A Singaporean-Lao joint venture has signed a memorandum of understanding with the Lao government for the development of a clean thermal fired power plant in Sekong.
On 27 May 2020, the Singapore-based Evolution Power Investment Corporation ("EPIC") and Khounmixay Bridge and Road Construction and Repair Co., Ltd ("KMX") signed a Memorandum of Understanding with the Government of Lao PDR to conduct a feasibility study on the development of a clean thermal fired power plant in Sekong Province, Lao PDR ("MOU"). The MOU was signed by Vice Minister of Planning and Investment Ms Khamchanh Vongseneboun, on behalf of the Government of Lao PDR, and KMX Vice President Mr Khamthanh Phommathat on behalf of the EPIC-KMX joint venture company.
Under the MOU, EPIC and KMX will be permitted to conduct a feasibility study on the economic, social and environmental viability of a 1000MW clean thermal technology power plant project in Dakcheung District (Sekong). The estimated USD $1.7 billion power project, expected to be commissioned by 2027, aims to produce reliable year-round electricity for export to neighbouring countries like Thailand, Vietnam and Cambodia. Domestic offtake (electricity used within Lao PDR) is also expected, and the project intends to use domestically-extracted fuel sources to generate power for export. This will add value to local natural resources and optimise foreign exchange.
As part of the project, EPIC and KMX will study some thermal power technology options such as conventional pulverized boilers and circulating-fluidized-bed boilers, all of which will operate within at least an ultra-supercritical steam parameter to determine how efficient the fuel source can be spent.
On 11 May 2020, the Civil Code No. 55/NA dated 6 December 2018 ("Civil Code") was published in the Lao Official Gazette and came into force on 26 May 2020. The Civil Code is a comprehensive piece of legislation comprising 630 articles. It replaces and repeals civil and commercial laws containing similar provisions, including the Law on Contract and Tort, the Law on Family, the Law on Property, the Law on Inheritance, the Law on Secured Transactions and other laws with respect to civil matters.
The Civil Code brings notable changes to civil and commercial relationships. A summary of the key changes is set out below.
- Possession period for acquisition of ownership by means of adverse possession – For immovable assets, the possession period for the acquisition of ownership by means of adverse possession has been reduced from 20 years to 10 years.
- Formality requirements for the formation of a contract – The formality requirements for the formation of a contract have been amended, with the presence of a village chief and signatures of witnesses now optional for a written contract.
- Rights affecting a third party – The Civil Code has introduced provisions relating to rights affecting a third party. These include the requirement for a third party to express its intention to receive a contractual benefit before it can receive such benefit. This also applies to transfer of debt. These provisions were absent from the Law on Contract and Tort, which was the general law governing contractual transactions and commercial relationships in Lao PDR before the adoption of the Civil Code. The previous law only included the rights of creditors to terminate fraudulent transactions of a debtor and the assignment of contractual benefit/s by means of a contract document or debt.
- Title to a property to be transferred only after registration of sale – For general sale of an asset capable of registration, the Civil Code now expressly provides that title to a property will be transferred only after the registration of such transaction, regardless of whether there is actual transfer of the property or delivery of payment.
- Hire-purchase agreement – The Civil Code has expanded the provisions governing hire-purchase agreements. It now provides that the seller has to notify the buyer of the failure to pay three consecutive installments, and must give the buyer 30 days within which to remedy the situation, before the seller can terminate the contract, claim for damages, and withhold all paid amounts. The Civil Code also imposes criminal liability on buyers who sell or otherwise transfer hire-purchase items to a third party during the term of a hire-purchase agreement.
- New categories of civil liabilities – The Civil Code now recognises the tort of defamation, and introduces new categories of liability caused by third parties to property. This includes: (a) compensation for damage to a tree or building to the owner thereof; (b) damage caused by a building contractor; (c) damage caused by products and/or dangerous items; and (d) damage caused to the environment.
- Rights of a secured creditor – The Civil Code provides that a secured creditor has rights over the secured assets and their proceeds until the debt is settled in full, notwithstanding whether there is a transfer of debt or change in identity of debtor.
- Priority given to creditors who fund debtors – Creditors who fund debtors in the purchase of assets have priority over other creditors for a period of 10 days from the acquisition of the assets by the debtors. The priority will no longer apply if the 10-day period lapses without the secured transaction being registered.
- New subcategories of secured transactions – The Civil Code has introduced subcategories of secured transactions including pledge of moveable assets, pledge of immovable assets, pledge of rights, mortgage of movable assets, mortgage of immovable assets, and pledge by an individual or juristic person.
- Formal requirement for a secured transaction agreement involving immovable assets – Under the Civil Code, it is no longer a formal requirement to have three witnesses and/or a village chief witnessing the execution of a secured transaction agreement in the mortgage or pledge of immovable assets. For a mortgage of an immovable asset, it should be noted that the agreement must be registered with the natural resource and environment sector and the finance sector.
In order for the Civil Code to be fully implemented, the Government may still need to issue supplementary instruments to clarify the principles set out in the law.
It was reported by the online publication Vientiane Times that the majority of families in the Luang Namtha province who have been affected by the Laos-China Railway Project ("Project") have received payment for their land to make way for construction of the Project.
Compensation began in 2018, and many landholders have expressed interest in the scheme so far. More than 131 billion kip has been paid to 218 families, out of a total of 321 families affected by the Project.
Namtha is still planning to compensate some landholders who are making way for the construction of the Project’s two stations, one in Boten and the other is Nateuy.
Construction of the Boten station is still ongoing on a 20-hectare site. This is the first station on the southbound 414-km line, which is capable of carrying about 5,000 passengers per day as well as freight.
The railway is scheduled to be completed by end of 2021, and will be the first rail route linking Laos to China’s network.
On 30 March 2020, the newly amended Law on Insurance ("Amended Law") was published in the Electronic Official Gazette. It has been in effect since 15 April 2020.
Following on from the 2018 regulations for insurance business operations, reporting requirements, and risk prevention measures, the Amended Law addresses insurance activity in Laos, insurers’ daily operations, and the termination and liquidation of insurance companies.
The key changes of the Amended Law relate to the following:
- Life Insurance;
- Compulsory Insurance;
- Indemnity Payments;
- Transfer of an Insurance Contract;
- Business Operations;
- Establishing and Maintaining an Insurance Business;
- Ministry of Finance’s Approval for Shareholding Changes and Mergers;
- Contingencies for Distressed Insurance Businesses;
- Financial and Accounting Requirements;
- Dissolution and Liquidation; and
- Regulatory Environment for Insurance in Laos.
Existing insurers are given three years to comply with the new requirements set out in the Amended Law. As for insurance and reinsurance companies that are not yet established in Laos, the application for and issuance of new insurance business licenses remain suspended under a 2016 notification.
