President Choummaly Sayasone this week promulgated a newly revised law, which aims to promote local and international investment in the country.
The Investment Promotion Law offers a number of investment incentives for local and foreign business people, including allowing any foreign investors who invest more than US$500,000 to hold residential land use rights.
The new policy will enable foreign investors to own houses in certain areas as part of government efforts to encourage them to invest and do business in Laos.
Policy makers believe land use rights will encourage wealthy people to invest and work in Laos, bringing in money, new technology and jobs for Lao people so they can move out of poverty.
The law also offers various tax reductions and exemptions, depending on the type and location of an investment.
Under the law, in remote areas where there is no infrastructure, investors in the agriculture sector will be given a 10 year profit tax exemption, while those who invest in the industrial sector will be exempt for six years. Investors in the service sector will receive four years profit tax exemption.
In areas where basic infrastructure exists, agricultural investments will benefit from eight years of profit tax exemption, investors in the industrial sector will be exempt for four years, and those who invest in the service sector will receive two years exemption.
In urban areas with full infrastructure, agricultural investors will be exempt from profit tax for six years, for two years in the industrial sector, and in the service sector for one year.
The new law also outlines incentives for investments in the construction and operation of hospitals, formal schools and vocational schools.
In remote areas 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 also receive a higher rate of profit tax exemption than investors in agriculture, industry or the service sector.
The president also disseminated a new Water Supply Law, which aims to allow the private sector to take part in development of the sector. The new policy will help the government to expand water supply to meet demand spurred by a growing population and urban development. The law also defines the scope of responsibility for water supplier and users to protect investors and consumers.
The National Assembly approved the Investment Promotion Law and Water Supply Law in July 2009.
