New Enterprise Registration System in Lao PDR

Since the Prime Minister’s Order No. 02/PM of 2018, the Ministry of Industry and Commerce (“MOIC”) has been focusing on the regulatory amendments in respect business incorporation and corporate amendment procedures for investment in general business activities.

The Ministry of Planning and Investment (“MPI”) and the MOIC in collaboration with the relevant line ministries have also revised and identified the lists of general business subject to control and concession business (“Lists of Controlled and Concession Businesses”) administered by the MPI which was adopted under the Decree on Adoption of Lao PDR Lists of Controlled and Concession Businesses No. 03 dated 10 January 2019 (“Decree No. 03”). Investors seeking to invest in controlled and concession businesses will need to apply with the MPI for an investment licence (“Investment Licence”). In the old system, the MOIC was responsible for both controlled and non-controlled general business investment.

Individuals or entities looking to conduct business activities outside the Lists of Controlled and Concession Businesses must file application with the MOIC for an enterprise registration certificate (“ERC”). Under the new system pursuant to the Decision on Enterprise Registration No. 0023/MOIC dated 9 January 2019 (“Decision No. 0023”) (effective from February of 2019), the MOIC has reduced certain documentary and approving requirements for the business entity registration including application documents, approval letters and application processing. For instance, the old requirement of having to obtain prior consent from an industry specific authority before the proposed entity could be incorporated has been waived by the MOIC. The ERC will now be issued without listing the business activities which are subject to an Investment Licence and/or an industry specific operating licence. To this effect, the MOIC has played the principal role in coordinating with the relevant line ministries for research and confirmation of their business sector activities by reviewing and/or adopting any related licencing regulations in a more comprehensive and transparent manner for purposes of the newly implementing system. As an example, the MOIC adopted the Decision on Adoption of Business Activities Requiring Operating Licences issued by MOIC No. 0044/MOIC dated 18 Janaury 2019 (“Decision No. 0044”) and further Instruction on Issuance of Operating Licenses for Industry and Commerce Sector Business Activities No. 0045/MOIC dated 18 January 2019 (“Instruction No. 0045”) on business sector activities requiring an operating licence to be issued by the MOIC.

Besides the more convenient enterprise registration with the MOIC, the associated procedures have been implemented to boost the ease of doing business in Lao PDR such as the reorganised tax identification and new online tax service registrations, the enterprise seal casting and registration throughout to the enterprise signage approvals.

Nevertheless, the newly incorporated entity undertaking non-controlled business subject to operating licence will be required by the MOIC to obtain an industry specific operating licence within 90 days from the issue date of ERC to be able to commence its commercial business operation. Of relevance, the licencing period for a controlled business entity will rely upon available legislation and process of the industry specific ministries. In this regard, the delay may be caused where the existing laws and practices are still applicable to the old system. Consequently, certain line ministries have been stimulated by the MOIC to address the licencing procedural framework more efficiently for the new system implementation.

It is always recommended to consult your intended business activities in Lao PDR with a legal advisor. Please do not hesitate to contact us should you require our assistance to establish a Lao PDR business entity at enquiries@arionlegal.com.