,835 km in the west) cambodia (435 km in the south) china (505 km...
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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 (2,069 km in the east)
Country’s ProfileCountry’s Profile
•Land Area :Land Area : 236,800 sq.km2236,800 sq.km2•Population :Population :5.6 Millions (2005)5.6 Millions (2005)•Population Density:Population Density: 24 persons/sq km24 persons/sq km•Population Population Growth Rate: Growth Rate: 2.8%2.8%•LLabor Force abor Force :: 2.172.17 Millions Millions•Religion:Religion: Buddhism (85%)Buddhism (85%)
Regional Population/Market Regional Population/Market AccessAccess(2004)(2004)
Lao P.D.R.Lao P.D.R. :: 5.6 Millions 5.6 Millions
ThailandThailand :: 61.6 Millions61.6 Millions
CambodiaCambodia :: 12.5 Millions12.5 Millions
VietnamVietnam :: 80.5 Millions80.5 Millions
Yunnan ProvinceYunnan Province :: 43.0 Millions43.0 Millions
MyanmarMyanmar :: 48.9 Millions48.9 Millions
In TotalIn Total :: 252 Millions 252 Millions inhabitantsinhabitants
Open Door PolicyOpen 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 Shares of Private InvestmentInvestment
63.8%
34.1%
29.7%
18.6%
47.3%
6.5%
2001 2005
Foreign
DomesticPrivate
Public
$54.1
$492.0 $465.0$533.0
$1,249.0
$75.0 $93.0$155.0
$299.0
$405.052
84
178
131 127
$0
$500
$1,000
$1,500
2001 2002 2003 2004 2005
Millio
ns D
olla
rs
0
50
100
150
200
No. of
Pro
ject
Approved
Implemented
No. of Projects
Approved and Implemented FDI in Lao Approved and Implemented FDI in Lao PDR from Y2000 to 1PDR from Y2000 to 1stst half 2005. half 2005.
88
Approved Foreign Investment in Lao Approved Foreign Investment in Lao
PDR by Sector 1988-March/2005PDR by Sector 1988-March/2005 No Sectors Projects Total Investment Cost
1 Electricity Generation 24 2,317,300,000
2 Telecommunication 17 677,204,647
3 Hotel-Restaurant 93 586,374,232
4 Industries-Handicrafts 243 350,174,752
5 Other Services 204 259,116,903
6 Wood Industries 62 186,933,048
7 Agriculture 152 254,627,242
8 Construction 58 120,837,626
9 Mining 86 458,400,591
10 Trading 176 111,556,192
11 Banking 10 81,800,000
12 Garment 85 72,068,398
13 Consultances 58 11,591,322
Grand Total 1268 5,487,984,953
LAO PDR IN THE GLOBAL LAO PDR IN THE GLOBAL ECONOMYECONOMY
MMember of international organization ember of international organization ( MIGA, ( MIGA, ASEAN, ASEAN-Japan Centre, WORLD ASEAN, ASEAN-Japan Centre, WORLD BANK, ADB, IMF…)BANK, ADB, IMF…)
GSP PrivilegesGSP Privileges : 42 : 42 countries countries ( EU, CANADA, JAPAN, CHINA, ….. )( EU, CANADA, JAPAN, CHINA, ….. )
NTR NTR with with USA (04/02/2005)USA (04/02/2005)
BBilateral Investment Treaties with 23 countries ilateral Investment Treaties with 23 countries ((Investment Promotion and ProtectionInvestment Promotion and Protection))
IIn process of joining n process of joining WTOWTO
GEOGRAPHYGEOGRAPHY
Lao PDR is being transformed into Lao PDR is being transformed into LAND LINKED country and Transit LAND LINKED country and Transit country in the regioncountry in the region
On-going projectOn-going project
• Thai, ADB, China share 1/3 Thai, ADB, China share 1/3
(soft loan)(soft loan)
• Start 2004, complete 2007Start 2004, complete 2007
Jinghong
1,200 Km.1,200 Km.
Chiang Rai
Luang Namtha
Kunming
THAILANDTHAILAND
LAOSLAOS
CHINACHINA
Chiang Khong
On-going projectOn-going project
• Second Mekong Bridge Second Mekong Bridge (Mukdaharn – Savannaket)(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 2006A. Chumpae
Kon Kaen
KalasinMukdaharn/
Savannaket
Seno
Maung Pin
Dansavan/Lao Bound Dong Ha
Danang
HAI VAN PASS TUNNELSecond Second Mekong Int’l Mekong Int’l Bridge ProjectBridge Project
Cambodia
Lao PDR
Vietnam
Showcase, Short-TermShowcase, Short-Term
Medium to Long-TermMedium 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
Payaggi
Mae Sot
Thanbuzayat
Meiktila
Bagan
Lashio
Kentung
Jinghong
Bo Ten
Nan
Poipet
Ranong
Kaw Thong
Sihanouk Ville
(Road Project)
Nakhon Phanum
CT25aCT25a
CM12CM12CT56CT56
CT25bCT25b
CL14CL14
LT30LT30LT32LT32
LT29LT29
MT36MT36
LT34LT34
LM16LM16
LT28LT28
MT40MT40
MT38MT38
MT37MT37
Showcase, Short-TermShowcase, Short-Term
Medium to Long-TermMedium to Long-Term
On-going projectOn-going project
III III CL14: Stung Treng – Champasak and CL14: Stung Treng – Champasak and Preah Vihear – ChampasakPreah Vihear – Champasak
•No progress on Cambodia sideNo progress on Cambodia side
•Section in Lao PDR is completed.Section in Lao PDR is completed.
IV IV CM12: Road linkage under Asian CM12: Road linkage under Asian Highway projectHighway project
•Cambodia: Poipet –Sisophon (48 km)Cambodia: Poipet –Sisophon (48 km)
•Under ADB loanUnder ADB loan
Showcase, Short-TermShowcase, Short-Term
Medium to Long-TermMedium 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
Payaggi
Mae Sot
Thanbuzayat
Meiktila
Bagan
Lashio
Kentung
Jinghong
Bo Ten
Nan
Poipet
Ranong
Kaw Thong
Sihanouk Ville
(Road Project)
Nakhon Phanum
CT25aCT25a
CM12CM12CT56CT56
CT25bCT25b
CL14CL14
LT30LT30LT32LT32
LT29LT29
MT36MT36
LT34LT34
LM16LM16
LT28LT28
MT40MT40
MT38MT38
MT37MT37
Showcase, Short-TermShowcase, Short-Term
Medium to Long-TermMedium to Long-Term
Next stage projectsNext stage projects
CT56: Chong Chom – Siem ReapCT56: Chong Chom – Siem Reap
LT29: Muang Ngeon – Loung PrabangLT29: Muang Ngeon – Loung Prabang
MT40: Three Pagoda Pass – ThanbuzayatMT40: Three Pagoda Pass – Thanbuzayat
Field reconnaissance will start mid 2004.Field reconnaissance will start mid 2004.
LT34: Mekong Bridge at Chiang LT34: Mekong Bridge at Chiang Kong/Houay SaiKong/Houay Sai
•ADB will start FS & DE in 2005ADB will start FS & DE in 2005
MT37: Mae Sot – Pa an - ThatonMT37: Mae Sot – Pa an - Thaton
(Section Foothill – Pa an – Thaton)(Section Foothill – Pa an – Thaton)
MT38: Kawkariek – Mawlamyine - MT38: Kawkariek – Mawlamyine - ThatonThaton
LM16: Lao – Myanmar Friendship LM16: Lao – Myanmar Friendship Bridge over Mekhong RiverBridge over Mekhong River
Preliminary survey complete, wait for Preliminary survey complete, wait for funding (Japan)funding (Japan)
• Law on the Promotion of Foreign Investment (2004)Law on the Promotion of Foreign Investment (2004)
Welcome every business sector and activity not Welcome every business sector and activity not detrimental to national security, environment, and public detrimental to national security, environment, and public health and safetyhealth and safety
All investment is guaranteed against expropriation and All investment is guaranteed against expropriation and nationalisation without compensationnationalisation without compensation
Remittance of dividends an profits back home or to third Remittance of dividends an profits back home or to third countries is allowed through banking systemcountries is allowed through banking system
Employment of skilled and expert foreign personnel (up to Employment of skilled and expert foreign personnel (up to 10% of total employees of an enterprise) 10% of total employees of an enterprise)
Long term land lease (50-75 years) Long term land lease (50-75 years)
Government’s Investment Government’s Investment PolicyPolicy
Government’s Investment Policy Government’s Investment Policy (con.)(con.)
3 Forms of Foreign Investment:3 Forms of Foreign Investment:
1) Business Cooperation by contract1) Business Cooperation by contract2) Joint Venture between foreign & domestic investor2) Joint Venture between foreign & domestic investor3) 100% foreign owned enterprise3) 100% foreign owned enterprise
Representative Office & Branch:Representative Office & Branch:+ Foreign Company can open its Representative Office in + Foreign Company can open its Representative Office in
Lao PDR to Lao PDR to collect information, study the feasibility of collect information, study the feasibility of investment and investment and coordinate matters for the coordinate matters for the purpose of applying for investmentpurpose of applying for investment..
+ Foreign Banks, Financial Institutions, Insurance + Foreign Banks, Financial Institutions, Insurance Company, Company, Consulting firms, Airlines can open their Consulting firms, Airlines can open their branches in Lao PDR. branches in Lao PDR.
Investment Term:Investment Term:
The investment term of a foreign enterprise depends on The investment term of a foreign enterprise depends on the nature, size and conditions of the nature, size and conditions of the business activities will the business activities will be fifty(50) years and extendable to seventy five (75) years.be fifty(50) years and extendable to seventy five (75) years.
• Promoted Activities eligible for Promoted Activities eligible for incentives:incentives:
1.1. Production for export; Production for export; 2.2. Activities relating to agriculture or forestry, and Activities relating to agriculture or forestry, and
agricultural, forestry and handicraft processing activities; agricultural, forestry and handicraft processing activities; 3.3. Activities relating to industrial processing, industrial Activities relating to industrial processing, industrial
activities using modern techniques and technology, activities using modern techniques and technology, research and development, and activities relating to the research and development, and activities relating to the protection of the environment and biodiversity; protection of the environment and biodiversity;
4.4. Human resource development, skills development and Human resource development, skills development and public health; public health;
5.5. Construction of infrastructure; Construction of infrastructure; 6.6. Production of raw materials and equipment to be supplied Production of raw materials and equipment to be supplied
to key industrial activities; andto key industrial activities; and7.7. Development of the tourism industry and transit services. Development of the tourism industry and transit services.
Government’s Investment Policy Government’s Investment Policy (con.)(con.)
Government’s Investment Policy Government’s Investment Policy (con.)(con.)• Promoted ZonesPromoted Zones
Zone 1: Zone 1: Mountainous, Plain and plateau zones with no Mountainous, Plain and plateau zones with no economic infrastructure facilitate investments, economic infrastructure facilitate investments, which will be entitled to a profit tax exemptionwhich will be entitled to a profit tax exemptionfor 7 years and thereafter will be subject to profit for 7 years and thereafter will be subject to profit
tax tax at the rate 10%.at the rate 10%.
Zone 2:Zone 2: Mountainous, Plain and plateau zones with a Mountainous, Plain and plateau zones with a certain certain level of economic infrastructure suitable to level of economic infrastructure suitable to accommodateaccommodate
investments to some extent, which will be entitled investments to some extent, which will be entitled to a profit to a profit tax exemption for 5 years and thereafter tax exemption for 5 years and thereafter will be subject to a will be subject to a reduced profit tax rate of half of reduced profit tax rate of half of fifteen 15% for 3 years and fifteen 15% for 3 years and thereafter a profit tax rate thereafter a profit tax rate of 15%.of 15%.
Zone 3:Zone 3: Mountainous, Plain and plateau zones with Mountainous, Plain and plateau zones with goodgood infrastructure to support investments, infrastructure to support investments, which will be which will be entitled to a profit tax exemption for 2 entitled to a profit tax exemption for 2 years and years and thereafter will be subject to a reduced thereafter will be subject to a reduced profit tax rate of profit tax rate of half of 20% for 2 years and half of 20% for 2 years and thereafter a profit tax rate thereafter a profit tax rate of 20%. of 20%.
Government’s Investment Policy Government’s Investment Policy (con.)(con.)
In addition to the incentives mentioned above, FDI In addition to the incentives mentioned above, FDI shall be entitled to the following incentives: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 the profit used for the expansion of business
activities will be exempted from profit tax during activities will be exempted from profit tax during the accounting year;the accounting year;
• Exemption of import duties and taxes on Exemption of import duties and taxes on equipment, spare parts, vehicles directly used for equipment, spare parts, vehicles directly used for promotion and raw materials;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: Loss carry forwards: 33 years years• Additional tax holidaysAdditional tax holidays, r, reduced tax rates for large educed tax rates for large
projects with special concession are available upon projects with special concession are available upon negotiationnegotiation
POTENTIAL SECTORSPOTENTIAL SECTORS Energy Mining Agribusiness Tourism Construction Material Light industry Service
INVESTMENT SECTORSINVESTMENT SECTORSELECTRICITY GENERATION:ELECTRICITY GENERATION:
• Abundant water resources produceAbundant water resources producedd by by tributaries of Mekong rivertributaries of Mekong river
• EstimateEstimatedd electricity generation potential electricity generation potential:: over 23,000 MWover 23,000 MW (only about 2% currently (only about 2% currently exploited)exploited)
• Investment in BOT hydro-electric facilities Investment in BOT hydro-electric facilities will be substantialwill be substantial
• Investment in ancillary support services will Investment in ancillary support services will increaseincrease
Luangprabang
NN1
Xekaman1. 468 MW
Xeset 45 MWSekong 5. 253 MW
Nam Mo 100 MW
Nam Theun3. 237 MW
Nam Theun2 681 MW
Nam Ngiep 1 440 MWMae Moh
To Bangko
Hongsa Lignite
LEGEND :
Existing Transmission line Before the year 2010 After year 2010 Existing Power Plan Under Construction before 2010 After 2010 Proposed 500 kV Substation Existing 115/22 kV Substation Proposed 115/22 kV substation 22 or 35 kV 115 kV 230 kV 500 kV
Sekong 4. 440 MW
POWER DEVELOPMENT PLAN
B. Mai
To Hatinh
CHINA
THAILAND
MYANMAR
CAMBODIA
Paksane
Xiengkhuang
Xayabury
Huaphan
OudomxayHouayxai
Phongsaly
Nam Ou 600 MW
CS. Luangnamtha
Nam Tha 263 MW
500 kV
Theun-Hinboun 210 MW
NN5 100 MW
ThakhekUdonthani 3
Savannakhet
Xepone
Saravane
Sekong
To Uborn 2Pakse HHO 150 MW
XPXN 390 MW
M. Khong
To Roi Et 2
M. Boten
To Plieku
115 kV
35 kVTheun1. 500 MW
Xekaman3 198 MW
NN3 460 MW
NN2 615 MW
NLEUK 60 MW
M.Salakham
Attapeu
TRANS2020dec98.pr4
MINING SECTOR:MINING SECTOR:
• MMining ining industry industry is at an early stage of is at an early stage of developmentdevelopment
• Mining sector presents numerous potential Mining sector presents numerous potential opportunities for investment and development.opportunities for investment and development.
• Mineral deposits : tin, lead, zinc,iron ore, Mineral deposits : tin, lead, zinc,iron ore, cooper, gold, gypsum, lignite, sapphires, …cooper, gold, gypsum, lignite, sapphires, …
• Some concessions granted to foreign investorsSome concessions granted to foreign investors
Focus in Agro-Forest Focus in Agro-Forest ProcessingProcessing• Highest ratio of forest areaHighest ratio of forest area
• Large stands of tropical hardwoods including teak, Large stands of tropical hardwoods including teak, mahogany and rosewoodmahogany and rosewood
• Suitable land for various tree Plantation Suitable land for various tree Plantation
• Plenty of productive landPlenty of productive land
• Long term land lease (50-75 years)Long term land lease (50-75 years)
Agro-Forest in Lao PDRAgro-Forest in Lao PDR
• 44 44 projects in Lao PDR = projects in Lao PDR = 61.711.20961.711.209 us$. us$.
• Some achievement and large scale projects : Some achievement and large scale projects : - BGA Lao Plantation (Newz): - BGA Lao Plantation (Newz): 50.000 ha50.000 ha = = 49.000.000 49.000.000
us$;us$;
- CITYLAND Resources (Malaysia): - CITYLAND Resources (Malaysia): 3.500 ha3.500 ha = 11.000.000 us$; = 11.000.000 us$;
- Daklak Rubber (Vietnam): - Daklak Rubber (Vietnam): 10.000 ha10.000 ha = 6.000.000 us$; = 6.000.000 us$;
- Vietnam General Rubber(Vietnam):- Vietnam General Rubber(Vietnam):10.000 10.000 ha=22.000.000 ha=22.000.000 us$;us$;
- Paksong Highland (Thailand): - Paksong Highland (Thailand): 26.000 26.000 ha = 8.000.000 us$. ha = 8.000.000 us$.
Investment in Agro-Forest of Top 7 Investment in Agro-Forest of Top 7 countries.countries.
NoNo CountryCountry Capital (USD)Capital (USD)
11 ThailandThailand 63,311,20963,311,209
22 VietnamVietnam 55,985,41455,985,414
33 New Zealand New Zealand 49,000,00049,000,000
44 MalaysiaMalaysia 18,448,38618,448,386
55 ChinaChina 12,003,72012,003,720
66 FranceFrance 13,079,04713,079,047
77 KoreaKorea 12,794,75012,794,750
Agro-Forest in Lao PDRAgro-Forest in Lao PDR• Main issues in Agro-Forest: Main issues in Agro-Forest:
- Land approved level:- Land approved level:• District not over District not over 3 ha3 ha with approval from province with approval from province
• Province not over Province not over 100100 ha with approval from MAF; ha with approval from MAF;
• MAF not over MAF not over 10.00010.000 ha with approval from GOL; ha with approval from GOL;
• Government Government 10.000 10.000 ha up with adoption from NA;ha up with adoption from NA;
- Fees rate between 6 -9 US$/ha/year.- Fees rate between 6 -9 US$/ha/year.
Long term land lease (50 -75 years)Long term land lease (50 -75 years)
TourismTourism1. Eco-tourism2. Culture-Tourism3. Agro-Tourism
Eco-tourismEco-tourism•Clean air•Beautiful landscape•Attractive for health-improving purposes
Culture-tourismCulture-tourism
• Rich in well-preserved culture and traditions
• World heritage sites
ADMINITRATION OF THE FDI ADMINITRATION OF THE FDI SYSTEMSYSTEM
• FDI system is administered by DDFIFDI system is administered by DDFI• DDFI acts as One-Stop-ShopDDFI acts as One-Stop-Shop• DDFI manages the investment application process DDFI manages the investment application process
advices advices for investors:for investors:-- investorsinvestors in in fillfillinging out investment application out investment application forms;forms;- - processes/processes/obtains the foreign investor’s business obtains the foreign investor’s business and tax licenses;and tax licenses;- assists investors - assists investors in in obtaining other obtaining other necessary necessary permits and licenses;permits and licenses;- grants investment incentives.- grants investment incentives.
Thank You Thank You For Your For Your AttentionAttention