How much do you know about new business opportunities in Laos?
As early as the end of 2015, the Lao government had formulated a five-year socio-economic development goal for 2016-2020. Among this goal, 17 sustainable development goals were highlighted, as well as the implementation of 169 specific goals under this framework. , The goal is to leave the ranks of the least developed countries in 2020.
At present, according to the Laos target deadline, there are only two years left. The Lao government has revealed that it hopes to attract investment and talents to join in to stimulate rapid development in various fields.
Based on the development in recent years, Laos expects that the country’s economic growth will not be less than 7% in 2018, with exports of 5.015 billion U.S. dollars, imports of 4.978 billion U.S. dollars, and per capita annual income of 2,536 U.S. dollars; planned agriculture and forestry will grow by 2.8%, industrial growth by 9.1%, and services The industry increased by 6.4%, and the import tariff increased by 9%, accounting for 15.73%, 30.79%, 41.83% and 11.65% of GDP respectively. To this end, the Lao government welcomes more foreign-funded enterprises to invest and cooperate.
Laos is a landlocked country located in the northern part of the Indochina Peninsula. It borders China to the north, Cambodia to the south, Vietnam to the east, Myanmar to the northwest, and Thailand to the southwest. It is the country with the largest number of other countries in ASEAN. Chinese companies entering Laos can not only seize the business opportunities brought about by the rapid economic growth of Laos, but also use its location advantages to develop the markets of other ASEAN countries.
In 2017, the bilateral trade volume between China and Laos was US$3.02 billion, an increase of 28.6%, ranking second among ASEAN countries. In 2017, China's non-financial direct investment flow in Laos reached US$1.38 billion, an increase of 139.1%, and the growth rate ranked first among ASEAN countries.
There are business opportunities for Chinese enterprises to invest in agricultural development and food processing, mineral development, wood processing, tourism development, daily-use product production, building materials production, and infrastructure construction in Laos. Automobiles, motorcycles, textiles, steel, wires and cables, communication equipment, electrical and electronic products have markets in Laos.
Cooperation between China and Laos in the energy field. Nine Chinese-invested hydropower projects have entered commercial operation, and another 10 projects are under construction. At present, China is also constructing 8 projects in the field of 230KV and 500KV transmission and transformation lines. In the field of minerals, 52 projects invested by Chinese companies have entered the mining implementation stage, and 20 projects are undergoing feasibility studies.
According to ADB estimates, the Mekong River flowing through Laos has approximately 18,000 megawatts of electricity, but the current utilization rate is less than 4%. There are still more than 100 remote mountainous areas in Laos that have no access to electricity, and 14% of households have no access to electricity. Electricity. There is great potential for power development.
At present, there are several direct flights from Laos to China: Vientiane-Kunming, Vientiane-Guangzhou, Vientiane-Nanning, Vientiane-Hainan, Luang Prabang-Jinghong, Luang Prabang-Chengdu and Vientiane-Changzhou. The opening of direct flights between China and Laos has effectively promoted the rapid development of bilateral cooperation. According to statistics, in 2016, the number of people visiting Laos in China exceeded 540,000.
In January 2018, China's exports to Laos increased by 74% year-on-year, the third largest increase in Asian countries (regions); the turnover of China's project contracting to Laos increased by 525.6% year-on-year, the second largest increase in the Asian region.
Laos' relevant investment industry incentive policies
The Lao Ministry of Industry and Trade, the Ministry of Planning and Investment, and the General Office of the Government respectively manage the general investment, franchise investment and special economic zone investment of Lao investment.
The areas that are encouraged to invest are: agriculture, planting, breeding, small and medium-sized processing industries that do not require large areas of land, logistics, hotels, catering, tourist attractions development, etc.; there are other areas that are based on the newly revised "Investment Promotion Related service industries newly stipulated in the Law, such as hospitals, vocational schools, universities, etc. The Lao side invites and welcomes Chinese-funded enterprises to increase their investment in the above-mentioned related fields and projects.
The industries that Laos encourages foreign investment include: export commodity production; agriculture, forestry, agricultural and forestry processing and handicrafts; processing, use of advanced technology and technology, research science and development, ecological environment and biological protection; human resource development, labor quality improvement, medical care; Infrastructure construction; production of important industrial raw materials and equipment; tourism and transit services.
According to the newly revised "Investment Promotion Law", companies investing and operating in impoverished areas with imperfect infrastructure (referred to as Zone I) can be exempted from paying 10 years of profit tax; enterprises that promote investment in impoverished areas are granted an additional 5 years The profit tax is exempted within the period, that is, the profit tax can be exempted for 15 years.
Companies that invest in poverty-stricken areas can enjoy 10 years of free land lease or franchise rights, and enterprises that invest in poverty-stricken areas can get an additional 5 years to obtain 15 years of free land lease or franchise rights.
Encourage investment in areas where infrastructure and facilities are developing (referred to as District II), and invest in these areas to enjoy a 4-year tax exemption policy, and encourage enterprises to invest here to obtain an additional 3 years of tax exemption, that is, 7 years of profit tax exemption. In addition to the profit tax incentives, the government also provides tariffs, value-added tax, land lease and royalties.
Companies investing and operating in Zone II enjoy 5 years of free land lease or franchise rights, and promoting companies investing in Zone II receive an additional 3 years of free period, and they can get 8 years of free land lease or franchise rights. In addition, according to the revised law, imported vehicles, machinery and equipment are not used for sale in Laos but directly used for production and use by enterprises, and can enjoy import tariff and value-added tax exemption.
Companies that import raw materials, equipment, and spare parts for the production of export commodities can also enjoy the tax exemption policy. Duties and value-added tax on exported products can also be exempted. However, imported vehicles, imported oil, natural gas, and lubricants used by the government should be regulated and managed in accordance with relevant laws and regulations. According to the revised law, enterprises that use non-natural resource raw materials to produce products and export them can also enjoy VAT exemption.