The government aims to regulate foreign currency earned from foreign investment. - VT
VIENTIANE: The Bank of the Lao PDR has issued a Decision on the regulation of foreign currency, which requires foreign investors to open specific bank accounts in Laos to process their financial transactions.
The Decision was issued after the government found that foreign investment inflows recorded in the banking system were much lower than the agreed value of investment capital.
The move by the central bank is part of the government’s efforts to ensure that more foreign currency enters the banking system and is used to address the shortfall in the overall balance of payments, believing that stabilising the value of the kip will help resolve the country’s financial woes.
The 9-page Decision signed by the Governor of the Bank of the Lao PDR, Dr Bounleua Sinxayvoravong, states that foreign investors must open bank accounts in Lao kip and foreign currencies at a commercial bank in Laos within 15 working days after receiving their business licence or having their investment proposal approved.
The Decision states that all financial transactions carried out by the investor must be done through the said bank accounts. This includes the transfer of investment capital to Laos, profit transfer, and repayment of the principal and interest of the approved company to foreign countries.
In addition, foreign investors wishing to pay for goods and services, pay debts, dividends and salary/wages must convert their foreign currency into kip through commercial banks and keep the money-changing documents for auditing purposes.
In addition, foreign investors are required to transfer all investment capital into Laos in the amount stipulated in their investment approval/business licence. If the investment capital transfer into Laos is in the form of equipment or goods, the relevant documents are needed.
Foreign investors are prohibited from carrying out financial transactions through bank accounts other than the ones specifically opened for this purpose at a commercial bank in Laos.
Foreign investors are also not allowed to change money through individuals/legal entities, except commercial banks.
President Thongloun Sisoulith recently signed a new presidential ordinance imposing a rise in excise tax on 18 luxury and non-essential goods listed in six categories, ranging from fossil-fuel-powered vehicles to alcoholic beverages and other drinks, tobacco, and gaming machines.
For instance, the excise tax levied on fuel-powered SUVs and vehicles with an engine size ranging from over 4,000cc to 5,000cc will increase from 92 to 200 percent. The excise tax on beer with an alcohol volume of more than 5 percent will rise to 70 percent from the previous rate of 60 percent.
These measures have been introduced to help the government reduce the amount of foreign currency spent on the import of luxury and non-essential goods.
In addition, the government is making a determined attempt to boost exports and ensure that more foreign currency earned from exports enters Laos through the banking system. - Vientiane Times/ANN
