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Lao People's Democratic Republic

Laos has been ranked as one of the most resource-rich countries in Asia. More than 570 mineral deposits have been identified, including gold, copper, zinc, iron, potassium bauxite, limestone and lead.

Some 209 projects are being explored and developed.

Major producers are Phu Bia Mining (184 Mt @ 0.49% Cu and 0.22 g/t Au) and the Sepon Copper Mine (producing 80,000 T copper cathode per year).

The Dor Project is 30 km NE from Phu Bia Mining leases.

Supporting services in Laos such as ALS Laboratories and Boart Longyear Drilling are managed by Australians.

Country Facts

A land-locked country in southeast Asia, bordered by Myanmar and China to the north, Vietnam to the east, Cambodia to the south and Thailand to the west.

Laos became independent tin 1953, a republic with a democratic government, ruled by the Laos People’s Revolutionary Party. The Head of State is President Mr Thongloun Sisoulith and the Head of Government is Prime Minster Sonexay Siphandone. The population of Laos is 7 million and is mainly Buddhist (65%), its currency is the Kip and languages are Laos, French and English. The capital and largest city is Vientiane. The project area is in the Province of Xiangkhoang, one of Laos 17 Provinces.

More than two thirds of the workforce are employed in Agriculture. The Laos population is young, half under 25 years of age and 60% under 35. The country has a small but growing middle class concentrating mainly in the capital and cities such as Savannakhet, Pakxe and Luangphrabang.

Geography

Laos thickly forested landscape consists mostly of rugged mountains, the highest of which is Phou Bia at 2,818 metres.

The Mekong River forms a large part of the western boundary with Thailand, whereas the mountains of the Annamite Range form most of the eastern border with Vietnam and the Luangphrabang range, the southwestern border with the Thai highlands. There are two plateaus the Xiangkhoang in the north and the Boloven Plateau at the southern end.

The climate is tropical and influenced by the monsoon pattern.

WHY LAOS

Infrastructure

The Laos government is implementing policies that will make Laos land-linked rather than land-locked, prioritising easy access to larger emerging neighbour economies.

There are several routes to connect ASEAN to China such as Road No. 3, connecting Thailand – Laos – China (the north-south corridor) and the Laos – China railway.

The railway commenced construction in 2015 and is completed. It is the key co-operation project between China and Laos in the “one belt one road” initiative. The designed speed is 160 km/h and the length is 427 km of which 60% is 162 bridges and 72 tunnels. Among the bridges, one super one will run over the Mekong River, measuring 1,220 m.

In the centre there is the east-west corridor which is Road No. 9 connecting Thailand – Laos – Vietnam. Laos has three (3) international airports and five (5) Friendship bridges crossing the Mekong River linking Laos with Thailand.

Laos now has a total of 60 hydropower projects nationwide with total installed capacity of more than 10,000 megawatts, an annual generation of over 60,000 gwh, ensuring 98% of total households have access to domestic supply of electricity. According to the World Bank, Laos has met the Millennium Development Goal targets on water supply and sanitation.

Physical Map

China-Thailand Railway

Business Environment

Laos economy is growing, spurred by improvements within the regulatory and policy environment. The new Investment Promotion Law of 2017, with the aim of increasing Foreign Direct Investment (FDI), is offering incentives such as exemption from profit tax, fee exemption on land leases and abolishing the minimum capital investment.

The Laos economy has grown at nearly 8% for the last decade, placing it among the fastest growing economies in the world.

The Laos government’s 2013 WTO accession and the creation of the ASEAN Economic Community (AEC) in 2015 led to an improving business and investment environment.

Rapid economic growth in neighbouring countries such as China, Vietnam and Thailand has helped expand trade and investment in Laos.

Major international companies have begun to invest in Laos Special Economic Zones, particularly near Savannakhet and Vientiane. Investors include Toyota, Nikon, Encon, Celestica, Coca Cola and GE. Hongsa Lignite Power Project provides opportunities for international agreements with Thailand, Myanmar and Malaysia to import electricity from Laos called the “battery” of Southeast Asia, and exports 8,000 megawatts, earning more than US$1 billion annually.

Laos is mineral resource rich. More than 500 mineral deposits have been identified including gold, copper, zinc, lead and tin. The mining sector accounts for 35% of exports in 2017 and 12% of government revenue with 80% of FDI. Efficient management of national resources is key to unlocking Lao’s development potential with rich mining resources, a river network, ample arable land, cultural as well as national sites, Laos offers attractive investment opportunities in the mining, hydropower, agriculture and tourism sector.

In 2020 the government established the Laos Mining Development State Enterprise (LMDSE) to promote the development of mining projects.

Laws and Regulations

The Laos government is a Rule of Law state and continues to work with many international donors on a comprehensive legal sector reform plan. The Laos judicial system is bureaucratically independent of the government cabinet, and there is a commercial court system.

Laos Law on Minerals

In accordance with the 5-year workplace for the creation and revision of laws of the VII National Assembly (2016-2020), the Law on Minerals 2011 was revised and became effective in 2017.

The Ministry of Energy and Mines with the assistance of the World Bank’s Hydro-Mining Technical Assistance Programme and Australia’s monetary and technical advice, amended the Law on Minerals. The aim is to centralise the management of mineral resources and to develop the mining industry in an environmentally sound and sustainable manner, to encourage and support domestic and foreign investment in the mining industry in accordance with international best practice; to provide effective enforcement standards within the mining industry; to emphasise the importance of good mine closure and rehabilitation practice; to provide clean mechanisms for dispute resolution arising from mining activities and to ensure the sustainability of the development of the mineral resource sector.

Competition and Anti-Trust Laws

A competition law was approved in 2015 which applies to both foreign and domestic individuals and companies. The law was drafted with the assistance of the German government and other donors. The law was an implementation of the ASEAN Economic Community Policy.

Protection of Property Rights

According to law, foreign assets and investments in Laos are protected against seizure, confiscation or nationalisation. Foreign investors are not currently permitted to own land. However, under the Law on Investment Promotion 2016, investors are allowed to obtain land for use through long-term leases or as concessions, and are allowed to transfer, without government approval. Laos is a member of the World Intellectual Property Organisation (WIPO) Convention and the Paris Convention on the Protection of Industrial Property. Laos is also a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Taxes and Royalties

Corporate Income Tax

A 20% profit tax rate applies to both domestic and foreign businesses.

Losses may be carried forward for 3 years. Profits from sale of shares in a stock market are exempt from income tax.

There is no capital gains tax in Laos.

Profit tax payments shall be made on a quarterly basis. The tax administration has the right to audit the calculation and payment of taxes by taxpayers within 3 accounting years.

Financial Statements

The fiscal year is from 1 January to 31 December. Financial Statements must be prepared in Laos Kip and filed by 1 March.

Repatriation of Income and Capital

In conformity with the law and regulations governing the management of foreign exchange and precious metals, foreign investors may repatriate earnings and capital from their foreign investments to their home countries or third countries. Also paying for imported goods, import export related services, repaying foreign debts in accordance with loan agreements are allowed.

International Withholding Tax Rates

Dividends paid to individuals or legal entities that are registered abroad are subject to 10% Withholding Tax. Royalties at the rate of 5%.

Indirect Tax

The Value Added Tax is 10% and applies to a wide range of products including electricity, water, fuel and all imported products.

Social Security

The law requires a deduction from gross salary of 6% to be paid by the employer and 5.5% by the employee, with a maximum monthly payment of US$30.

Tax on Natural Resources

Natural resources tax applies to the businesses involved in the exploitation of precious resources including oil, gas, minerals, coal and hydro-electric power.

The applicable rates depend on the sale on export price and varies from 5% to 25%.