Investment Reform Map for Lao PDR: A Foundation for a New Investment Policy and Promotion Strategy

The report, Investment Reform Map for Lao PDR - A Foundation for a New Investment Policy and Promotion Strategy, details a proposed action plan for targeted reforms to realize the positive impact of foreign direct investment (FDI) on the local economy.

The findings suggest that developing a holistic investment strategy along with continued regulatory reforms will help Lao PDR attract more diverse and higher-quality FDI. The approach will allow the country to expand its economy, generate more jobs, and achieve shared prosperity.

Over the past 15 years, FDI has been a major contributor to Lao PDR’s strong economic growth. However, most of the investments have been in natural resources, generating limited job opportunities and failing to unlock the full potential of FDI.

The report shows that FDI in non-resource sectors, which has high potential for job creation, made up less than 40 percent of total approved FDI stock during 2005-2017. This can be primarily attributed to the high cost of doing business in Lao PDR, triggered by a range of complex and time-consuming investment entry procedures. In laying out its recommendations, the report also provides a comprehensive analysis of the current investment climate in Lao PDR.

It recommends a strategic FDI shift to help the economy venture into knowledge-intensive industries, as well as removing unnecessary restrictions on FDI entry and establishment, providing enhanced incentives, and introducing an investor grievance mechanism.

The report was prepared for the Ministry of Planning and Investment of Lao PDR as part of an IFC advisory project funded by the Government of Japan.