Decentralization of Foreign Investment Management Power

 After more than 15 years of experience in promoting and managing foreign direct investment, the Lao Government decided to decentralize foreign investment management power, giving local authorities opportunities to attract investment to their governed territories as seen appropriate.

 On the 23^rd of April 2003, the Prime Minister signed Decree No. 64/PM on the Roles, Responsibilities and Rights of the Committee for Investment Management, Foreign Cooperation and Domestic Investment at Central and Local Levels.

 According to the newly released decree, the Committee for Investment and Cooperation (CIC) comprises two levels of organizational structure: Central CIC and Local CIC. Central CIC shall be chaired by chairman of the Committee for Planning and Cooperation (CPC). Vice-chairman of the CPC directly in charge of investment affairs and foreign cooperation shall also be the vice-chairman of Central CIC. Other vice-chairmen of the CPC should be members of the board of Central CIC. At local level, governors of provinces, municipalities and special zones are chairmen of CICs in those areas. Vice-governors of the provinces, municipalities and special zones who are directly in charge of economic affairs are vice-chairmen of the local CICs. Other vice-governors of the provinces, municipalities and special zones are members of boards of the local CICs.

 The CIC has supporting organizations as follows:

At Central Level: 1) The Department for Promotion and Management of Domestic and Foreign Investment; 2) The Department for Foreign Economic Cooperation; and 3) the Cabinet of the CPC as the Secretariat of the Central CIC.

At Local Level: Departments for Planning and Cooperation of provinces, municipalities and special zones as secretariats of local CICs.

 Some rights of each CIC level and rights of concerned ministries/agencies:

Central CIC has some rights as follows:

1)      To consider every matter concerning domestic and foreign investment and foreign economic cooperation nationwide;

2)      To approve: - foreign investment projects under the promoted activities with capitals of less than10,000,000 USD (ten million US dollars);

     - and issue certificates for incentives to domestic investments with capitals of less than 100,000,000,000 kips (100 billions kips);

                             -   concerning foreign and domestic investment projects that local authorities have the rights to approve, as mentioned in Article 6 of the decree, investors have the right to choose whether they would like to apply for investment licenses or certificates for incentives from central CIC or from local CICs.

     -   grant aid projects from other countries, which will be specifically identified in the rules governing international grant aids and loans.

     -   concerning foreign investment projects with capitals of equal or higher than 10,000,000 USD (ten million US dollars) or domestic investment projects with capitals of equal or higher than 100,000,000,000 kips (100 billion kips) and/or projects requesting concession rights to exploit natural resources of Lao PDR, after being considered and agreed in principles by Central CIC considers, the projects will be submitted to the Central Government for consideration and approval as seen appropriate.

3)      To sign investment projects:

After the projects have been considered and approved by a Central CIC meeting:

-         Chairman of Central CIC has the right to sign investment projects with capitals of equal or higher than 5,000,000 USD (five million US dollars);

-         Vice-chairman of Central CIC has the right to sign investment projects with capitals of less than 5,000,000 USD (five million US dollars)

Local CICs have some rights as follows:

1)   To approve: - foreign investment projects under the promoted activities (as specified in Prime Minister’s Decree No. 46/PM, dated 23^rd March 2001) with capitals of equal or less than 1,000,000 USD (one million US dollars); and issue certificates for incentives to domestic investments with capitals of equal or less than 10,000,000,000 kips (ten billion kips).

                           -  CIC chairmen of Vientiane Municipality, Savannakhet, Champasack and Luang Prabang Provinces have the rights to approve foreign investment projects under the promoted activities with capitals of equal or less than 2,000,000 USD (two million US dollars) and the rights to issue certificates for incentives to domestic investments with capitals of equal or less than 20,000,000,000 kips (twenty billion kips)

2)      Chairmen of local CICs have the rights to sign investment licenses and issue certificates for incentives in the amounts of capitals as mentioned above, after which a copy of each investment license/certificate for incentives shall be sent to Central CIC within five working days.

3)      To directly manage foreign and domestic investment projects and foreign cooperation within their administrative territories and regularly report to Central CIC.

4)      To study and comment on investment projects to be established in their administrative territories, which do not fall under their approval rights.

 Concerned ministries/agencies have some rights as follows:

1)      To study possible strategies to attract investment and cooperation within their fields in order report to CIC for consideration and approval;

2)      To cooperate and provide technical comments on projects to CIC for consideration and approval or rejection of proposed investment projects;

3)      To encourage, promote and attract more investment and cooperation into their sectors.

 This decree is to replace Decision No. 28/PM dated 18^th of August 2000 and Decision No. 013/PM, dated 27^th February 2002, and will be effective after 30 days from the date of signature onward.

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