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The Lao National Assembly ("NA") passed the Decree on Biofuels (No. 410/GO, 10 November 2016) ("Decree") last year, opening the door for biofuels investment in the Lao PDR. The Decree sets out the procedures for the production, storage and distribution of biofuels, as well as the procedures for the importation of input and eventual export of biofuels.
The Decree stipulates that biofuel production is a concessionary business, requiring the investors to establish a project company in the country, and enter into a concession agreement for biofuel production with the Lao Government. It sets out detailed requirements and timelines for project development, which will require careful attention to ensure regulatory compliance. The Decree also mandates the investors to must submit a detailed "Biofuel Development Plan" consisting of a strategic plan, with short, medium and long-term plans. The investment itself must be "environmentally sustainable" and "economically viable".
The Decree pre-approves the use of oil palm, cassava, sugarcane and corn for the production of biofuels.
The current Social Security Law (No. 34/NA, 26 July 2013) ("Social Security Law") and Implementing Guidelines (No. 2751/MLSW, 24 July 2015) ("Implementing Guidelines"), mandate local as well as foreign employees to contribute to the Social Security Fund ("Fund"). Under the Social Security Law and Implementing Guidelines, an employer must contribute 6% of the employee's salary to the Fund and an additional 5.5% (of the employee's salary) must be withheld and contributed to the Fund.
The maximum base salary per month had increased from LAK 2,000,000 to LAK 4,500,000 with effect from 1 January 2017 pursuant to the Minister's Agreement on the minimum and maximum employee earning cap to calculate contributions into the Fund (No. 1740/MLSW, 25 April 2016 ("Minister's Agreement"). Therefore, the maximum contribution payable by the employer for employees earning LAK 4,500,000 or more is LAK 270,000 per month per employee.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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