A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration in Management of Technology

Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 1994

After the change in government and policy system in the end of 1975, there was structural disturbance in growth and development in the country. Particularly, industrial production has disrupted because of foreign aid and foreign currency foreign investments. 1982 the country first opened up to the world and has taken step to advance its own. perestroika call "Chintanakan May" the concept of (new thinking). 1985, the government implemented major reforms "the new economic mechanism (NEM)" makes decisions relating to local and international markets. The broad policy guidelines for the NEM were endorsed in November 1986, by the fourth congress of the Lao People's Revolutionary Party. Since then, the objectives of the NEM, enactment of the new central bank law, and the passage of a law on foreign investment have been refined. 1988, the government enact the foreign investment code and established the board for the management of foreign investment. July 1988, the Lao government having enact the law on foreign investment to open the national's economic door for the challenge of restructuring towards market-oriented economy. March 1990, the Government substantially clarified its privatization policy through the Decree 17 of the Council of Ministers. This Decree stipulates that except for those "bearing importance for national economy, society, national defense and security", all state enterprises are to be converted "to other forms of ownership through acts of leasing, sale, joint shares or contracting by workers' collectivities". August 15 1991, the National Assembly has adopted the new constitution which reaffirmed the policy commitment. Since the incentives of the NEM adopted in 1986 and the foreign investment law adopted in 1988, the number of foreign investment has been growing steadily. In addition, the national assembly's adoption of the new constitution has been reaffirmed that policy commitment to boost deeply the economy development through the privatization program. Presently difficulties and problems still remain. What is foreign investors have to face with during doing business in Laos. In spite of difficulties and barriers, the perspectives for foreign investment in this country are encouraging and promising. This paper will present some legal and practical issues of the foreign investment in the Lao PDR. Based on an analysis case studies of Foreign Investments already made in Laos, the paper will provide guideline for other investors who will invest in Laos.