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...

Notarisation of Security Agreement in Lao PDR

All contracts in Lao PDR are required to be notarised and registered with the relevant authorities to ensure their legal compliance and validity under the Law on Notary. Additionally, security agreements are subject to registration requirements under the Law on Secured Transactions, and the Decree on the Implementation of the Law on Secured Transactions (the “Decree”). Notarised agreements will have greater legal value as evidence in the event of a dispute arising over the contents or implementation of such agreements as the Lao courts, as well as mediation and arbitration authorities, will consider the enforceability and legality of notarised agreements already established. Only Lao language agreements may be notarised. Under the Law on Secured Transaction and the Decree, agreements in which one party acquires a security interest in the immoveable property of another, such as loan agreements, pledge and mortgage agreements, etc. must be notarised and registered with the Ministry of Finance (“MOF”) and the Land Management office of the Ministry of National Resources and Environment in order to have preferential rights of priority. Typically, security agreements over moveable assets must only be registered at the State Assets Management Department of the MOF. As a result of increased economic activity and a rise in the levels of secured transactions in Lao PDR, and as such to facilitate greater registration of security interests, the minister of the MOF issued the Regulation on the Management of the Electronic Registration over Moveable Assets (the “Regulation”) in 2013. The Regulation allows both individuals and legal entities to record their security interest in moveable assets such as vehicles, inventory, accounts receivable, crops, etc. at...

Out of Court Dispute Resolution

The number of investors expressing an interest in starting businesses in Lao PDR has been increasing in recent years as the government of Lao PDR has continuously focused on providing regulatory changes in favor of both domestic and foreign investments. These investment policies have created many opportunities for new investors and competitors as well as increasing employment in Lao PDR. As a result of higher levels of employment, the government of Lao PDR has adopted the Prime Minister’s Decree on Labour Dispute Resolution No.76 dated 28 February 2018 (the “Decree”) to simplify out-of-court methods of resolving labour disputes under the Labour Law with the aim of protecting the rights and interests of both employees and employers and making issues arising out of, or relating to, employment efficiently resolvable. The Decree expands the descriptions of the two categories of labour disputes, namely those constituting a ‘Regulatory Dispute’ and an ‘Interest Dispute’, which in each case may be an ‘individual’ or ‘collective’ dispute. Regulatory Disputes are disputes resulting from either an employer or employee who fails to comply with the labour law, the internal regulations of a labour unit, the individual or collective employment contracts pertaining to the employer and other labour related legislation. This may include breaches such as overtime work exceeding that provided for by law or payment of wages lower than the minimum wage as determined by the government. An Interest Dispute is a dispute arising from either party having not responded to a request for new rights and/or interests by the other party, for example, working hours, wages or labour welfare arrangements. The Decree also provides more...

2017 trade balance surplus details released

The trade balance surplus in Lao PDR reached USD 9,345 million in 2017.

The Department of Import-Export, Ministry of Industry and Commerce, has reported that in 2017 the industrial processing sector has expanded to a value of worth 8,942 billion kip, an increase of 4.15% compared to the year 2016.

Update on Draft Civil Code

After promulgation, the upcoming Civil Code currently being drafted by the Government of Lao PDR (the “GOL”) will replace the Property Law; Contract and Tort Law; Family Law; Heritage and Basis of Inheritance; Secured Transaction Law; Nationality Law; Enterprise Law; and others. It aims to homogenise and clarify the legal concepts expressed in different, and sometimes contrary, ways across the scope of numerous laws.