(KPL)  The 2nd Extraordinary Session of the 9th National Assembly convened on March 20 to review a draft proposal on special investment policies in the industrial sector. The session was presided over by National Assembly President Xaysomphone Phomvihane, with Deputy Prime Minister Saleumxay Kommasith presenting the proposed policies aimed at enhancing investment in the sector.

The proposal highlights the need for special policies due to Laos’ competitive disadvantages compared to neighboring countries. Key challenges include an unfavorable geographical location, underdeveloped infrastructure requiring significant investment, and a limited domestic market. Additionally, the country ranks low in investment ease—154th out of 190 economies—while facing persistent economic and financial difficulties. Capital inflows remain constrained, and a significant number of young workers continue to seek employment abroad, leading to a labor shortage.

Foreign investment in Laos' industrial sector has been limited, primarily concentrated in energy and non-energy industries. To address these challenges, the government is considering the cancellation of carbon tax collection as an incentive to attract industrial investments. This policy aims to stimulate economic activity, create jobs, and encourage Lao workers to return home, thereby stabilizing the financial sector.

Following the COVID-19 pandemic, foreign investment in ASEAN has rebounded, with most inflows directed toward countries with more favorable conditions, such as Singapore, Indonesia, and Vietnam. Meanwhile, Malaysia, Thailand, and the Philippines have been improving their investment policies to remain competitive. Laos, in response, has proposed a tax deferral policy of up to 30 years in the Amata Industrial Estate—one of the most generous incentives in the region—to compensate for its competitive weaknesses.

Recognizing the shifting global investment landscape, the government sees an opportunity to attract businesses relocating their production bases due to economic and geopolitical uncertainties. If Laos fails to act, investors will choose other destinations with better conditions.

Under the proposed policy, investors must commit to projects in designated areas, including Na Mor (Oudomxay province) and Nateuy (Luang Namtha province). Investments will be directed toward four key special promotion industries including an agricultural processing – Utilizing domestic raw materials for export; renewable energy – Solar panel and other clean energy industries; automobile and spare parts manufacturing and  electrical and electronic equipment manufacturing.

Once approved, these policies will serve as tools to promote investment in Laos' industrial sector, strengthen exports, and create employment opportunities. The long-term goal is to shift the economic structure from raw material exports toward a more advanced manufacturing base, fostering sustainable industrial growth.

KPL