You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

June 17, 2021

Laos Sets Out Rules for Securing Investment Promotion Incentives

Subscribe to Updates

Laos has issued important new guidelines on obtaining investment promotion incentives in the country. The Instructions on the Promotion of Investment Incentives concerning the State Land Rental and Concession Fee, which was published in the Lao Official Gazette on May 28, 2021, supplement the Law on Investment Promotion of 2016 by clarifying procedural requirements for general investment, obtaining an incentive certificate, activity-specific requirements, and zone categories for various districts.

The Law on Investment Promotion plays a key role in clarifying Laos’ approval process for investments and business activities. The law provides a list of promoted sectors that can receive certain incentives (e.g., profit tax holidays and exemption from state land rental or concession fees) if they fulfill the law’s general requirements. The incentives can last for 4 to 15 years, depending on the type of promoted activity and the zone in which it is located (i.e., zone 1 for remote areas, zone 2 for developed areas, and zone 3 for special economic zones). Additionally, the Law on Investment Promotion introduced the “incentive certificate,” which is issued upon request when an investment activity is approved for receiving promotion incentives.

However, the Law on Investment Promotion was considered to be very general, and these instructions represent the Lao authorities’ attempt to clarify the law by specifying the types of investment activities eligible for incentives, the procedure for requesting and obtaining an incentive certificate, and other requirements for businesses and investments to thrive in Laos.

Incentive Certificate

According to the investment promotion instructions, legal entities must submit an application for an incentive certificate to the appropriate section of the Ministry of Planning and Investment (MPI), which will coordinate internally and with other governmental agencies, including the Ministry of Finance. If the activity is deemed eligible and all requirements are met, the authorities will issue the certificate within 30 working days in accordance with the following procedure:

  1. A legal entity submits a request for an incentive certificate via the one-stop service at the central or provincial level.
  2. Within 10 working days, the appropriate section of the MPI coordinates with relevant governmental agencies at the central and provincial levels to conduct an on-site inspection of the entity’s investment activity.
  3. The one-stop service will submit its opinion on the matter to the Investment Promotion and Management Committee, which will issue its decision within 15 working days.
  4. If approved, the incentive certificate will be issued within five working days. If the request is rejected, the one-stop service will inform the applicant within two working days.

According to the instructions, large investment projects that have signed a concession agreement with the Lao government, and are subject to a National Assembly resolution on incentives beyond those provided in the Law on Investment Promotion, do not have to request an incentive certificate.

A legal entity that receive an incentive certificate must implement the incentive-eligible activities from its certificate, comply with its sector’s laws and regulations, pay its taxes and other official fees, and report its activity every six months to the MPI, Ministry of Finance, and any other relevant governmental agencies.

The instructions provide that an initial warning will be issued to a legal entity that does not observe the country’s law and regulations. If it does not correct the wrongs in accordance with the warning within 45 working days, its tax incentives may be withdrawn.

Investment Requirements

The instructions group investment requirements into two categories—general and specific.

All legal entities seeking investment promotion incentives must fulfill the general investment requirements (termed “horizontal requirements” in the instructions). According to the instructions, an entity must invest LAK 1.2 billion (approx. USD 127,000) in one of the promoted sectors, or employ at least 30 Lao technical staff or at least 50 Lao workers with employment contracts of at least one year. In addition, entities must pay up their registered capital, comply with all applicable laws and regulations (including environmental requirements), and fulfill their tax obligations.

Additional specific requirements apply to 108 activities within the promoted sectors in the Law on Investment Promotion, a list of which are detailed in the instructions. The law’s promoted sectors are broad, each encompassing a range of business activities as follows:

  • High and modern technology applications, scientific research, research and development, use of innovative and environmental-friendly technology, efficient use of natural resources and energy;
  • Clean and toxic-free agriculture, seed production, animal breeding, industrial plantations, forestry development, protection of environment and bio-diversity, activities promoting rural development and poverty reduction;
  • Environmentally friendly agricultural processing, national traditional and unique handicraft processing;
  • Environmentally friendly and sustainable natural, cultural, and historical tourism development;
  • Education, sports, human resource development and labor skill development, vocational training institutions or centers, production of educational and sports equipment;
  • Construction of modern hospitals, pharmaceutical and medical equipment factories, traditional medicine production and treatment;
  • Investment, service provision and development of public infrastructure for urban traffic congestion reduction and residence facilities, infrastructure development for agricultural and industrial production, transportation of goods, transit services and international linkages;
  • Policy banks and microfinance focusing on poverty reduction for people and communities with limited access to banks; and
  • Modern commercial centers promoting domestic products and world-renowned brands, fairs for domestic products (industrial, handicraft, and agricultural).

The annex that contains the 108 activities mentioned above also contains the specific requirements for the activities that are subject to them. These are myriad and are often concerned with meeting domestic or international standards—for example:

  • Factories that process sugar must comply with the ISO 9001 and ISO 14000 standards and be certified as a GMP or HACCP within four years of its date of starting the operation.
  • Factories that assemble two-wheeled vehicles (e.g., motorcycles) must assemble vehicles in an automated or semi-automated process using technologically advanced machines, which must not be more than five years old from their year of manufacture. The activity must meet ISO 9001 standards issued within four years, and factories must be of the semi knocked down (SKD) type.

Zones

As mentioned above, the Law on Investment Promotion offers different promotional incentives based on the location—or “zone”—of the activity, with zone 1 being remote areas with limited infrastructure, zone 2 for areas with better socioeconomic infrastructure to support investment, and zone 3 for special economic zones. The Law on Investment Promotion did not provide further guidance on which specific areas of the country were located in zone 1 or zone 2, and the recently issued instructions clarify this point by listing the districts that fall into each zone.

Conclusion

The instructions strengthen the Law on Investment Promotion by adding clarity and legal certainty to areas of the law that had formerly been left up to the discretion of local authorities. Now, however, the conditions and requirements are confirmed by the recent instructions and are made available to every investor in Laos. This movement toward regulatory consistency is another encouraging step taken by the Lao government to improve the country’s business climate and foster a more welcoming environment for foreign direct investment.

Related Professionals

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

January 26, 2026
Prisna Sungwanna, head of Tilleke & Gibbins’ office in Vientiane, and Sayphin Singsouvong, associate, provided an updated Laos chapter for Foreign Investment Review 2026, a global guide to the legal and regulatory environment for foreign investment in 25 jurisdictions worldwide. Published and distributed by Lexology Panoramic, the guide discusses law and policy on oversight of foreign investment, regulatory frameworks, procedural requirements, and other important considerations for foreign investors. The Laos chapter aims to give investors an understanding of what to expect when establishing operations and operating in the Lao market, covering: Law and Policy: Government policies and practices, main laws and their scope of application (including details on investment promotional measures), definitions, rules for state-owned enterprises and sovereign wealth funds, relevant authorities and oversight, and national interest provisions. Procedure: Jurisdictional thresholds, national interest clearance, securing approval, the review process for competition clearance and associated penalties, involvement of authorities, facilitation of clearance, and post-closing regulatory powers. Substantive assessment: Substantive tests for clearance, authorities’ consultation with other countries and other relevant parties, transactional prohibitions and objections, mitigating arrangements and challenges to a decision, and protection of confidential information. Recent cases, updates, and trends: Relevant recent case law, key recent and ongoing developments. A PDF of the Laos chapter can be accessed through the button below. Tilleke & Gibbins also contributed the Cambodia, Myanmar, and Vietnam chapters to Foreign Investment Review 2026. Readers can also gain 30 days of complementary access to the full Foreign Investment Review 2026 guide and the rest of Lexology Panoramic’s varied offerings through this link.
Read More
January 26, 2026
Tilleke & Gibbins has contributed an updated Cambodia chapter to Foreign Investment Review 2026, a global guide to the legal and regulatory environment for foreign investment in 25 jurisdictions around the world. Published and distributed by Lexology Panoramic, the guide is focused on law and policy regarding foreign investment oversight, regulatory frameworks, procedural requirements, and other notable concerns for foreign investors. The updated Cambodia chapter was prepared by Jay Cohen, partner and director of Tilleke & Gibbins’ Phnom Penh office, and Nitikar Nith, associate. The chapter focuses most closely on the law and policy section, which explains the government’s policies and practices regarding foreign direct investment, the main investment laws and their scope, and the relevant authorities responsible for regulating mergers, acquisitions, and other business transactions. The chapter also brings up key recent developments, such as the prospect of Cambodia establishing a competition regulator. A PDF of the Cambodia chapter can be downloaded through the button below. Tilleke & Gibbins also provided the Laos, Myanmar, and Vietnam chapters to Foreign Investment Review 2026. Readers can also gain 30 days of complementary access to the full Foreign Investment Review 2026 guide and the rest of Lexology Panoramic’s varied offerings through this link.
Read More
January 26, 2026
Myanmar’s Private Security Services Law, enacted on February 18, 2025, together with its implementing Directive on Applications for a Private Security Services License or Permit issued on June 18, 2025, establishes the country’s first comprehensive regulatory framework for both commercial private security service providers and companies that employ in-house security personnel. The framework applies to both Myanmar and foreign entities. For foreign investors and multinational operators, the new regime introduces strict licensing requirements, local content rules, and various approvals that must be carefully considered as part of business planning and compliance processes. Regulatory Authority and Structure The governing authority under the Private Security Services Law is the Private Security Services Central Supervisory Committee, formed with the minister of the Ministry of Home Affairs (MOHA) as chairperson, the chief of the Myanmar Police Force as vice-chairperson, and members from other high-ranking officials from relevant ministries, such as Transport and Communications, Defense, Planning and Finance, Investment and Foreign Economic Relations, Legal Affairs, Immigration and Population, Labor, and Commerce. This Central Committee is the highest regulatory authority and has the power to adopt policies, approve or reject applications for licenses and permits, and decide appeals against administrative actions taken by Supervisory Committees, which operate under the Central Committee at the state and regional level. They are responsible for processing applications, verifying compliance with statutory requirements, submitting applications to the Central Committee with remarks, and issuing licenses and permits once approved. Supervisory Committees also monitor compliance by license or permit holders and impose administrative penalties for noncompliance, while the Central Committee exercises final decision-making authority. License Requirements for Security Service Providers To apply for a private security services license, companies must be registered under the Myanmar Companies Law. Foreign companies may also operate a private security services business in Myanmar, subject to compliance
Read More
January 21, 2026
Spurred by global geopolitics and Canada’s Indo-Pacific Strategy, which aims to forge deeper ties with ASEAN, Canadian companies have been showing growing interest in Thailand and Southeast Asia in recent years. To understand the opportunities offered by the region, we sat down with Andrew Stoutley, a Toronto native and the chief operating officer of Tilleke & Gibbins, a leading Southeast Asian regional law firm with over 130 years of history in Thailand. Q: Why are Canadian companies looking at Thailand and Southeast Asia right now? A: Two reasons stand out. First, diversification has moved up the agenda. Many Canadian companies want options outside North America due to tariff volatility and policy uncertainty in the United States, as well as questions around the next Canada–United States–Mexico Agreement mandatory joint review. At the same time, the shift of global production from China to Southeast Asia is accelerating, driven by rising costs, geopolitics, and the need to avoid overreliance on a single market. As a result, Canadian companies are looking for a second production base or a regional hub, and Thailand and its neighbors are natural choices given their manufacturing depth, location, and established supply chains. Second, Canada’s own efforts in the region are gaining traction. The Indo-Pacific Strategy has led to more on-the-ground support, including larger trade missions, upgraded diplomatic posts, and new financing options. Export Development Canada (EDC) now has a presence in Bangkok, giving Canadian companies a direct line to financing and insurance in Thailand. There’s also steady progress on trade frameworks like the recently signed Canada–Indonesia Comprehensive Economic Partnership Agreement (which will come into effect pending domestic procedures), ongoing negotiations of a Canada–ASEAN FTA, and the exciting announcement about the launch of negotiations of a Canada–Thailand FTA. Together, these developments have the potential to make it much easier
Read More