ARTICLE
20 November 1995

Laos - Legal System and Investment - Investment Approval

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Mayer Brown

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Hong Kong Strategy
(A) Foreign Investment Management Committee

By the time the country opened to foreign investment, only the Council of Ministers could give final approval to an investment project. However, the Ministry of External Economic Relations was authorised to grant temporary approvals to investment projects. This resulted in an awkward situation where projects were set up and running with only interim approval.

After that, the Council of Ministers decided to establish the Foreign Investment Management Committee (FIMC) to centralise foreign investment approval procedures. This organisation is designed as the sole organisation in the country responsible for accepting and handling the approval of applications for foreign investment.

(B) Investment Application

To invest in the Lao PDR, all foreign investors have to request a written foreign investment licence granted by the FIMC. All applicants for foreign investment must submit to the FIMC an application and supporting documentation, as the FIMC may prescribe by regulation. The FIMC then, will review all applications and supporting documentation to make a licensing decision and notify the applicant of that decision within 60 days of the application's submission date. After receiving the foreign investment licence within 90 days, a foreign investor shall present the Approval Certificate to the Tax Department in order to register with this department, and a Business Licence will be issued. The Tax Department is authorised to carry out this process in order to closely monitor enterprises and to keep enterprise records for taxation purposes.

In addition, certain important business sectors for national security, economy or society are subject to close control by the State, such as businesses pertaining to:

- Petroleum;
- Electric power;
- Water supply;
- Telecommunications;
- Wood and wood products;
- Mining and minerals;
- Chemical substances;
- Alcohol;
- Cigarettes.

NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".

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