Laos Remains Unable to Streamline Investment Process

Laos Still Unable to Centralize Investment Facilitation (Photo TF Travel)
Photo: TF Travel

While Laos has been promoting a one-stop investment service for many years, lawmakers admit that the reality remains a tedious process mired in bureaucracy.

Speaking at the National Assembly’s ninth session yesterday, Deputy Prime Minister Dr. Sonexay Siphandone expressed his dissatisfaction that investors still need to obtain approval from each line ministry responsible for a specific area of a proposed investment.

Members of the assembly urged the government to strengthen the operation of the existing single-window facility after finding that developers still had to apply to multiple departments in order to have their investment plan accepted.

It was noted that in other countries one-stop investment services are able to issue an investment license directly from a single office.

Ease of Doing Business

One assembly member was quoted by the Vientiane Times as asking, “Why couldn’t we organize things in one place to hasten procedures so our country won’t remain at 154th position in world rankings,” referring to the ease-of-doing-business rankings published by the World Bank.

Dr. Sonexay responded that the one-stop service remains problematic and inefficient because government laws and regulations have not been collectively updated, and instead require each line ministry to be involved in the approval process.

He said that if an investor wishes to invest in the energy sector, they must still seek further approval from the Ministry of Energy and Mines, or if they want to invest in healthcare they must obtain further approval from the Ministry of Health.

The deputy prime minister said that this issue had been raised at cabinet meetings, with an idea of assigning representatives from all relevant sectors to be stationed at the one-stop service office.

Laos has struggled to improve its ease of doing business ranking over the last few years, with a ranking of 136 in 2015, only to sink to 154th place in 2018 and 2019, ahead only of Myanmar among ASEAN countries last year.

Laws and Regulations Lack Enforcement

In 2017 Laos amended its law on investment promotion, setting out several new and amended articles on supported business sectors and investment opportunities, types and forms of investment, and investment management frameworks, with a focus on facilitating the incorporation of companies and improving the business environment in the country.

The law sought to provide a seamless process for investment applications and enterprise registrations, however, it has been unsuccessful in achieving this goal.

In 2018 Prime Minister Thongloun Sisoulith issued Executive Order No. 2 to improve the investment climate in Laos, ordering ministries and other bodies to improve procedures and remove obstacles causing difficulties to investors.

Under the order, authorities are required to issue enterprise registration certificates for new businesses within ten working days after an application is submitted.

Despite the best efforts of lawmakers, however, in practice, these accelerated registrations are rarely possible.

Untapped Potential

Despite being one of the fastest-growing nations in Asia, boasting a growing services sector, and an abundance of natural resources, as well as bordering five other rapidly developing nations, investment in Laos is still plagued with difficulties.

Strict land laws do not allow for foreign ownership or part ownership, while Laos remains the only country in ASEAN without some form of strata title law.

A lack of clear instructions for investors, despite several good attempts at investment promotion websites, has made the initial investment license and enterprise registration process lengthy and tedious.

Investors remain hopeful that the government will continue to streamline the process and perhaps achieve the holy grail of a centralized investment procedure.