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WEEKLY NEWSLETTER
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Laos
Index
Decree 20 of 1988 identifies sectors open to foreign
investment
under the Foreign Investment Law: these include
agriculture and
forestry; industry; communication, transportation, and
construction; and services and tourism. Five criteria are
used to
judge the desirability of investment projects: whether the
project
uses advanced techniques, technology, and scientific
management to
produce goods that could compete in the world market and
make
efficient use of energy, raw materials, and equipment;
provides
export merchandise or services that generate
foreign-exchange
earnings and use domestic raw materials as much as
possible; has
low labor requirements but provides managerial and/or
technical
training; involves infrastructure development, especially
of roads,
bridges, and irrigation; and is deemed by the government
to be
important to economic development. Projects are
discouraged if
they: do not conform to economic and social development,
or disturb
the sovereignty, order, or security of the country;
seriously
damage the environment; make long-run use of imported
materials and
do not promote import substitution; create large debts; or
are
prohibited by the government.
The law spurred a steady increase in foreign direct
investment.
Within one year of the law's promulgation, Laos received
124
investment proposals, of which sixty were approved that
same year.
As of 1992, some 109 proposals had been accepted out of
a total
of about 200, worth about US$231 million, of which the
government
share is roughly 3 percent; most are worth less than US$5
million
each. Almost 50 percent of the proposals were signed with
Thai
companies. Most proposed investment is in foreign trade,
manufacturing, handicrafts, services, tourism, and the
agriculture,
forestry, and mining sectors. About ten proposals were
subsequently
canceled, usually because of a failure to receive expected
financing.
Despite the positive response of foreign investors to
liberalization measures, in the early 1990s, foreign
investment is
still handicapped. Hindrances include the poor
infrastructure, the
unskilled labor force, and the lack of an intellectual
property
rights law, although regulations on patents and industrial
property
have been drafted.
Data as of July 1994
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