Encouragement of Telecommunication Activities through Amended Law on Telecommunications
On 23 March 2022, the newly amended Law on Telecommunications No.05/NA dated 16 November 2021 ("Amended Law"). was published on the Electronic Official Gazette ("e-Gazette"). It will come into effect from 7 April 2022, 15 days after its publication on the e-Gazette. The Amended Law aims to support telecommunications service operations in Lao PDR by encouraging domestic and foreign individuals, legal entities and organisations to invest in the construction, development and extension of telecommunication networks. The key features of the Amended Law include the following:
Types of telecommunication service operations
There are two types of telecommunication service operations: (i) telecommunication services, and (ii) provision of telecommunication facilities.
a. Telecommunication services
Telecommunication services is a form of business operation in which one or more telecommunication companies have their own networks in carrying out the business operation. It consists of the following:
- Mobile communication;
- Landline telephone services;
- Internet services;
- Satellite communication;
- Communication Survey and location search;
- Intelligent Transport System (ITS);
- Internet service using a high-altitude platform station (HAPS);
- Mobile phone service using high altitude platform station as imt base stations (HIBS);
- Auxiliary services;
- Application services;
- Internet of Things (IoT); and
- Other telecommunication services.
b. Provision of telecommunication facilities
The provision of telecommunication facilities is a form of business operation which involves one or more activities related to the telecommunications business. It consists of the following activities:
- Rental of telecommunication infrastructure;
- Assembling, manufacturing and/or distributing telecommunication equipment;
- Installation-repair of telecommunication equipment;
- Importation and exportation of telecommunication equipment;
- Telecommunication consulting;
- Data Center Services; and
- Provisions of other telecommunication facilities.
Term of investment and validity of licence
The term of investment in telecommunications business is not more than 15 years and can be renewed. The telecommunication operating license is valid for one year. This can also be renewed.
The Technology and Communications Sectors of MTC will assess the business application documents from applicants for a telecommunication operating licence. Once satisfied that the necessary documents have been submitted, it will issue such licence within 30 days from receipt of the documents.
The Amended Law also stipulates the conditions for conducting telecommunications business.
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Instruction on the Procedures for Applying for a Lao PDR Entry-Exit Permit during COVID-19 Pandemic
On 17 March 2022, the Ministry of Foreign Affairs ("MOFA") issued Instruction No. 2143/MOFA.TFC on the Procedure for Applying for a Lao PDR Entry-Exit Permit during COVID-19 Pandemic ("Instruction"). The Instruction replaces Instruction No.4881/MOFA.TFC dated 31 December 2021. Individuals wishing to enter into or depart from Lao PDR must comply with the procedures and measures set out in the Instruction. Among other things, individuals wishing to travel to Lao PDR must have with them certificates of COVID-19 vaccination and tested negative in an RT-PCR test taken within 72 hours prior to their entry into Lao PDR. They must also register for a Lao Green Pass with a QR code via this link: laogreenpass.gov.la. Specific requirements apply to various types of travellers such as diplomats and representatives of international organisations, investors and technical officers involved in businesses in Lao PDR, returning Lao citizens, and returning spouses of Lao citizens.
For more information, click here to read our Legal Update.
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Notice on Adding an Account Number Associated with Providing Electronic Money Services
Pursuant to Instruction No.666/PSD dated 24 August 2021 on Providing Electronic Money Services ("Instruction"), the Payment Systems Department of Bank of Lao PDR ("BOL") issued on 8 February 2022 Notice No.133/PSD on Adding an Account Number Associated with Providing Electronic Money Services ("Notice"). The Notice, which replaces Notice No.537/PSD dated 16 July 2020, applies to the commercial banks that allow customers to open guarantee accounts for electronic money services ("Trust Account"), and provide electronic money services from such deposit accounts. The Notice requires these commercial banks to add a designated account number associated with the provision of electronic money services to the account number of specific types of accounts. Affected commercial banks were given until 15 February 2022 to comply with the Notice.
The account numbers that must be added are set out as follows:
a. 2131160 – for Trust Accounts
- Used for non-bank electronic money providers required to open a Trust Account with a commercial bank
- Used as savings accounts, where deposits and withdrawals can be made at any time and the interest rate is set out by the bank
b. 2201800 – for Advance Receipts Accounts from customers who use electronic money services
- Used for electronic money providers that are commercial banks
- Accounts to track and store money received in advance from users of electronic services; no interest is earned from these accounts
c. 2137161 – for overdue interest on deposits guaranteeing electronic money services
- Used as an account to track accrued interest arising from a deposit account to guarantee electronic money services
d. 4102160 – for interest expense on deposits that guarantee electronic money services
- Used as an account to track interest expenses incurred from a deposit account to provide electronic money services (2131160).
Upon completion of the addition of the designated account numbers as specified in the Notice, banks were to report their compliance to BOL in writing within five working days. Non-bank financial service providers must open Trust Accounts pursuant to Notice No.134/PSD on Opening a Guarantee Account for Electronic Money Services and report their compliance to BOL within five working days. (Please refer to the write-up below titled "Notice on Opening a Trust Account" for more information on this requirement.)
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Notice on Opening a Trust Account
Pursuant to Instruction No.666/PSD dated 24 August 2021 on Providing Electronic Money Services ("Instruction"), the Payment Systems Department of Bank of Lao PDR ("BOL") issued on 8 February 2022 Notice No.134/PSD on Opening a Guarantee Account for Electronic Money Services ("Trust Account") ("Notice"). The Notice replaces Notice No.537/PSD dated 16 July 2020. The Notice requires non-commercial bank electronic money providers to open a Trust Account with a commercial bank for the purpose of depositing a sum of money which will serve as a collateral for electronic money issuance as specified in the Instruction.
The Notice sets out the following guidelines on opening a trust account:
- A non-commercial bank electronic money provider must open a Trust Account (account number 2131160) ("new Trust Account") with a commercial bank pursuant to Notice No.133/PSD on Adding an Account Number Associated with Providing Electronic Money Services, for the above-stated purpose and the Instruction.
- The interest earned from the new Trust Account must not be added to the Trust Account. The non-commercial bank electronic money provider holding the savings account which is newly opened shall certify such interest.
- A non-commercial bank electronic money service provider which opened a Current Account-type Trust Account before the issuance of the Notice must close such Trust Account by transferring the money therein to the new Trust Account. This must be reported to BOL in writing within February 2022.
- A non-bank electronic money service provider which opened a Fixed/Term Deposit Account-type Trust Account before the issuance of the Notice may continue to deposit into such Trust Account until the maturity of the deposit. Thereafter, it needs to close the Trust Account by transferring the money therein to the new Trust Account. This must be reported to BOL in writing within five working days after closing the Trust Account.
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Signing Ceremony for Digital Property Business Pilot Agreement
On 27 January 2022, the Ministry of Technology and Communications ("MTC") and Lao VIP Investment Development SOLE Co., Ltd. ("Lao VIP") signed the Digital Property Business Pilot Agreement. The signing of this agreement is in line with the Prime Minister's guidance on digital asset exploration in Lao PDR, as well as the implementation of the vision, strategy and national digital economy development plan recently approved by the National Assembly.
Mr. Keonakhone Xaysulian, Director General of the Department of Digital Technology of MTC, said: "Currently, the Fourth Industrial Revolution is a global trend spreading around the world, such as Blockchain or data binding group is a technology that is emerging in the globalization and investment in the global economy 4.0. With the unique features of Blockchain enabling electronic value exchange through computer networks, digital asset transactions have resulted in the creation of cryptocurrencies and digital tokens to be traded or exchanged. For Lao PDR, there is potential in terms of electricity, which is currently generated in our country, but there is still some electricity that cannot be exported. Therefore, it can be seen that the efficient use of electricity generated to generate revenue for the country can also create a stable revenue base, a source of monetary revenue that can increase the government's treasury. In order to conduct such business, our government, as well as the relevant ministries and departments, have issued regulations governing, encouraging, tightening and enforcing the law in order to facilitate domestic entrepreneurs".
During the signing ceremony, Ms. Viphaphone Konsin, President of Lao VIP noted that "the signing of this agreement will be beneficial in encouraging the business sector to be strong and create jobs for the Lao people as well as a way to increase revenue to the state budget and export electricity in place".
At the ceremony, Lao VIP fulfilled its obligations to pay US$500,000 to the Lao Government for the issuance of the Patent of Digital Property Exploitation License. In addition, Lao VIP also donated LAK500,000,000 to MTC to support the management of digital asset management activities in Lao PDR.
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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.