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FDI in Figures

According to UNCTAD's World Investment Report 2022, FDI inflows into Laos increased to USD 1,072 million in 2021 from USD 968 million a year earlier, but they were still below the three-year average recorded before the pandemic (USD 1,267 million in 2017-19). The FDI stock stood at USD 12.2 billion in 2021, representing around 65.8% of the country’s GDP. Projects in the areas of hydraulic energy production and the exploitation of mining resources represent around 80% of the foreign investment accumulated over the last ten years (according to Lao government statistics, mining and hydropower accounted for 59.1% of FDIs between 1989-2021). Transportation infrastructure, tourism and large agroforestry projects are also attracting new investors. Furthermore, the government is aiming at integrating Laos into regional supply chains by developing a light manufacturing industry to make the country a low-cost export base. According to data from the national Investment Promotion Department, the main investing countries in Laos are large neighbours such as China, Thailand and Vietnam, but also South Korea and France. In April 2023, Japan's Mitsubishi Corp declared that it and other shareholders raised USD 692 million in financing for the Monsoon wind power project in Laos, which is Southeast Asia’s biggest wind energy project, with an expected capacity of 600 megawatts from 2025.

The Government has been pursuing a policy of FDI promotion, with the investment law being amended at the end of 2016. Foreigners may invest in any sector or business unless it would cause a threat to national security, health or national traditions, or if it may impact negatively the environment. Several incentives are available to foreign investors (including tax holidays, exemptions or reductions on import and export duties, and land leases at preferential rates), as well as “special” and “specific” economic zones, such as the Vientiane Industry and Trade Area which was successful in attracting major manufacturers from Europe, North America, and Japan. However, barriers to FDI remain, especially the lengthy procedure to obtain the required investment authorisations, the overlapping of jurisdictions between the different ministries, inequalities in terms of tax benefits, high tariff costs, low-skilled labour and poor-quality infrastructure (although they are improving). Furthermore, corruption is widespread (126th position out of 180 in the 2022 Corruption Perception Index). In 2022, the government approved the 9th Five-Year National Socio-Economic Development Plan (2021-2025), which aims at graduating Laos from Least Developed Country (LDC) status in 2026 to become an upper-middle income country. Laos ranks 147th out of 176 in the 2023 Index of Economic Freedom.


Country Comparison For the Protection of Investors

  Laos East Asia & Pacific Estados Unidos Alemanha
Index of Transaction Transparency* 6.0 5.9 7.0 5.0
Index of Manager’s Responsibility** 1.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 3.0 6.7 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 9681,072528
FDI Stock (million USD) 11,135.912,207.812,736.0
Number of Greenfield Investments*
Value of Greenfield Investments (million USD) 1031310

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.


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Tax Rates

Value Added Tax (VAT)
10% (standard rate).
Exports are zero-rated (except those of natural resources that are not finished goods).
Exempt items include unprocessed agricultural products, seeds, fertilisers, international transportation services, educational goods and services, equipment for agricultural purposes, certain medical goods and services, certain bank services, and financial institution services.
Company Tax
Withholding Taxes
Dividends: 10%, Interests: 0 (earned on deposits, government bonds, and debentures is exempt)/10%, Royalties: 5%.
Social Security Contributions Paid By Employers
6% (Social Security Scheme)
Other Domestic Resources
Tax Department (Ministry of Finance)
Overview of Laos' tax measures in response to Covid-19
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Individual Taxes

Income tax (monthly income) Progressive rate until 25%
From LAK 0 to LAK 1,300,000 0%
From LAK 1,300,000 to LAK 5,000,000 5%
From LAK 5,000,000 to LAK 15,000,000 10%
From LAK 15,000,000 to LAK 25,000,000 15%
From LAK 25,000,000 to LAK 65,000,000 20%
Above LAK 65,000,000 25%
Specific rates
  • 1% of gross revenue for manufacturing on agriculture, industry, and other production industries
  • 2% of gross revenue for commerce
  • 3% of gross revenue for services

Country Comparison For Corporate Taxation

  Laos East Asia & Pacific Estados Unidos Alemanha
Number of Payments of Taxes per Year 35.0 23.4 10.6 9.0
Time Taken For Administrative Formalities (Hours) 362.0 195.1 175.0 218.0
Total Share of Taxes (% of Profit) 24.1 33.8 36.6 48.8

Source: Doing Business - Latest available data.

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Investment Opportunities

Tenders, Projects and Public Procurement
Tenders Info, Tenders Worldwide
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Laos.
Useful Resources
Laotian Investment Promotion Department
Laos Trade Portal
Asia Trade Hub

Business Setup Procedures

Setting Up a Company Laos East Asia & Pacific
Procedures (number) 9.00 7.25
Time (days) 173.00 29.73

Source: Doing Business.


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Latest Update: November 2023