Monday, November 20, 2017

Minimum investment requirement eliminated on general businesses

Minimum investment requirement eliminated on general businesses by foreign investors to Laos
In April 2016, the Organisation for Economic Co-operation and Development (OECD) advised the Lao government to reduce or eliminate the minimum investment capital of 1 billion kip on foreign owned businesses in what it described as discriminatory and a deterrent for investors, as well as, not serving its original purpose.  A formal recommendation to amend the Law on Investment to rescind the minimum was then submitted to the National Assembly that same year.

The governing body agreed and it was duly noted in Amendment No. 14/NA dated November 17, 2016.  However, the change was not well known or highly publicized.

To address this, on November 7, 2017, the Lao Ministry of Industry and Commerce issued a formal notice, No.2633/MOIC, to all its offices across the country to fully recognize and abolish the capital requirement on foreign owned general businesses.

The notice appears to have been needed to help clarify the issue on the requirement and to lay to rest any doubts that foreign investors may have had on the issue.  Moreover, it was a clear signal to those who may have still been enforcing the now defunct requirement to cease the practice.

Of note, there are still restrictions in specific industries and sectors of the economy that foreign companies are not permitted to operate in.  Additionally, some industries maintained their minimum investment capital requirements, such as in mining.  The amendment discussed here refers to "general businesses" only.

No comments:

Post a Comment