Doing Business in Laos Property Rights 1-Aug-18 Doing Business in Laos Property Rights Presented by Chris Manley Mekong Law Group

General Legal/Business Climate Types of legislation Key laws for foreign investors to know Dissemination/Implementation of legislation Legal precedents Dissemination ad implementation: According to a notice published in the Pathet Lao newspaper on April 26, 2006, the Enterprise Law was signed into law by the President of Lao PDR on December 9, 2005 and made effective 120 days thereafter. Therefore it came into effect on April 8, 2006. more than two weeks before anyone knew Low public service pay: $30 per month The “Lao way”

Major Investment Sectors Hydropower Biggest projects Financial services Real growth area Mining “Slowdown” Agro-forestry Concessions Tourism New regulations to be released Hotels Especially in Luang Prabang Hydropower – the biggest in terms of deals

Land Ownership 2003 Land Law and 2005 Land Law Implementing Decree Land Management Authority Ownership / titles Foreigners/foreign companies cannot own land Limited to leasing land for certain terms Structures available to attempt security Risks inherent in any structure Law not entirely clear on foreign owned companies. Officials have told us a certain percentage of foreign shareholding may be okay – eg 60%, but not 70%. No legislative basis. No one has tried. We have heard that KoLao has name on land title, but in a restricted way (includes the notation “cannot sell” We have a structure we have tried to propose in the past, but seems to not be well looked on to by Government.

Buildings/Structures on Land Right to own building/structure under Foreign Investment Law Verbal confirmation from DIP Must be licensed foreign investor Lease Agreement should clarify or reference Sale-Purchase Agreement Risk: ownership ends with lease and FIL

Examples of Land Structures Basic Leasing Option Funding Option Subsidiary Ownership Option

Basic Leasing Option Lease Terms for Foreign Investors: 30 years from individuals 50 years from the Government 99 years for embassies and international organizations Extendable with Government approval Steps involved to lease land: Land due diligence Lease Agreement / Sale-Purchase Agreement Registration and notarization

Funding Option Wholly Owned and Joint Venture Company Land due diligence (Joint Venture Agreement for JV Company) Sale-Purchase Agreement Loan Agreement Security Agreement Hold original title Right to transfer to eligible third party Lease Agreement

Subsidiary Ownership Option Foreign owned Lao company establishes a domestic company (subsidiary) in Laos Domestic company owns land & leases to foreign owned Lao company Risk: theoretical option - has not been tested

1-Aug-18 One Region  One Firm Any questions? 10