The Lao- Japan Public and Private Sector Dialogue: the Second Meeting (05/12/2008) -----For further enhancing investment from Japan to Laos---- THE ACTION PLAN FROM THE LAO SIDE December 5, 2008
1.Legal and policy transparency and predictability To clarify and make public the responsible governmental departments in charge of granting the necessary official licenses and approvals. The GOL will establish a kind of clearinghouse-center which is to render one-stop-service to the investors the information as to legal affairs, tax matters, labor issues, licenses and approvals such as the one relating to land use by mid-2009. The information is to cover all the governmental ministries and agencies of the Lao PDR. The GoL will make the list of the responsible governmental departments in charge of granting the necessary official licenses and approvals by publishing a booklet by mid-2009. Ministry of Planning and Investment will show the above information in their website also by mid-2009. --------------------------------------------------------------------------------------------------------------------- NOTE: 1. Issuing Permission and License at Central level: - The Investment Permission is considered and issued by Investment Promotion department, Ministry of Planning and Investment. - The Enterprise License is considered and issued by Domestic Trade Department, Ministry of Industry and Commerce. - The Domestic Tax License is considered and issued by Taxation Department, Ministry of Finance. 2. Issuing Permission and License at Local level: - The Investment Permission is considered and issued by Planning Division and Provincial Investment. - The Enterprise License is considered and issued by Trade Division of Province. - The Domestic Tax License is considered and issued by Finance Division of Province. 1
1.Legal and policy transparency and predictability To make public the laws and regulations as well as measures concerning investment, e.g. favourable treatments for foreign companies, in an easily accessible way. For instance, it will be useful to timely up-date the web-site of the Lao Government and to issue the official gazette. All the Ministries/Agencies will consider opening their web-site in English, if they do not have it for the present, by mid-2009. The GoL will improve the information on laws, decrees, rules and regulations on investment in the website of the Ministries/Agencies concerned without delay each time there take place any change or modification to them. The GOL will continue to publish revised investment guideline and brochure, including Law and Decrees related to investment, at least once a year in English. The GoL will consider issuing the official gazette containing all the official governmental decisions, unless they prejudice Lao national security and other vital national interests, on the monthly basis within the year 2009. The GoL will promote E-Government and will have a tangible outcome by the end of 2009. The GoL will make sure that the Embassy of Lao PDR in Japan will have the above-mentioned investment guideline, brochure and so on to facilitate the investment-related information to Japanese investors. ------------------------------------------------------------------------------------------------------------------------- NOTE: Web-site addresses of the Ministries/Agencies of the Lao PDR is as attached. 2
1.Legal and policy transparency and predictability To give prior notice to the public well in advance when laws and regulations as well as measures concerning investment are newly adopted or modified. For the sake of the directly-affected companies in particular, it will be desirable to give them prior explanations individually and then seek their opinions. The GoL will open the public hearings when it takes new laws, decrees, rules and regulations concerning investment. This process is particularly important for drafting the so-called unified investment law. These public hearings are very useful for the companies which will be directly affected by the new measures. 3
1.Legal and policy transparency and predictability To apply these laws and regulations as well as measures concerning investment to the investors in an impartial and fair fashion at all the governmental levels including the implementation one. The GoL will make sure that laws, decrees, rules and regulations will be executed in unity across the country in an impartial and fair fashion for all the investors. As one of the steps for this purpose, the GoL will continue to conduct the dissemination and training on the work of investment to the central governmental officials as well as the local officials. 4
1.Legal and policy transparency and predictability To ensure consistency among the laws and regulations concerning investment. The GoL will make further efforts to ensure consistency among international agreements, laws, decrees, rules and regulations by comparing and analyzing them before the adoption of laws, decrees, rules and regulations. 5
2. Deregulation To clarify and ease the regulations on foreign capitals and amplify the sectors which are 100% open to foreign capitals' participation. The GoL will enact the unified investment law which is to clarify and ease the regulations on foreign capitals by the end of 2009. The gist of the new law is as follows; Unify the Domestic Investment Law and Foreign Investment Law Easing the investment approval procedures and harmonizing with the Enterprise Law Clarifying the investment in both areas and promoted investment activities. --------------------------------------------------------------------------------------------------------------------- NOTE: Based on the Foreign Investment Law, the Foreign Investment is allowed 100%, with the exception only few sectors such as the ones related to the use of natural resources. 6
3.Procedures for permission and approvals To simplify the procedures for visa and labour permission. The GoL will issue the first list of documents and necessary attachments to apply for permission of residence for foreign investors and foreign workers by mid-2009. Ministry of Planning and Investment will show the above information in their website. The GoL will issue the decree of Prime Minister on management of immigration including the expansion of multi visa for foreign investors from one (1) year to five (5) years and also the expansion of identification card from one (1) year to five (5) years by mid-2009. --------------------------------------------------------------------------------------------------------------------- NOTE: In January 2008 the GoL announced that the Japanese ordinary passport holders would be exempted visa for their stay in Laos with the business purpose during less than 15 days. 7
3.Procedures for permission and approvals To simplify the procedures for licenses and approvals as much as possible at every stage for realizing the investment in Laos such as land use license, business license and import/export license, and then to reduce the number of licenses and approvals as well as the time to grant them. The GoL will enact the unified investment law which is to clarify and ease the regulations on foreign capitals by the end of 2009. This is purported to simplify the procedures for licenses and approvals for investment. The GoL will use ONE STOP SERVICE UNIT of Department for Investment Promotion of MPI whose responsible contact point is: Office ONE STOP SERVICE UNIT Tel: (856) 21 217 012 Fax: (856) 21 215491 E-mail address: heuang@hotmail.com This will be instrumental for enhancing smooth coordination with the related sectors. The GoL will set up the investment application system through web-site for the businesses in the Promotion List by mid-2009. The GoL will make sure the common application forms for the investment permission and approvals across the country by mid-2009 8
3.Procedures for permission and approvals In this regard, to implement the one-stop-service across the country. The GoL will continue to expand the one-stop-service across the country by early 2009. In addition to the steps concerning clearing house/center ( see page 1) and the single-stop / single-window service at the border areas (see page 21), the GoL will implement the one-stop-service at the Prefecture government s offices. --------------------------------------------------------------------------------------------------------------------- The one-stop-service has been already provided at Vientiane, Champasak, Savannakhet, Luangnamtha and Luangprabang. 9
4.Taxation and accounting To clarify and make fair the tax collection system and tighten control of double collection and irregularities. The GoL consider issuing a plain booklet on tax written in English for the benefit of foreign investors. Ministry of Planning and Investment will show the above information in their website. The GoL will make fair tax collection based upon laws, decrees, rules and regulations. The GoL will strengthen the enforcement of the anti-corruption law, approved in July 2006, and revise the law appropriately. 10
4.Taxation and accounting To make no unjustified discrimination among the investors from all the foreign nations as to custom duties and taxation. The GoL will not make unjustified discrimination among all the foreign investors in accordance with the PM decree for Custom Law which was approved by the National Assembly in 2007 as well as the Law on the Promotion of Foreign Investment. 11
4.Taxation and accounting To make sufficient explanation in advance upon the transition from the current turnover tax to the future VAT, and then to implement the VAT in an impartial and united way after its entry into force. The GoL will hold the explanation conferences to the foreign investors about the VAT with sufficient frequency before the introduction of this new tax. The GoL will continue the training and dissemination for the central government and local authorities officials on execution of the VAT, such as; 12
4.Taxation and accounting To harmonize the accounting standards with the international one. In order to make the accounting standards clear and unified, the GoL will continue to make efforts to harmonize the accounting standards with the international one by mid-2009, such as the effort by the Accounting Authority for introducing the new Accounting Code. 13
5.Public utility charges To abolish the dual pricing system for the foreign businesses. The GoL confirms that there is no dual pricing system as to public utility charges for the foreign businesses and will make a list of public utility charges to show them in the web site of Ministry of Planning and Investment. 14
6.Land use To lift the temporary ban of the license for more than 100 ha land use, still in effect since last May, as early as possible, and then clarify the procedures for land use license that are to be newly elaborated. The GoL has formulated the New Forestry Law which was already approved by the N.A in on December 24 th, 2007. This Law clarifies in the articles 74, 75 and 76 regarding the procedures for foreign investors to obtain the license of land use. The GoL will ensure the smooth implementation of this process including the completion of the charges/fees list of land lease and concession by Presidential decree by the end of March 2009. --------------------------------------------------------------------------------------------------------------------- Note : The details of the articles 74, 75, and 76 are as attached. 15
6.Land use To inspect how the lands that were already granted the use license have been used and then make sure their proper use. The GoL will make efforts to ensure the implementation of the Land Law, the Forest Law and/or individual MOUs- Concession Agreements as to monitoring the proper use of lands, some of which were already granted the use license. The responsible ministry / agency is National Land Management Authority and the Ministry of Agriculture and Forestry. For this purpose, the GoL will take steps, including the withdrawal of the use license, over the lands that are improperly used or not used at all. The responsible ministry /agency is National Land Management Authority and the Ministry of Agriculture and Forestry. 16
7.Labour To further strengthen the governmental efforts for developing human resources, including Japanese and English language education, and for making good use of these human resources. The GoL will make the best use the Japanese technical cooperation through JICA for the purpose of human resources development, and also will make efforts to strengthen the vocational training to provide skilled labor. The GoL will continue to make efforts to promote English education. The GoL will continue to make efforts on Japanese language education for the Lao nationals such as broadcasting Erin s Challenge! at the Channel 1 of the Lao National Television from October 2008. The GoL will preferentially allot officials who can speak Japanese to the Ministries/Agencies concerning to the foreign investment. 17
7.Labour To ensure reasonable business operations as to employment / dismissal and working hours. In recognition of the importance of reasonable labor-related business, the GoL has taken note of the Japanese recommendation in this regard and will keep consultation with the Japanese side to address their concerns particularly regarding Over Time, which is regarded as very costly by some Japanese business. The GoL will try to address the issue on a case-by-case basis as much as possible. 18
8.Preferential treatment for foreign investment(special Economic Zone) To make efforts to improve the Savan-Seno Special Economic Zone, while making effective use of the existing infrastructure, towards establishing industrial parks. The GoL will make the best use of the Savannakhet airport, reopen from August 2008, to facilitate the transportation in the area and overseas. The GoL will make better other kinds of infrastructure such as supply of electricity, water, waste-disposal service, road and telecommunication systems including high-speed broad-band internet connection. 19
8.Preferential treatment for foreign investment(special Economic Zone) To make efforts, while viewing the development of the Savan-Seno Special Economic Zone, to improve the systems and infrastructure in the suburbs of the Vientiane Capital as well that keep the establishment of Special Economic Zones in sight. The GoL will take the following steps in collaboration with the GoJ (first with JICA); To seriously address the establishment of the Export Processing Zone - Industrial park in Vientiane Capital in order to foster more and more foreign investment. In this regard, to determine the responsible entity for development and establish the implementation system for EPZ - Industrial Park. At the same time, to prepare the laws and regulations necessary for management and promotion of EPZ - Industrial Park. 20
9.Logistics To simplify the systems and procedures concerning custom clearance and immigration control so that investors will be able to do their business in an easier way. For example, it is desirable to increase the number of one-stop shops along the borders with Vietnam and Thailand. In the light of the usefulness of single-stop / single-window service at Dansavanh (Laos)-Lao Bao (Vietnam), the GoL will continue to increase the number of single-stop / single-window service and simplify the procedures at the border areas. Target number: 5 North-South Economic Coridor (1): - Border Crossing: Houixay (Lao) - Chieng Khong(Thiland) East-West Economic Corridor (1): - Savannakhet (Lao) - Mukdahan (Thailand) Other Border crossing (3): - Thanaleng (Lao) - Nongkhai (Thailand) - Nam Phao (Lao) - Cau Treo (Vietnam) - Wang Tao (Lao) - Chong Mek (Thailand) Priority (1) - Savannakhet (Lao) - Mukdahan (Thailand) - Thanaleng (Lao) - Nongkhai (Thailand) (2) - Wang Tao (Lao) - Chong Mek (Thailand) (3) - Border Crossing: Houixay (Lao) - Chieng Khong(Thiland) - Nam Phao (Lao) - Cau Treo (Vietnam) Target deadline date: 2009-2010 The GoL will will take the following specific steps of the simplified procedures: Step 1. Joint Customs Inspection in Common Control Area (CCA) at Country of Entry, as Single Stop Inspection (SSI). Step 2. Joint Customs and Quarantine Inspection in CCA 21
Step 3. Joint Clearance/Processing of Customs Documents at Country of Entry. Step 4. Single Window Inspection / Single Stop Inspection (SWI/SSI): Joint Customs and Quarantine Inspection in CCA and Clearance/Processing of Customs, Quarantine, and Immigration Documents at Country of Entry. 22
9.Logistics To coordinate with Thailand and Vietnam so that it will become unnecessary to change of vehicles and to reload merchandise from one vehicle to another at the borders, thus trying to facilitate logistics. The GoL will continue with the negotiations with Vietnam and Thailand for the GMS cooperation concerning the change of vehicles and enhance the single-stop/single-window system at the international borders between Laos and Vietnam and between Laos and Thailand with a view to bringing about the conclusion by mid-2009. 23
9.Logistics To improve the logistics network and make better the related systems and infrastructure in the suburbs of the Vientiane Capital. The GoL will make efforts to establish logistics parks in the Vientiane Capital and in the Savannakhet City at the earliest date. 24
9.Logistics To revise the existing aviation agreements so as to ensure the operation of large aircraft-carriers capable of transporting large-sized containers (= increasing the capacity of aircraft-carriers) in taking account of the outcome of the ASEAN transport ministers' meeting on November 1, 2007, which refer to the opening of the airways to link the capital cities by the end of 2008. The GoL will welcome the first Japanese charter flight operation between Narita and Vientiane next February and encourage the airline companies concerned to address the concern that Japanese businesses have for the large aircraft-carriers operation. The GoL will follow the gradual liberalization of regional aviation which was agreed at the ASEAN transport ministers meeting held in Manila early November 2008. 25
9.Logistics To try to resolve the issue concerning one-way loading of container trucks by consulting with the neighbouring countries. The GoL will prepare a list of problems concerning the transport, including one way loading, with the neighboring countries at the annual meeting with Thailand, China, Vietnam and Cambodia respectively and come across the solutions of these problems by mid-2009. The GoL will make its best efforts in collaboration with the Japanese government to promote and attract more Japanese manufacturers to establish their production/assembling facilities in Laos so as to create more demands for both way loading of container trucks, i.e. for importing production/assembling materials and exporting finished/assembled products. 26
10. Protection of the intellectual property rights To make further endeavours to take necessary control and regulatory measures against the infringement of intellectual property rights. The GoL will issue at the earliest date the decree based on the Law on Intellectual Property Rights, approved at the National Assembly in December 2007, and will take necessary measures so as to protect the intellectual property rights in Laos. 27
11.Relations with the provinces To make sure that the authority to issue licenses and approvals, including the certificate of origin, will be transferred to the provincial governments as much as possible and that necessary procedures can be processed there smoothly, for the companies doing business out of the capital city regard as a burden their trips coming up to the Vientiane Capital each time they need to clear the license-and-approval-related process at the central governmental ministries. The GoL will amend the PM Decrees no. 300/PM and 301/PM on the implementation of Domestic Investment and Foreign Investment Promotion Laws no. 10/NA and 11/NA respectively no later than the end of 2008. The amendments will delegate greater authority to provinces to issue licenses and approvals which will include among others the following authorities: - Approve investment activities (Category 1 as attached) with no limitation on investment capital value. - Approve the investment incentives (exemption/reduction of import duties) on the importation of raw material, machinery and equipment, and other production inputs. 28
11.Relations with the provinces To improve the transportation infrastructure facilities, including airports, out of the Vientiane Capital. The GoL will make the best use of the airport at Luang Prabang, Luang Namtha, Savannakhet and Pakse which have been or will be improved, renewed and reopened respectively, and continue to have better connection inside and out of the country. END. 29