Foreign investors to have land purchase rights

Foreigners who invest more than 2.5 billion kip (nearly US$300,000) in Laos will have the right to purchase land in Laos if a new investment promotion law is approved.

National Assembly members are now debating the law. Policy makers believe they can convince legislators to approve the bill and say the move would encourage investors to boost economic growth in Laos .

According to Article 59 of the New Investment Promotion Law, the government will allow foreigners who invest the specified amount to purchase and own land use rights for the building of a home, the same as Lao citizens.

The move will result in the amendment of the Law on Land, which allows only Lao citizens to own land use rights while foreigners only have the right to hold land concessions and leases, according to officials.

Lao and foreign investors will also benefit from a number of investment incentives if the assembly approves the law.

The law, which is now under debate at the assembly, outlines benefits such as tax exemptions and the right to access investment information.

According to Article 52, Lao and foreign investors will be e ligible for different rates of tax exemption depending on whether their investment is in agriculture, industrial processing or the service industry, and whether the business is in an urban or rural area.

In remote areas where there is no infrastructure, investors will receive the highest tax exemptions, as follows:

In the agriculture sector, investors will be given profit tax exemption for a period of 10 years while those who invest in the industrial sector will have exemption for six years. Investors in the service sector will have four years' profit tax exemption.

In areas where basic infrastructure exists, investors in agriculture will benefit from eight years' profit tax exemption, investors in the industrial sector will be exempt for four years, and those who invest in the service sector will have two years' exemption.

In urban areas with full infrastructure, agricultural investors will be exempt from profit tax for six years, in the industrial sector for two years, and in the services sector for one year.

According to Article 52 of the law, tax exemption will be effective from the date when the investor first starts to make a profit, especially for those owning industrial tree plantations and manufacturing goods.

Another investment incentive is that the government will allow Lao and foreign investors to access investment capital from financial institutions both within and outside Laos .

Investors in the construction and operation of hospitals, formal schools and vocational schools will receive different levels of investment incentives depending on location, as follows:

In a remote area without infrastructure, an investor in public utilities will receive a land concession fee exemption for a period of 15 years. Those investing in an area where there is limited infrastructure will receive an exemption for 10 years, while those who invest in an area where there is basic infrastructure will receive a three year land concession fee exemption.

Investors in public utilities will receive a higher rate of profit tax exemption than investors in agriculture, industry or the service sector.

The new investment promotion law is a merger of the two existing laws on domestic and foreign investment.

By Ekaphone Phouthonesy