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Rajah & Tann Regional Round-Up

your snapshot of key legal developments in Asia

Issue 2 - Apr/May/Jun 2022



LAO PDR

Decision on the Exchange Services of Commercial Banks and Representative Exchange Shops

On 14 June 2022, the Bank of Lao PDR ("BOL") issued the Decision on the Exchange Services of Commercial Banks and Representative Exchange Shops No.449/BOL ("Decision"). The Decision was officially announced to the public on 20 June 2022 by the Monetary Policy Department of BOL, and replaces the Decision on the Trading of Currency with the Public of the Commercial Bank and Currency Exchange Shops No.109/BOL dated 1 February 2019.


The Decision states that Commercial Banks and Representative Exchange Shops can sell foreign currency to individuals capped at LAK15 million per person per day, and the customer must clearly state the purpose of such foreign exchange. He must present a copy of his ID card or passport as proof of his identity when buying foreign currency. The Decision also states that representative exchange shops can only sell foreign currencies to individuals, not legal entities. The maximum amount that can be sold per day must not exceed the registered capital of the representative exchange shop.


Based on the Decision, only commercial banks can sell foreign currencies to legal entities and organisations (both domestic and foreign) for purposes of making foreign payments. In such instances, they must prioritise entities and organisations making payments for priority products such as fuel, medicine, essential consumer goods, and targets as defined in Article 10 of the Law on Foreign Exchange Management: 


  1. Payment for imported goods;
  2. Payment for services related to the import and export of goods directly to foreign countries such as transit, insurance, and other services;
  3. Repayment of loans and trade credits with foreign countries;
  4. Provision of foreign aid;
  5. Transfer of profits, money, costs, interest, other service fees of foreign investors and wages of foreigners back to the country of origin or a third country;
  6. Transfer of money for investment abroad;
  7. Payment for study, travel and visiting overseas, and receiving of medical treatment abroad; and
  8. Implementation of other targets in accordance with the regulations set by BOL.


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Notice on Modifying the Country's Minimum Monthly Wage

On 13 June 2022, Laos' Prime Minister’s Office ("PMO") issued Notice No. 829/PMO modifying the country's minimum monthly wage ("Notice"). This is pursuant to the instruction of the Prime Minister of Lao PDR to the Minister of Labour and Social Welfare and the President of the Lao Federation of Trade Unions (LFTU) in relation to the proposal of the Ministry of Labour and Social Welfare.


The increase in the minimum monthly wage will take place in two phases: 


  1. First phase – the minimum wage will be increased to LAK1.2 million with effect from 1 August 2022
  2. Implementation of other targets regulations set by BOL.

The Notice mandates government authorities, employers and other stakeholders, including trade unions, to work collectively to ensure that the prescribed minimum wage structure is implemented effectively. PMO has notified all employers to ensure strict compliance with the employee welfare requirements set out in the Labour Law No. 43/NA dated 24 December 2013 and the Law on Social Security No. 54/NA dated 27 June 2018.


By way of background, the national minimum wage was first raised in 2018 pursuant to Notification No. 560/PMO from LAK900,000 to LAK1.1 million. The increase, which took effect on 1 May 2018, was implemented at a time when the Lao kip was facing sharp depreciation against the US dollar amidst heightened inflation.


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Decree on Technology Account Comes into Operation on 3 June 2022

On 19 May 2022, the Decree on Technology Account No.540/GOV dated 16 August 2021 ("Decree") was published on the Electronic Official Gazette ("e-Gazette"). The Decree took effect 15 days from the date of its publication in the e-Gazette, namely on 3 June 2022. The Decree has been issued to implement the Law on Technology Transfer which reflects the government policy on technology transfer. The law aims to promote technology transfer that is accurate, clear and appropriate for use in Lao PDR. 


"Technology Account" refers to the type of technology, the transfer of which may be promoted, regulated or prohibited. 


  1. Technology account promoted transfer – This refers to the transfer of clean technologies, high technologies, or appropriate technologies that are advanced, modern, consistent and responsive to the conditions of national socio-economic development. These include: (i) Nanotechnology, and technology for the production of Micro-Electro-Mechanical Systems (MEMS), nanoelectromechanical systems (NEMS), and devices that use MEMS or NEMS; (ii) technologies for the production of LCD (Liquid Crystal Display), LED (Light-emitting diode), and plasma; (iii) technologies for the production of sensor and transducer devices; (iv) wireless communication technology; (v) technologies for the production of Robots; and (vi) space technology.

  2. Technology account regulated transfer – This refers to the transfer of technologies that may have a negative impact on or cause damage to the socio-economic, environmental and national interests of the country, and is therefore regulated. Examples of this type of technology include: (i) technologies for the production of incandescent bulbs, vacuum electronic components, half-layer and double-layer electronic circuit boards, and explosives used in industries; and (ii) technologies for printing banknotes and valuable documents.

  3. Technology account prohibited transfer – This refers to the transfer of technologies that have adverse effects on the country or are unable to meet the needs of the country regarding socio-economic development. This type of technology includes: (i) technologies for the production of drugs, products containing explosive chemicals, and paints combined with mercury; (ii) technologies for the use of mercury in the mining process; and (iii) human genetic technology to create human embryos.


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Development of Tax Payment System through M-Money Mobile Phone System

On 14 March 2022, the Ministry of Finance ("MOF") held a meeting featuring a presentation on the development of a tax payment system through the M-Money mobile phone system ("M-Money").


The Department of Tax and MOF, in collaboration with the Department of Financial Information Technology, the Department of Customs and the National Treasury, are working with Lao Mobile Money Sole Company Limited ("LMM") (as the developer company) to monitor the development of M-Money so that M-Money is able to connect to MOF's Easy Tax, Tax Revenue Information System ("TaxRIS") and Real Time Information System (RTIS). Currently, LMM has completed the development of the connection to Easy Tax, TaxRIS, and the reports and display dashboard according to the requirements of the Department of Tax. 


The development of a system for the payment of taxes, fees, services, and the disbursement of the state budget through M-Money is another step in digitising the payment services in the government sector. This will strengthen the country's digital economy, reducing the use of cash in the collection of tax revenues and expenditures of MOF. This will also enhance the transparency of the state budget revenue-expenditure management system, and ensure that the collection of revenue into the state budget is in line with the country's fiscal plan and the disbursement of state budgets is carried out in a  timely and auditable manner.


The project is spearheaded by the Minister of Finance, Mr. Bounchoum Ubonpaseuth, and the General Director of Lao Telecommunication Public Company Limited, Mr. Suphon Chanthavixay, along with LMM and representatives from the Department of Financial Information Technology, the Department of Customs, the Department of Tax, and the National Treasury.


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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.

 

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Desmond Wee
Director
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