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Connecting clients to top-tier legal talent around the world…

Arion Legal today announced it has joined Nextlaw Global Referral Network, enabling it to connect its clients to high-quality lawyers around the world. Nextlaw Global Referral Network is the largest legal referral network in the world, with 283 member firms, 18,600 lawyers covering 160 countries.

Mike McDonald, Managing Director, said, “By joining Nextlaw Global Referral Network, we can now provide our clients with the best of all worlds by continuing to serve them where we currently have offices, while also being able to direct them to top-tier lawyers in other jurisdictions where they need legal counsel and business advice. We can build on our trusted relationships with our clients by putting the full resources of the global, legal powerhouse at their disposal.”

Jeff Modisett, Nextlaw Global Referral Network CEO said, “We’re proud to have Arion Legal as part of our network. We’re only as good as the quality of our member firms, and Arion Legal makes us stronger and better able to meet the needs of our other members’ clients in Lao PDR and Australia.”

Nextlaw Global Referral Network was created by Dentons, the largest law firm in the world. The network, which is free to join, employs a comprehensive screening system to guarantee the quality of its member firms and has developed proprietary technology to allow members to identify lawyers at other member firms with the appropriate experience where clients need legal counsel.

Arion Legal is an Australian-based law firm that has been operating in Lao PDR since 2008, providing international-quality legal and tax advice to foreign investors operating in or seeking to invest in Lao PDR. Arion Legal represents clients across a broad range of commercial issues while providing practical, results-orientated and cost-effective legal and tax advice.

About Nextlaw Global Referral Network

Nextlaw Global Referral Network is the client-focused legal referral network created by Dentons, the world’s largest law firm. Nextlaw Global Referral Network is the largest legal network in the world. It’s free to join, open to all high-quality law firms regardless of size and does not grant geographic exclusivity to its members. This enables the network to connect clients of member firms to the best lawyers with the appropriate experience in the locations where clients need legal counsel. The network utilizes a proprietary technology platform to help member firms research, contact, and rate the performance of network members to guarantee that clients receive the highest quality legal advice and business solutions.

www.nextlawnetwork.com

About Dentons

Dentons is the world’s first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world’s largest law firm, Dentons’ global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

www.dentons.com

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Mr Manothong Vongsay, Director General of Investment Promotion Department, Ministry of Planning and Investment and Madame Valy Vetsaphong, Vice President of LNCCI led the consultation session on the Draft Law on Investment Promotion on 29 September 2016.

During the session the latest draft of the Law on Investment Promotion was presented to members of the business community, including representatives from the foreign business chambers, AustCham and ECCIL, with attendees invited to provide their comments and feedback in relation to the draft law and its application.

One of the key changes in the draft law is the removal of minimum Registered Capital for general business activities, which at present is 1 billion Kip, or approximately USD125,000. Whilst some protected sectors will still be subject to minimum capital requirements according to industry specific regulations – for example construction, logistics, and wholesale and retail – under the current draft all other companies established to undertake general business activities will be able to commence operations without the need to import minimum cash levels and in-kind capital within 90 days of being issued their licences.

Mr Manothong Vongxay explained that the reasoning behind this amendment to the law was to remove barriers to entry for small and medium enterprises, to boost research, development and innovation projects, and to reflect the changing nature of businesses in Laos, which has seen a shift from heavy equipment/asset reliant activities to online and mobile devices services.

Other key changes include:

• The replacement of a debt-to-equity ratio applicable to concession projects which previously required concession projects to ensure their Registered Capital (equity) was at least 30% of their Total Capital (equity plus long-term debt and retained earnings), with a fixed minimum Registered Capital amount;
• A reduction of the maximum concession period from 99 years to  50 years;
• The introduction of provisions governing public-private partnerships; and
• The inclusion of a section for managing outbound investment by Lao registered companies and individuals.

The Investment Promotion Department, together with line Ministries, is aiming to submit the draft of the Law on Investment Promotion to the National Assembly in October for debate and approval.

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Banks in Laos have implemented stricter controls on foreign currencies notably the Thai baht and US dollar in a move to stabilise exchange rates and sustain the country’s economy.

Speaking to Vientiane Times on Wednesday, bankers attributed the move to falling foreign currency reserves because businesses constantly required Thai baht and US dollars to import goods.

The falling reserves are the result of Laos’ exports, predominantly in mining and agricultural commodities, which have fallen while imports are still increasing and this trade had to be paid for in foreign currencies, according to economists.

According to the Ministry of Industry and Commerce, the total value of exports to 76 countries exceeded US$3.43 billion in 2013-14. In the meantime, the value of goods imported from 73 countries reached US$4.68 billion.

Commercial banks are mostly reluctant to sell foreign currencies to maintain their reserves amidst rising demand for Thai baht and US dollars to import goods from other countries.

A senior banker who asked not to be named said most banks welcomed foreign currencies but were unwilling to sell them.

The move has caused complaints from a frustrated public who can’t always find foreign currency for purchases forcing them to other sources including exchange rate shops or even the black market despite more expensive rates on offer.

Commercial banks recently lowered the interest rates charged on loans and offered on Kip deposit accounts in line with a decision made by the Bank of the Lao PDR, hoping to stimulate economic activity.

On the other hand, banks have raised the interest rates offered on Thai Baht and US dollar deposit accounts hoping to build up reserves of these currencies.

For instance, Phongsavanh Bank raised the interest rates to 6 percent (US$) and 5.75 percent (baht) for 12-month deposits, 7 percent (US$) and 6.75 percent (baht) for 24-month deposit accounts, and 7.50 percent (US$) and 7.25 percent (baht) for 36-month deposit accounts.

A senior economist from the National Economic Research Institute Dr Leeber Leebouapao told Vientiane Times on Thursday that stabilising exchange rates was one of the most important things that could be done to boost business confidence and ensure the economy could move forward.

“Fluctuation of exchange rates will absolutely worsen our economy. Ideally, if banks wish to attract more capital, they will raise interest rates, and if they don’t want the money coming in, they will lower interest rates,” he said.

Despite falling foreign currency reserves, there has been no official report offered to the media this year regarding how many months of imports the nation’s total of Thai baht and US dollar will cover.

As a result of rising demand for foreign currencies, the Lao kip has devalued against the US dollar and Thai baht.

According to BCEL’s exchange rates yesterday: US$1 buys 8,086 Kip, sells for 8,124 Kip. One Baht buys 234.06 Kip, sells for 235.81 Kip.

Fortunately, Dr. Leeber said many development projects invested in by overseas entrepreneurs or projects funded by donors used their own foreign currencies, not intending to buy it from Lao banks.

Source: Vientiane Times

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Commercial banks in Laos have lowered the interest rates charged on loans and offered on kip accounts in line with a recent decision made by the Bank of the Lao PDR, hoping to stimulate economic activity.

Conversely banks have raised the interest rates offered on Thai baht and US dollar deposit accounts hoping to build up reserves of these currencies amidst rising demand for the baht and US dollar.

Banks informed Vientiane Times yesterday that lowering the interest rates on kip accounts and loans was intended to encourage people to spend kip and boost commercial productivity.

The lower interest rate on kip accounts would deter people from depositing money in banks and keep it in circulation, which would also bolster productivity, they explained.

The lower interest rate on loans would encourage entrepreneurs to borrow money from banks for business purposes and generate job opportunities. Prior to this, the interest rates charged on loans were high compared to those in other countries, which hindered the productivity of manufacturers and farmers.

One of the main points to note is that the interest rates offered on accounts that have been in existence for several years is not significantly different to those offered for an account that has been open for just one year. Previously there was a big difference between the one-year and long-term interest rates.

According to BCEL, a savings account now attracts just 1.91 percent. A 3-month deposit account attracts 3.20 percent interest, 4.02 percent is paid for a 6-month deposit, 5.72 percent for a 12-month deposit, 6.90 percent for a 36-month deposit, 6.97 percent for a 48-month deposit, and 7.04 percent for a 60-month deposit. Banks also lowered interest rates last year which was viewed as a major change in the banking sector, with the government wanting to lower the interest charged on loans to spur business growth.

At that time, a savings account at BCEL attracted 1.96 percent interest, a 3-month deposit account attracted 3.34 percent, 4.22 percent interest was paid for a 6-month deposit, 6.13 percent for a 12-month deposit, 11.50 percent for a 36-month deposit, and 12 percent for a 48-month deposit.

Meanwhile interest rates on Thai baht and US dollar accounts have risen, as these currencies are in high demand in Laos because businesses need them to pay for imported goods.

BCEL now offers 1.5 percent interest on a US dollar savings account and 0.90 percent for Thai baht, while a 3-month US dollar deposit account attracts 1.65 percent interest and a 3-month baht deposit account attracts 1.40 percent interest.

For 6-month deposits, 2.40 percent (US$) and 2.15 percent (baht) will be paid; for 12 months the interest paid is 3.40 percent (US$) and 3.15 (baht); for 36 months the interest is 5.90 percent (US$) and 5.65 percent (baht); and for 60 months the interest is 6.65 percent (US$) and 6.40 percent (baht).

Phongsavanh Bank’s interest rates are even higher: 6 percent (US$) and 5.75 percent (baht) for 12-month deposits, 7 percent (US$) and 6.75 percent (baht) for 24-month deposit accounts, and 7.50 percent (US$) and 7.25 percent (baht) for 36-month deposit accounts.

The longer term interest rates for kip accounts are not significantly different from those offered for Thai baht and US dollar accounts given that banks are keen to accumulate more foreign currency.

Source: Vientiane Times

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Arion Legal is excited to announce the arrival of its newest Senior Legal Advisor, Steve Goddard.

Steve is a qualified Australian Lawyer with several years’ experience specialising in foreign direct investment under the Cambodian, Myanmar and Lao PDR legal frameworks.

Before joining the Arion Legal team, Steve headed, among others, the Corporate & Commercial Practice Group of a leading regional law firm in Cambodia, while overseeing operations in Myanmar.

Steve’s areas of expertise include advising on investments in a diverse range of industries and matters, encompassing corporate law and governance, commercial establishment and structuring, mergers and acquisitions, regulatory compliance, industry–specific licensing (with a focus on the construction, transport and logistics, aviation, tourism and gaming sectors) and assistance with the drafting of various commercial agreements from a local law perspective. 

Prior to working in Southeast Asia, Steve spent a significant amount of time studying and working in Kunming, China. Given the strategic cooperation agreement between Arion Legal and Yunnan Baqian Law Group, Steve’s proficiency in speaking Mandarin makes him a valuable asset and well-positioned to assist Chinese investors establish entities and expand their business in Lao PDR.

Steve brings a wealth of regional understanding and background to the firm and we are very excited to have him onboard as we continue to grow and expand our knowledge of, and presence in, Lao PDR and the greater Mekong region.

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Arion Legal’s engagement with the legal community in the Lao PDR has developed further recently with members of our Vientiane office visiting the local Lao People’s Court Zone IV and speaking with judicial officials, including the Deputy President, Mr. Somphavanh Rardsavong, regarding some of the challenges of practicing law in Lao PDR. Arion Legal currently does not practice litigation in Lao PDR but we were excited by the chance to engage further with the local Court system and expand our knowledge of the  judicial process and practice in Vientiane.

An outcome of our developing relationship was a donation by Arion Legal of a desktop  computer and printer as well as a  number of administrative and office supplies to the Court,  in response to concerns raised by those we met regarding some of the difficulties and inefficiencies posed by shortages of office equipment.

Arion Legal is proud to have one of our young lawyers, Mrs Chintala Xayyaveth, currently fulfilling part of her legal admission requirements by working at the Lao People’s Court Zone IV and we hope that this developing relationship and engagement with the Court and its officials continues to reinforce our presence in, and commitment to, the local legal community in Vientiane and Lao PDR.

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Several years ago, the Lao government introduced a policy to reward qualified foreign expatriates in Laos with citizenship if they so desired. Laos also gives family books and ID cards to foreigners who do not want to denounce their original citizenship.

Over the years, a number of foreign expatriates in Laos have requested and been granted citizenship on submission of an official request. Citizenship entitles them to enjoy fundamental rights as a Lao citizen.

Citizenship has been awarded to foreigners who meet 11 criteria as detailed in the Law on Lao Nationality, Director General of the National Assembly’s Department of Petition and Naturalisation, Mr. Khamsing Xaysompheng, has said.

The criteria for granting Lao nationality fall into two categories: one for applicants of foreign origin and another for people of Lao origin who left the country and renounced their nationality but now wish to become Lao citizens again.

Under the law’s Article 14, people of foreign origin who apply for Lao nationality are required to renounce their original nationality and must prove they have lived in Laos for at least 10 consecutive years.

Foreigners under the age of 18 are not eligible. Applicants must be able to speak, read and write Lao to a proficient level.

Applicants must also prove that they are healthy and do not carry a serious communicable disease, are not addicted to drugs and are not a convicted criminal. Applicants must possess professional skills and have a career with a secure economic status.

Highly-educated foreign experts are given special privileges as they are required to demonstrate a shorter period of residence in Laos.

A foreigner who marries a Lao citizen will also be given a shorter time requirement concerning his or her residence in Laos.

Children of foreigners who have been granted Lao citizenship will automatically become Lao nationals if they are under 18 years of age. Children who are 18 by the time their parents are granted Lao nationality will not be automatically eligible.

People of Lao origin who renounced their Lao nationality and have become citizens of another country will be required to live in Laos for a shorter term of five consecutive years if they wish to become Lao citizens once more.

People of Lao origin who renounced their Lao nationality but have not yet been granted foreign citizenship will be required to live in Laos for three consecutive years before they can submit an application to request Lao citizenship.

Lao nationals who left the country for more than seven years without permission will have their Lao nationality renounced. Those Lao nationals who departed Laos with permission but refused to come back within an appropriate time and lost contact with the Lao authorities for more than seven years will also have their Lao nationality renounced.

The application process begins with local authorities where the application form must be submitted, then onward through the relevant ministries and the government before final submission to the NA’s Standing Committee for approval.

The number of people seeking Lao nationality has declined in recent years compared to a decade ago. In 2009, as many as 317 foreigners were granted Lao nationality along with another three of Lao origin who previously renounced their Lao nationality but wished to have it reinstated.

In 2014, just 19 foreigners were granted Lao citizenship, according to the National Assembly.

Most of those awarded Lao nationality were traders and business people who met the criteria, according to Mr. Khamsing.

In addition to its citizenship policy, the Lao government gives red family books and ID cards to foreigners who do not want to renounce their existing citizenship status.

Over the past three years, 2,802 family books have been issued to foreigners, enabling them to live permanently in Laos, according to the Ministry of Public Security.

Foreigners who meet the required criteria, including living in Laos for at least seven years, complying with the country’s laws and contributing to socio-economic development, can apply for a red family book. Lao nationals have a blue family book.

Applicants who meet the criteria and want to apply for a family book can do so via the relevant sectors, Lieutenant Colonel Mailar Soukkhaseum of the Family Book and ID Cards Issuance for Foreigner Division under the Ministry of Public Security said recently.

Once the Minister of Public Security has approved the application, the family book can be issued, he added.

Some 2,802 family books, naming 6,444 family members including 2,884 females, have been issued over the past three years. Some were newly issued, while others were provided to replace old ones.

Foreigners are not required to renew their family books but are required to apply for a new one when there are changing circumstances, such as an increase in the number of family members or a new place of residence.

Those holding a family book are eligible to apply for an ID card. Foreigners are required to renew their ID card every five years. Once ID card holders reach the age of 60 they do not have to renew the card, which continues to remain valid, Lieutenant Colonel Mailar said.

In total, 3,198 ID cards have been issued to foreigners over the past three years.

Both family books and ID cards give foreign holders the permanent living permits that enable them to enjoy their stay in Laos.

However, the foreign holders will not equally enjoy fundamental rights as Lao people do, for instance they are not eligible to buy land among other things.

Those foreigners marrying to a Lao woman or man are also required to follow the same rules if they want to apply for in order to enjoy a permanent resident permit in Laos, the Lieutenant Colonel said.

Source: Vientiane Times

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Shares of Comba Telecom Systems Holdings rose [last] Friday on the Hong Kong bourse, hitting 1.38 Hong Kong dollars, up 1.85% from the previous close.

After the market closed [last] Thursday, the Chinese telecom equipment maker announced its Jiafu Holdings unit plans to buy a 51% stake in Laos’ state-owned telecom carrier, ETL, for $91.8 million. Investors pushed Comba shares higher on hopes the deal will help the Chinese company boost its revenue.

The Lao government will hold the remaining 49% in ETL. Through the partnership, Comba Telecom aims to expand into the market in Laos, providing both equipment and services.

Comba Telecom, which owns 49% of Jiafu shares, will contribute $50 million in capital to the deal.

ETL is the only [fully] state-owned telecom company operating in Laos. ETL, the No. 3 operator in the country, provides a range of services from fixed-line and mobile phone service to internet and content services.

Source: Nikkei Asian Review

[:zh]Shares of Comba Telecom Systems Holdings rose Friday on the Hong Kong bourse, hitting 1.38 Hong Kong dollars, up 1.85% from the previous close.After the market closed on Thursday, the Chinese telecom equipment maker announced its Jiafu Holdings unit plans to buy a 51% stake in Laos’ state-owned telecom carrier, ETL, for $91.8 million. Investors pushed Comba shares higher on hopes the deal will help the Chinese company boost its revenue.  The Laotian government will hold the remaining 49% in ETL. Through the partnership, Comba Telecom aims to expand into the market in Laos, providing both equipment and services. Comba Telecom, which owns 49% of Jiafu shares, will contribute $50 million in capital to the deal.ETL is the only state-owned telecom company operating in Laos. ETL, the No. 3 operator in the country, provides a range of services from fixed-line and mobile phone service to internet and content services.

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A development in the value-added tax (VAT) sphere of Laos has caused quite a stir on social media recently, following the issuance of a Decision by the Ministry of Finance and its subsequent reporting in the media (click to read the article). Given the ‘hoo-hah’ surrounding the development, we thought we’d weigh in with some commentary on it.

One simple, direct (and valid) question – which is the kind we like – posed by a (valued) client was: “is this legal?” Our response was: “most definitely”. In fact, this is not even a new rule or imposition, it’s just enforcement of the current VAT provisions – and these provisions even existed under the former VAT Law (2006).

From the current VAT Law (2014):

Article 11. (Revised) Value-Added Tax-Liable Goods and Services

Goods and services liable to value-added tax include goods imported into the Lao PDR [emphasis added], goods and services provided within the country, the services of non-residents, legal entities and organizations unincorporated in the Lao PDR; except for the goods and services stipulated in article 12 and 16 of this law.

Article 12 refers to a list of goods and services which are exempt from VAT and Article 16 refers to goods for which VAT applies but the rate is 0% (instead of 10%).

A couple more relevant articles from the VAT Law (2014):

Article 7. (Revised) Value-Added Tax Obligations of Individuals, Legal Entities and Organizations

Individuals, legal entities and organizations that consume goods and services in the Lao PDR have the obligation to pay value-added tax to the State in accordance with this law.

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Article 8. (Revised) Scope of Application of the Law on Value-Added Tax

This law is applicable to both domestic and foreign individuals, legal entities and organizations operating businesses, working and living in the Lao PDR that consume goods and services.

It’s actually very common for countries to levy their own VAT/GST on goods imported from elsewhere; it’s just that often VAT/GST did not apply in the country of origin (e.g. as usually is the case when online shopping) because it’s considered an export of goods and subject to a VAT/GST rate of 0% (which is also the case in Laos).

The issue here, for the most part, is people physically entering Thailand to purchase goods. While we are not experts in Thai taxation, we understand that Thailand also applies a 0% VAT rate to exported goods – so if you were to buy Thai goods online and have them shipped across to Laos, you would effectively ‘not be charged’ Thai VAT.

We also understand that the Thai tax system has a VAT-refund mechanism in place (the ‘Tourist Refund Scheme’), but that it’s only available via international airport departure points and limited to ‘luxury items’ – so even if the Tourist Refund Scheme was available at the Nong Khai border, your ‘grocery shopping’ (which is quite common amongst residents of Vientiane) would be excluded anyway.

Early reports on social media by those who have crossed-over into Thailand for grocery shopping since the Decision was issued have suggested that it’s not yet being enforced, with somewhat of a ‘grace period’, but that there is an expectation of enforcement very soon.

In light of this, we note that Article 6 of the Decision (issued by the Ministry of Finance) essentially assigns the responsibility for implementing it to the Customs Department. This responsibility includes developing the procedures, forms and payment mechanisms of the measure, which will no doubt take time to implement and place a substantial strain on the country’s tax administration system.

Businesses Importing Goods (Sorry General Consumers)

Fortunately, there is a silver lining in the cloud of this Decision: generally speaking, businesses registered for VAT in Laos should be eligible for a VAT deduction/credit/offset for any VAT paid at the time of importation if those goods are (directly) used to produce goods and/or services on which VAT must be charged; subject to any deduction limitations within the VAT regulations.

Therefore it is extremely important that businesses obtain the proper documentation upon importing goods (and paying the VAT), to facilitate this deduction.

Author: Daniel Harrison CPA, Senior Tax Advisor

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[:en] Dr Chaleun Yiapaoher addresses the press conference.

The government has ordered some 1,154 family-unit furniture plants across the country to shut down their illegal operations, a government spokesman announced yesterday.

Additionally, more than 20 wood processing plants located in or near conservation and protected forests areas were also ordered to close down.

The order was approved at the meeting between Prime Minister Thongloun Sisoulith and his deputies that took place on August 29 when the Task Force Committee reported its findings in relation to the illegal operations.

The spokesman Dr Chaleun Yiapaoher warned the operators of the plants to abide by the government’s order, which came into effect yesterday as he made a public announcement about the order during a press conference at the Prime Minister’s Office.

If the operators don’t shut down their plants, authorities in charge will take action, he told local media at the press conference.

He explained that the family-unit furniture plants had not been granted business licenses, while the more than 20 wood processing plants located close to forest conservation areas were also breaching the relevant laws.

The government also instructed the ministries in charge to take action to properly regulate the 1,595 licenced wood processing and furniture plants to ensure their operations meet the required standards.

The move was part of the progress made in implementing the Prime Ministerial Order No 15 issued on May 13 that imposes tough action to regulate wood processing businesses and logging, including the prohibition of exports of unfinished wooden products.

Initial data from the taskforce committee showed that there are more than 270,407 cubic metres of legally sourced timber in provinces across the country.

Taxes and customs for more than 79,182 cubic metres have been paid, generating more than 72.5 billion kip.

Dr Chaleun warned those businesses which have not paid taxes or customs for the remaining more than 191,225 cubic metres of timber to do so within the allocated time – if not the timber will be seized.

More than 55,421 cubic metres of illegal timber has so far been seized to become part of state assets. The seized timber will be sold through a bidding process.

The government has warned authorities at the ministerial, provincial and district level to stop granting logging quotas as it contravenes the Forest Law, which only gives the government the right to grant the logging quotas.

Any logging quotas previously granted by the ministries, provinces and districts but which have yet to be cut have been announced as revoked.

Any department that further grants logging permits will be held responsible and punished, Dr Chaleun warned.

Following the implementation of the Prime Ministerial Order, authorities have also seized a number of vehicles and equipment used for illegal logging.

These included 11 snigging trucks, a bulldozer, a log crane vehicle, and a Toyota Fortuner amongst others. Some 1,253 chainsaws were also seized and destroyed.

Dr Chaleun assured that the government has been tough to take action against those involved in the illegal actions and violators will be punished.

Source: Vientiane Times

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