Investment Guide - Why Laos

Market-oriented economic system The Laos has followed a market-oriented economy since 1986, with the New Economic Mechanism giving foreign investment generous incentives, constructing the basis of a legal framework from scratch and allowing private ownership.

The foreign exchange markets have been opened and the kip floats freely based on supply and demand in relationship to the exchange rate in the "parallel market." Formal exchange controls have been lifted.

Liberal foreign investment law

A liberal foreign investment law, passed in June 1994, set a flat rate corporate tax of 20 percent and duty of 1 percent on imports of means of production, spare parts and other materials used in operations. (Other imports are subject to 5-10 percent duty.) It also allowed 100 percent foreign ownership of business ventures. Since then, the detailed application of this law has been modified a number of times.

Strong potential for growth

The Lao PDR has a strong potential for growth in certain areas and a strong need for development in others. Potential growth areas include power generation, mining and minerals, agri-forestry and transportation. Areas that need to be developed include telecommunications, the financial sector, and tourism.

Savannakhet Province as Trade and Service Centre

Savannakhet Province in Lao PDR is a thriving hub of trade and services in the Greater Mekong Sub-region (GMS). The province is located along the East-West Corridor (EWC) linking Thailand, Lao PDR, and Vietnam (Road No.9). It is also along the North-South axis (Road No.13) that runs through Lao PDR, leading north into China and south into Cambodia.

The total value of export in Savannakhet was 238 million U .S. dollars in 1998-1999, of which nearly 92 percent (218 million dollars) was transit goods.

Savan-Seno Special Economic Zone (SSEZ)

Savan-Seno Special Economic Zone (SSEZ) is geographically composed of two separate sites both located in Savannakhet Province. Thanks to its strategic location, the development of the SSEZ is to become a centre for service and trade of the East-West Corridor.

The Lao Government is planning to upgrade the existing domestic airport in Khanthabouly city of Savannakhet province into an international airport in the near future, in order to meet transportation requirements of passengers and goods.

(Source: Department of Domestic and Foreign Investment)

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