Lao banks - high term interest rates (11%)

[simon43]

A trustworthy Lao business partner (if you can find one) would certainly increase your chances of success.

I'm not sure your comment applies to the example I cited. The Lao government promoted specific private investment projects for foreign SMEs, where one of the plus points was that the business could be 100% owned by the foreigner, with no Lao partners required, eg - building an eco-resort at the Konglor Caves because the local accommodation for tourists was x levels below what was acceptable by 'affluent' (read old and rich) foreign tourists.

By providing an incentive for foreign tourists to visit the region, the local community can benefit - hence the government incentive for 100% foreign ownership.

[anotheruser]

To get a work permit and business visa you will have to be involved with a Lao national.

Is that correct? Although my last employment in Laos (school Headmaster) required a WP of course, some previous meetings with Lao government officials (about 5 years ago) concerned opening an eco-resort. It was quite clear from the meeting that a foreigner could own a Lao business 100% with no Lao partners if he were to invest a modest sum ($100,000 USD) in certain sectors of industry, such as eco-tourism, especially for projects that were being promoted with infrastructure assistance (eg electricity supply), by ecotourismlaos.

I think this is different and is a type of investor visa rather than a simple business visa and work permit.

Although if you have the funds it may be what you are looking for. I think the $100K you are talking about is more than what the people in this thread would lay out. In your case you are looking to get involved and my comments were more directed to those that were speculating on getting a work permit just to get some fixed deposits and stay a short time.

Laos for sure has a lot of potential for anybody wanting to get involved. I have never heard of anybody wanting to reside in Laos being turned away for visa reasons ever. Google it and you will see what I mean. You will only find stories about people being denied Thai visas while in Laos usually from this site.

http://www.ecotourismlaos.com/ecotourisminvestment.htm

I would avoid the Siphandone wetlands one. It is pretty close to where the Don Sahong dam is currently being built. By close I mean around one kilometer or so. I take my chances over on Don Det but this particular place is cutting it close. I guess at least the electricity is close.

There are some handicraft projects that look like you would be doing nothing more than financing an impoverished village.

The canopy walkway one looks interesting if you don't mind starving in the middle of nowhere with no electricity. I am sure the assistance they offer will be some peasants to slave away on the lines if you pay for the wire. It is 210 km from Luang Prabang. You would have to haul everything in from China, VTE or Thailand. Even VTE is pretty limited to what you can get. You had better have experience in very remote locations if you want to go live up there. For the right person it could be a great place. Plan on spending more than what is suggested though.

The Kong Lor one could be alright. Depending on where it is in proximity to the cave. Keep in mind the water in Kong Lor cave is sometimes too high to navigate and sometimes too low. This means that nobody comes when that happens.

Heavy flooding also occurs frequently in the region. Take a look at the peak of the rainy season to see what you would be in for. Of what is there I think this one actually looks like the best prospect in the lower price range on the website. I have actually thought about doing something in this region although probably not exactly right at the cave.

All of the places listed appear to either be very expensive or in extremely marginal locations. These will be very expensive because of that to develop. There is a good reason some of these places lack infrastructure.

I doubt the estimated costs of these projects. Some of the figures on their website seem quite old and prices for materials in some cases have more than doubled in the past 5 years. They cite tourist arrivals in some cases from 2009 so the info is way out of date. The price of wood has doubled or in some cases tripled since then.

You have to wonder why the Lao government would give you a visa and run the electricity in for you if the location is desirable?

Some of them look like they could be very fun projects to be involved in. IMO after a brief look at what they are offering there are easier ways to get a visa than those.

Why not go up to Laos and talk to a lawyer and have a look? That is ultimately the only way you can definitively answer any of your questions. Arion legal will give you a free 30 minute consultation.

Anyway sorry to get off topic this was supposed to be a thread on fixed deposits.

[laobali]

Very interesting reading, nevertheless. I think after having lived in Laos for 8 years and I had $100,000 to invest, I'd go for fixed deposits for different terms in more than one bank.

[anotheruser]

I don't disagree with that. I would probably use BCEL, ANZ, Lao Dev and Phongsavan.

[anotheruser]

Well I emailed ANZ bank and just out of interest they gave me this email back....

Dear Mr xxx xxxx,

Thank you for contacting us. Regarding regal side, I am unable to confirm if it is a requirement by the government. However, according to our internal policies and guidelines, ANZ Lao unable to open any kind of accounts including Fixed Term Deposit for foreigners who does not have stay permit and work permit.

If you have any further query, please do not hesitate to contact us.

Best regards,
ANZ


-----Original Message-----
From: General EnquiryRxxx [mailto:xxxxxxxxxxx@gmail.com]
Sent: Tuesday, 13 October 2015 3:24 PM
To: Laos, Customer Care
Subject: General Enquiry - Laos

Query: Hello,

I would like to know if a Lao work permit or business visa is required legally to open a fixed term deposit account in Laos? Can a foreigner who does not reside in Laos open such an account?

Thank you,

So not even they really know what the deal is. What they do know is they demand a work or stay permit. Stay permits are for spouses that reside in Laos and do not work. There maybe other instances of a stay permit but it usually means that. I am going to guess they have those guidelines in their internal policy because the government told them to. Why else would they care?

Now say you were able to open a fixed term with no work permit at some minor bank. Would you feel secure doing so?

Cute that they don't know the 'regal" side. I tried to mail BCEL but their security capcha didn't let me through even if I typed it right. Their website has always sort of sucked.

Edited October 13, 2015 by anotheruser

[spambot]

Thanks anotheruser

Your response to posts was possibly one of the best I have seen on this forum.

I was especially thankful since - After spending many hours trying to figure out how to read between the lines, but all I found was straight the lines - about the Investment Promotion Law that requires for a minimum total capital requirement for a limited company investing in ‘general business operations’ -1 billion kip ($125,000 USD) and how and why a Representative Office is preferable to establishing a Limited Company.

It looked from my research that if I was to open a limited company this required a mountain of documentation and even more legal services to support the application with the Articles of Association, Shareholders’ or Joint Venture Agreement, Lease Agreement, Bank Statements showing the financial viability of the investor, Personal Details of the investor(s) such as resumes and together with a Business Plan outlining the intended business operations.

It never occured to me that I was in fact looking in the wrong place!

My take-away's from your posts:

1. Laos - You can stay as long as you want with a tourist visa - That did surprise me a lot and I did (assume) that getting a tourist visa back2back applications were going to have strings attached and this would not be easy to do this - But it seem that you do not have to jump through the same hoops as required by Thailand and be creative and knowledgeable about the changing rules at any given time.
2. Do not open a business or apply to open a business - Rather get positioned as an employee and get a work permit and business visa this way.
3. You can actually get a business visa and a work permit moderately easily - This was a big surprise and I had a assumed that i). There were restricted types of business classes that would be allowed to sponsor your work permit ii). Even if there was not strict categories simply asking a Lao business licence owner would cause great fear of being found out not adhering to some rule or another and felt in danger of some punitive result.
4. But it seems there is neither a category business restrictions nor will most local business refuse to cooperate - You just have to position yourself correctly and rent / transact funds to an existing Lao business owner so they have a vested interest in supporting your application - Simply put - This was a breakthrough in understanding for me.
5. ​And as you say the actual basis for getting a work permit and a business Visa - You must get involved with a Lao national.

The best route seems to be take the Lao tourist visa and at the end of the visa stay in Vientiane go to the Lao-Thai Friendship Bridge. Complete the immigration procedures on the Lao side; the take the shuttle bus to the Thai immigration point and enter Thailand. Then come straight back into Laos simply cross the road to the Thai immigration to exit the country. Get the shuttle bus and then arrive at the Lao side, where you can apply for a new Laos Visa on Arrival. The Lao application for Visa is usually always provided and rarely refused (unlike Thailand it does not have restrictions on multiple back2back applications).

Obvious downside here is the monthly stickers for the visa in your passport pages being eaten up and also its not clear how Thai immigration would respond to issuing an 'exempt visa' on multiple occasions (since the new restriction for land based crossing points came into force a few weeks ago).

However outside this - The point is to use the tourist visa time to understand what is available for building relationships in order to fulfill the future objectives to apply for a business visa and for a work permit that then gives you 12 months and no further visa sticker spam in your passport .

​Thanks again AnotherUser - Huge input.

Edited October 13, 2015 by spambot

[anotheruser]

1. This is absolutely correct. Laos still wants people coming to spend money.

2. No need to open a business if you aren't planning on opening a business.

3. Correct. I can almost guarantee you this will be in a tourism business of some sort. Would be sort of odd living in an office after all.

4. Just make somebody an offer. It won't take long to find somebody that doesn't mind having you around.

5. Help the guy out a little bit in exchange for helping you. There are people here on business visas who do nothing more than sit around, drink beer, and play the guitar. If you can do anything helpful beyond this the bar isn't set very high. Basically just become friends with a family and be a Farang at some resort somewhere. You will probably get your room for free if you do this. If not no big deal you will work something out dirt cheap. You should pay your own food and drink if you are actually just hanging out.

The way to do it without a Lao national would be to find a foreigner on an investor visa who has a quota of work permits to offer. This would be very rare and most wouldn't do this as they have to keep a proportion of staff local. I think the business I am with needs to mantain 80% local workers. So yeah you will 90% certainty be working with a Lao.

Yeah for my first 5 years I crossed at Chong Mek. Many times I just got stamped on the Thai side and didn't even stay 5 minutes. If you aren't doing business in Laos or need a work permit to make accounts don't even bother pretending to be attached to anything. The Thai side will see you are residing in Laos and leave you alone. They only really care about back to back stamps where you use most of your time in Thailand.

They know what the game is but they know you are playing the game in Laos and not Thailand. Even if they did refuse you for some reason at least you would just turn around at the border and figure something else out. You do not risk being stranded as you are living in Laos anyway. I have never heard of any one of my numerous friends that visa hop every month over here having any kind of problem.

You can fly under the radar forever. In my case my businesses got too big (by Don Det standards) and they finally came and asked me to get a business visa. After 5 years I thought that was fair enough and set up a company for my business partner. It took a little while to do and lots of back and forth getting papers. In the end I think I paid around $1,200 for my friend to get his application "fast tracked".

Certainly spend time on your tourist visa to figure out how the game is played.

I a happy that you can see just how easy it is to stay here now. As I said a legit business like what Simon is talking about is more complicated but just to live here is dead simple. To work for a Lao company also very easy. To set up a company 100% in your own name is where you need a ton of papers.

[laobali]

The cost of this 'friendly' business visa used to be $500 for a year, of which I think $350 went to the ministry, $100 or so to the middleman and the rest to the 'sponsor'. It rose to about $600 a few years ago, and then became more difficult. You do rely on the sponsor continuing to be willing to offer this on an ongoing annual basis.

[spambot]

Thanks anotheruser - You completely nailed it for me the way you described and positioned the method, context and opportunity.

Its just what I needed to be able to take action - I have to be in Europe in 6 weeks time and wanted to sort this bit out before I left - This saved me a ton of time getting this box ticked from the info you supplied. I did have a flight booked going to Lao to just simply walk the streets and talk with people on the ground to acquire the stuff you have provided - I really do not think I need to do this now.

Thanks for taking the time to be so thorough, detailed and illuminating - I am more than grateful.

[anotheruser]

The cost of this 'friendly' business visa used to be $500 for a year, of which I think $350 went to the ministry, $100 or so to the middleman and the rest to the 'sponsor'. It rose to about $600 a few years ago, and then became more difficult. You do rely on the sponsor continuing to be willing to offer this on an ongoing annual basis.

The difference is so small it really doesn't matter. I have argued the prices for this with somebody in the pinned visa section ages ago. Currently it is $600 a month at least in Champasak province. I don't care what anybody else says on this matter. The guy who built my pool has a Lao wife and lives in VTE he said it is more like $500 up there now. Remember this is the work permit and visa. Add $100 for special handling.

Edited October 13, 2015 by anotheruser

[elliss]

AMERICANS NEED NOT APPLY.

Why ?

Because , people Laos , not like Americans .

I was in Cambodia a few years ago , i made the mistake of wearing a baseball cap ,

they gave me hasle big time , until I showed them my UK ID .

When I visit Laos or Cambodia , I wear a Trilby , and,, I am treated with due respect.

Bttopic , good info on investment in Laos ,thx.

in UK , you are lucky to get 2 percent interest , a sure sign that UK economy growth is zero. .

[anotheruser]

Dear xxx,

Not a problem. If you don’t currently have a registered company in Laos, then under the law you shouldn’t technically (under the Enterprise Law) be conducting any business in Laos. Registering a company will result in your company being issued a valid Enterprise Registration Certificate, which will contain your investment approval, enterprise number and tax identification number. It may be that the Provincial authorities haven’t been strictly implementing or promoting laws around company establishment and that they are now trying to get up to speed.

Please let us know how you go with the Governor and if you require any assistance establishing a company. We would also recommend talking to the Provincial Division of Information, Culture and Tourism to determine if they are implementing regulations on hotel operation in full compliance with the law.

Dear xxx,

I note we have drafted a Letter of Engagement for you setting out our anticipated scope of works, and associated fees, however we have been waiting for confirmation from the Ministry of Information, Culture and Tourism in relation to ownership requirements of guesthouses and hotels. The regulations we have (MOIC Notification No. 1591 dated 26 August 2013) states that a foreign company/individual can own up to 60% of the capital investment in a hotel business 3-5 stars, however hotels below 3 stars are reserved for Lao nationals only. We are trying to investigate if this is being implemented as there are obviously quite a few foreign hotels and guesthouses being operated by foreigners around Laos.

The licence attached to your email is a “Guesthouse Operating Licence” issued by the Division of Information, Culture and Tourism of Champasak Province to Mr. Kxxxxxm xxxxh. This licence is your industry specific operating licence and needs to be renewed annually. All hotels and guesthouses are required to hold such operating licence.

It is hence likely that the Governor of Champassak was asking you to formally register a company in Laos, which requires applying for an Enterprise Registration Certificate (this contains your investment, business and tax approval). Technically under the law, the ownership of small guesthouses of 1-3 stars is reserved for Lao citizens i.e. 100% Lao-owned companies. Though I note that in practice each of the provinces in Laos tend to implement their own rules in relation to hotel and guesthouse ownership.

The following is a general list of things you needs to provide to the Lao Government in order to register a limited liability company in Laos (some are required in English and Lao language):

a. Application for an Enterprise Registration Certificate (this is a standard form we can prepare for you);

b. Incorporation certificate and brochure of the parent company or shareholder (if any);

c. Bank statement or financial statement (of the parent company or shareholder if any);

d. Resolution of establishment of the Lao company (we can prepare this for you);

e. Articles of Association of the intended company (there is a specific Lao Government format for this, we can prepare this for you);

f. Business Plan regarding intended investment and business in the Lao PDR (we can assist you to draft such plan and translate into Lao language);

g. Resolution to appoint a managing director (we can prepare this for you), CV and 12 passport photos of the managing director;

h. Power of attorney (to appoint a representative to file the application and register the company in the Lao PDR, we can prepare this for you); and

i. Lease agreement for office space in Laos. This is required before the Enterprise Registration Certificate can be submitted (we can prepare this for you in English and Lao language).

If the company will be established with more than one shareholder, a Shareholders’ Agreement/Joint Venture Agreement will also be required (in English and Lao language). This would, for example, be an agreement between yourself and your partner for the business, outlining the rights of each shareholder regarding transfer of shares in the future, rules for shareholder meetings, procedures for dissolution of the business etc.

The usual time frame for registration of a company is approximately three (3) months from the date of lodging the paperwork with the government. A minimum capital investment of US$125,000.00 is required to establish a general business company, which includes in-kind and projected capital. This capital needs to be imported into the Lao PDR within 90 days following the date of issue of the Enterprise Registration Certificate. Industry specific licences may be required depending on the exact scope of business activities you plan to undertake.

You should be aware that Lao Law makes specific restrictions on the ratio of foreign to local employees which are able to be employed by a company. The law requires that no more than 25% of skilled or 15% unskilled foreign workers of the total Lao workforce can be engaged which means that the more foreign workers you require, the greater number of Lao staff you must employ. These numbers must be applied for upfront in the initial application.

This is a series of letters from an attorney that I have chopped parts out of to protect my privacy. I am not saying any of it is guaranteed or not but this is what you will get when dealing with business in Laos if you want to be a legitimate foreign investor. I hope this clears up any confusion anybody might have. You can see at times even a law firm doesn't know the latest rules or what is being enforced province to province.

Article i is somewhat amusing. I guess somebody has to get a couple hundred dollars for an office space. Very easily done but entertaining nonetheless.

Edited October 13, 2015 by anotheruser

[anotheruser]

AMERICANS NEED NOT APPLY.

Why ?

Because , people Laos , not like Americans .

I was in Cambodia a few years ago , i made the mistake of wearing a baseball cap ,

they gave me hasle big time , until I showed them my UK ID .

When I visit Laos or Cambodia , I wear a Trilby , and,, I am treated with due respect.

Bttopic , good info on investment in Laos ,thx.

in UK , you are lucky to get 2 percent interest , a sure sign that UK economy growth is zero. .

God speed my friend.

[how241]

I hope someone can clarify this...In Laos, they mention a 14% tax rate or a 6% resident tax rate...Using the 6% resident tax rate and a 11% interest account , then you would be getting MORE then 5% ??? In Thailand, they have a 15% tax rate but the tax is ONLY on the interest earned and only slightly reducing your net total return....for example: a 2% account , net yields 1.7% after paying the 15% tax (yes, that tax paid is refundable to farang but ignore that for this discussion)..Is this the same in Laos ???

Edited October 15, 2015 by how241

[laobali]

I think those 14/6% rates mentioned applied in Cambodia. Although it may have changed since, while I was living in Laos, the personal tax rate was 10% with a minimum salary of $500 per month; that increased to $800. For the several years I held a Business Visa (the 'friendly package'), that tax was never asked for or collected.

[laobali]

AMERICANS NEED NOT APPLY.

Why ?

Because , people Laos , not like Americans .

I was in Cambodia a few years ago , i made the mistake of wearing a baseball cap ,

they gave me hasle big time , until I showed them my UK ID .

When I visit Laos or Cambodia , I wear a Trilby , and,, I am treated with due respect.

Bttopic , good info on investment in Laos ,thx.

in UK , you are lucky to get 2 percent interest , a sure sign that UK economy growth is zero. .

I don't know (or want to) the circumstances of your baseball cap experience, but it's nonsense to think that the Lao do not like Americans; many families have relatives living there anyway. The Vietnam war is long forgotten and Americans are treated no differently from other foreigners. Admittedly, (like Thailand) the urban locals seem to have reservations about the black/dark skins of Africans or to a lesser degree, South Asians; Dark skins denote 'low class' (like rice farmers), but it's hardly an issue. And nearly everyone wears baseball caps!

[greginlao]

I have been living and working in Laos now for over 1 year and am using the term deposits in lao banks for both my own investment and allowing some mates in Australia and Thailand to invest through my account.  We are currently getting 8.5% fixed interest for USD investments in one of the largest international banks in LAO.  I also have some kip invested in a smaller bank and getting 16%.  The kip and baht seem to be pretty close so most of my mates in Thailand invest in kip and then change currency before sending to Thailand.

 

I have had the money invested for over 1 year and have had no problems with the dividend or withdrawing of the capital.  Compared to 2% that is offered in Australia it is a much better return.  I think the rates in thai are pretty crap as well so its not a bad option.