Laos - Joint Ventures/LicensingLaos - Joint Ventures/Licensing
Care in selection of suitable business partners for joint ventures is crucial in Laos. As in other countries in the region, joint venture partners can contribute local knowledge of language and culture, local contacts, and access to human resources. There can also be challenges in a joint venture arrangement, including different management styles, different cultural expectations, and difficulty in exiting business arrangements with a local partner.
Lao foreign investment law recognizes joint ventures, but stipulates minimum requirements for the percentage of registered capital contributed by the foreign investor, with the exact percentage varying depending upon the industry. Capital contributed in foreign currency should be converted into Lao kip based on the exchange rate of the Bank of the Lao People’s Democratic Republic on the day of the capital contribution.
The foreign partners’ equity may be foreign currency, plant and equipment, capital goods, technology, and/or skills and management. Lao partners (including the Lao government) may contribute money, land, water rights, natural resources, and/or capital goods. The value of the inputs and assets of each side are assessed at international market rates and converted into local currency at the prevailing exchange rate on the date of equity payment.
Licensing arrangements also require a trustworthy Lao partner and opportunities should be thoroughly researched with, among others, the Lao government and LNCCI.
Laos Business Management Legislation