Doing Business 2020 Lao PDR Economy Profile Lao PDR Page 1 Doing Business 2020 Lao PDR Economy Profile of Lao PDR Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Lao PDR About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Lao PDR Ease of Doing Business in DB RANK DB SCORE Region East Asia & Pacific Lao PDR Income Category Lower middle income Population 7,061,507 50.8 154 City Covered Vientiane Rankings on Doing Business topics - Lao PDR 80 78 88 99 144 157 161 168 181 179 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 62.7 68.3 58.0 64.9 60.0 20.0 54.2 78.1 42.0 0.0 Starting a Business (rank) 181 Getting Credit (rank) 80 Trading across Borders (rank) 78 Score of starting a business (0-100) 62.7 Score of getting credit (0-100) 60.0 Score of trading across borders (0-100) 78.1 Procedures (number) 9 Strength of legal rights index (0-12) 6 Time to export Time (days) 173 Depth of credit information index (0-8) 6 Documentary compliance (hours) 60 Cost (number) 4.6 Credit registry coverage (% of adults) 19.8 Border compliance (hours) 9 Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 0.0 Cost to export Documentary compliance (USD) 235 Dealing with Construction Permits (rank) 99 Protecting Minority Investors (rank) 179 Border compliance (USD) 140 Score of dealing with construction permits (0-100) 68.3 Score of protecting minority investors (0-100) 20.0 Time to export Procedures (number) 12 Extent of disclosure index (0-10) 6.0 Documentary compliance (hours) 60 Time (days) 92 Extent of director liability index (0-10) 1.0 Border compliance (hours) 11 Cost (% of warehouse value) 4.6 Ease of shareholder suits index (0-10) 3.0 Cost to export Building quality control index (0-15) 6.5 Extent of shareholder rights index (0-6) 0.0 Documentary compliance (USD) 115 Extent of ownership and control index (0-7) 0.0 Border compliance (USD) 224 Getting Electricity (rank) 144 Extent of corporate transparency index (0-7) 0.0 Score of getting electricity (0-100) 58.0 Enforcing Contracts (rank) 161 Procedures (number) 7 Paying Taxes (rank) 157 Score of enforcing contracts (0-100) 42.0 Time (days) 87 Score of paying taxes (0-100) 54.2 Time (days) 828 Cost (% of income per capita) 705.2 Payments (number per year) 35 Cost (% of claim value) 31.6 Reliability of supply and transparency of tariff index (0-8) 3 Time (hours per year) 362 Quality of judicial processes index (0-18) 3.5 Total tax and contribution rate (% of profit) 24.1 Registering Property (rank) 88 Postfiling index (0-100) 18.6 Resolving Insolvency (rank) 168 Score of registering property (0-100) 64.9 Score of resolving insolvency (0-100) 0.0 Procedures (number) 6 Recovery rate (cents on the dollar) No Time (days) 28 Practice Cost (% of property value) 3.1 Time (years) No Practice Quality of the land administration index (0-30) 10.5 Cost (% of estate) No Practice Outcome (0 as piecemeal sale and 1 as 0 going concern) Strength of insolvency framework index (0- No 16) Practice Page 4 Doing Business 2020 Lao PDR Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is received -Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Lao PDR Starting a Business - Lao PDR Standardized Company Legal form Private Limited Liability Company Paid-in minimum capital requirement LAK 7,000 City Covered Vientiane Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Procedure – Men (number) 9 6.5 4.9 1 (2 Economies) Time – Men (days) 173 25.6 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 4.6 17.4 3.0 0.0 (2 Economies) Procedure – Women (number) 9 6.6 4.9 1 (2 Economies) Time – Women (days) 173 25.7 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 4.6 17.4 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 3.5 7.6 0.0 (120 Economies) Figure – Starting a Business in Lao PDR – Score 52.9 0.0 97.7 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Lao PDR and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 92.4: Thailand (Rank: 47) 85.1: Vietnam (Rank: 115) 83.9: Regional Average (East Asia & Pacific) 83.3: Malaysia (Rank: 126) 62.7: Lao PDR (Rank: 181) 52.4: Cambodia (Rank: 187) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Lao PDR Figure – Starting a Business in Lao PDR – Procedure, Time and Cost Time (days) Cost (% of income per capita) 3.5 160 3 Cost (% of income per capita) 140 2.5 120 Time (days) 100 2 80 1.5 60 1 40 0.5 20 0 0 1 2 3 4 *5 6 7 *8 *9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Lao PDR Details – Starting a Business in Lao PDR – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain the Enterprise Registration Certificate (ERC) 2-3 months LAK 30,000 (Incorporation Agency : Department of Industry and Commerce Vientiane Capital form) + LAK 60,000 Applicants apply for the Enterprise Registration Certificate (ERC) at the Department of Industry (Application form) + LAK and Commerce Vientiane Capital. The unique application form used for the name reservation and 500,000 (Registration the ERC must list three potential names for the company to be established. A signed Contract of service fee for companies Incorporation (if there are multiple shareholders) in the format approved by the Ministry of Industry with registered capital of and Commerce (MOIC) must be submitted to obtain the ERC. The approved format can be LAK 100,000,000- downloaded at the MOIC website. Founders shall complete the application form for the ERC in the MOIC standard application form attaching the following required documents: 400,000,000) (i) 3 copies of the Contract of Incorporation, (ii) 3 original copies of the signed Articles of Association in the MOIC standard template, (iii) 3 copies of the resolution of founders of the company, (iv) 3 copies of the Power of Attorney in the MOIC standard template (if another person is assigned to submit the application), (v) 3 copies of ID card/passport of founders (only for foreigners) or business licenses for entities, (vi) Office location certificate and the Map signed and sealed by the village chief, (vii) 6 photos size 3cmx4cm of the nominated Managing Director, (viii) Compliance letter stating that the founders of this company will comply with the rules of law. When issuing the ERC, the Department of Industry and Commerce Vientiane Capital issues (1) a letter for the tax office to register for a Tax ID and (2) a letter of approval for the Public Security Office for the company seal. Presidential Order N 003, of December 26, 2012 regulates the fees related to obtaining the ERC. 2 Register the Articles of Association 1 week LAK 40,000 (registration of Agency : State Asset Management Office, Ministry of Finance AOA) + LAK 40,000 Once the company obtains the Enterprise Registration Certificate, it shall thereafter register its (Contract of Incorporation) Articles of Association with the State Assets Management Department (SAMD), Ministry of + LAK 10,000 (Service Finance. For registration the following are required: letter request, the original signed Articles of fee) Association, and copy of ERC. 3 Apply for Tax Registration Certificate about 1 month LAK 25,000 (Registration Agency : Tax Department form for taxes) + LAK Enterprises operating in the Lao PDR are subject to direct and indirect taxes. You need to submit 100,000 (Tax certificate) the following documents: 1. Application form 2. Resident certificate of managers 3. List of assets 4. List of employees and estimates salaries 5. Copy of lease agreement 6. Office location certificate and Map signed and sealed by the village chief 8. 2 photos 3x4 of the managing directors 9. Copy of the resolution of formation 10. Copy of the ERC 11. Copy of ID cards 12. Registered AOA 4 Attend to a Tax Orientation meeting and obtain Tax Identification Number (TIN) about 1 month no charge Agency : Tax Division Once The Tax Certificate is issued, the Tax Division will arrange for a Tax Orientation meeting to explain all the different taxes that a company will have to pay, how to calculate them and how to keep your books in order. This is to ensure that companies prepare their tax return properly and pay the correct amount. After the Tax Orientation meeting, the Tax Division will start processing the TIN number. After the Tax Orientation meeting, the Tax Department prepares the Tax Identification Number (TIN) for the newly registered company. 5 Carve a company seal 2 weeks (simultaneous LAK 10,000 (application Agency : Ministry of Industry and Commerce and Ministry of Public Security with previous procedure) form for making the After the Enterprise Registry Office issued the ERC, entrepreneur need to submit a color copy of company seal) + LAK ERC at the Seal Carving Unit within the Ministry of Public Security. Once the seal is carved, a 60,000 (the certificate letter for registration the seal is issued by the Seal Carving Unit. The company needs to register it authorizing the design) + with the Department of Public Security in order to use it. LAK 50,000 (carving of a seal in Lao language only) or LAK 53,000 (the carving of a seal in Lao and in another language) 6 Register company seal at the department of public security 1 to 2 weeks no charge Agency : Department of Public Security After the seal is carved, the company needs to register it at the Department of Public Security in order to use it. Page 8 Doing Business 2020 Lao PDR 7 Obtain Approval of Content on the Company Signage 1 to 2 weeks LAK 10,000 Agency : Ministry of Information Culture and Tourism It is no longer required by law to obtain the content approval of the signage; however, majority of entrepreneurs continue to obtain it due to the local officers of Information Culture and Tourism, advice them to do that. For the content approval application, the company must complete the application form in MICT and provide the following: (i) the name of the company in Lao, enterprise code provided under the enterprise registration certificate, office location and contact detail of the company; (ii) the color in red for the letters, and yellow for the background (these colors applied to domestic companies); and (ii) the size shall not exceed 2mx4m. 8 Register the workers for social security 1 week (simultaneous no charge Agency : Social Security Office with previous procedure) The application form to register workers for social security insurance is available at the agency in charge of registration. Employees and employers must participate in the compulsory social security regime. They may not enter into mutual agreements to avoid participation in the social security regime. The social security regime for company employees is established on the principle of state-guaranteed insurance. Contributions to the social security regime are paid by both the employers and employees: 6.0% of gross salary is to be contributed for social security by the employer and another 5.5%, by the employee. The maximum ceiling for calculating these contributions is LAK 2,000,000 (6% and 5.5% of LAK 2,000,000). 9 Register for VAT 3 weeks (simultaneous no charge Agency : Tax authority with previous procedure) As per Article 9 of Law of Value added tax of 26 December 2006, all companies with a turnover higher than 400,000,000 Kip are are subject to value-added tax registration with the tax authority. Takes place simultaneously with previous procedure. Page 9 Doing Business 2020 Lao PDR Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule The warehouse: • Procedure is considered completed once final document is - Will be used for general storage activities, such as storage of books or stationery. received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage • Quality control after construction (0-3) infrastructure, a septic tank in the smallest size available will be installed or built. - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 10 Doing Business 2020 Lao PDR Dealing with Construction Permits - Lao PDR Standardized Warehouse Estimated value of warehouse LAK 1,027,162,351.60 City Covered Vientiane Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 12 14.8 12.7 None in 2018/19 Time (days) 92 132.3 152.3 None in 2018/19 Cost (% of warehouse value) 4.6 3.2 1.5 None in 2018/19 Building quality control index (0-15) 6.5 9.4 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Lao PDR – Score 72.0 81.0 76.8 43.3 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Lao PDR and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 89.9: Malaysia (Rank: 2) 79.3: Vietnam (Rank: 25) 77.3: Thailand (Rank: 34) 70.0: Regional Average (East Asia & Pacific) 68.3: Lao PDR (Rank: 99) 44.6: Cambodia (Rank: 178) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 11 Doing Business 2020 Lao PDR Figure – Dealing with Construction Permits in Lao PDR – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 2.5 90 80 Cost (% of warehouse value) 2 70 60 Time (days) 1.5 50 40 1 30 20 0.5 10 0 0 1 *2 *3 4 5 6 7 8 9 10 11 * 12 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 12 Doing Business 2020 Lao PDR Figure – Dealing with Construction Permits in Lao PDR and comparator economies – Measure of Quality 14 13.0 12.0 12 11.0 Index score 10 9.4 8.0 8 6.5 6 4 2 0 Lao Cambodia Malaysia Thailand Vietnam East PDR Asia & Pacific Details – Dealing with Construction Permits in Lao PDR – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a Soil Test from the State Enterprise 11 days LAK 18,451,948 Agency : State Enterprise Soil test is obtained a part of the pre-construction and design phase and is often required by supervising engineers who conduct inspections during construction phase. 2 Obtain Neighbors Consent for Construction 5 days no charge Agency : Village Chief Authority Obtaining the consent of neighbors is mandatory in practice. A document reporting that consultations were made with neighbors is attached to the request for a building permit. 3 Hire an external engineer to conduct building inspection 1 day LAK 22,860,429 Agency : External Engineer Any building of more than 1000 square meters requires an external engineer who is responsible for inspecting the process of construction. The Vientiane capital Ministry of Works and Transports will verify that the engineer undertook regular inspections when the final report is submitted at the end of the construction process. 4 Purchase the application forms for a building permit 1 day LAK 25,000 Agency : Vientiane Capital Department of Public Works and Transports BuildCo can either download the application forms free of charge or may purchase the application forms for a small fee to apply for a building permit from the Vientiane Capital department of Public Works and Transports. The Vientiane Capital is divided into nine districts, which are further subdivided into 481 villages.The forms are a complete set of documents which also provide the list of requirements and the costs associated with the building permitting process. 5 Request and obtain residence certificate from Village Chief 1 day LAK 30,000 Agency : Village Chief BuildCo must obtain 3 copies of a residence certificate certifying that the applicant (the company's manager) has a permanent address. The certificates are should be stamped and signed by the Village Chief who checks the history of the land and location. Costs may vary by village and are at the discretion of the Village Chiefs. 6 Submit building permit application to the District Construction Division 1 day no charge Agency : District Construction Division BuildCo must submit the application for a building permit, along with the following documents: structural and architectural plans, electrical and sewer plans, a location plan certified by the Villeage Chird, a copy of the ownership certificate and 2 copies of the land title. When the applicant deposits all the required documentation at the one stop service window, all documents are checked for completeness. The documents are then bound into one file and reviewed by an engineer at the Ministry of Public Works. The engineer will sign and stamp the cover letter to indicate his approval if the submission meets all technical requirements. 7 Receive setting-out inspection from Department of Urban Planning & Environment 1 day no charge Agency : Vientiane Capital Department of Public Works and Transport Within one week after the application has been submitted the Department of Urban Planning will visit the property and conduct an inspection to ensure that the boundaries are correct and measure the set-back. The Vientiane Capital Department of Public Works and Transport has developed checklists to aid the supervising engineer conducting the site inspection. At the same time they will also verify if there are any environmental issues to be taken into account. If there are, the Ministry of the Environment would be asked to participate in the building permitting process and conduct an environmental assessment. In practice, environmental assessments are only conducted for much larger buildings than a warehouse. 8 Obtain building permit from Vientiane Capital 30 days LAK 3,251,500 Agency : Vieintiane Capital Department of Public Works and Transport The approval process of buildings of less than 400 square meters are handled by the District Level while those above 400 square meters by the Vientiane Capital. The initial permit allows for the construction process to begin. Page 13 Doing Business 2020 Lao PDR 9 Receive half completion inspection from Department of Urban Planning & Environment 1 day no charge Agency : Department of Urban Planning & Environment The Urban Planning department conducts an inspection during construction when the process is about half way through. The external engineer is responsible for inspecting the construction during the entire process and must report to the authorities is there are any issues that need to be brought to their attention. 10 Request and receive final inspection from Committee for Management of Construction 1 day no charge Agency : Committee for Management of Construction After construction is completed, the project owner or building owner must submit a request in writing to the Construction Management Committee (CMC) to inspect the construction according to the issued building permit. A report from the external engineer is submitted and assessed, whether there are issues reported or not. If the construction complies with construction regulations, the Housing and Urban Planning Department, in coordination with State Asset and Housing Department, officially issues a correct construction certificate. 11 Request and receive connection to water and sewage services 45 days LAK 3,000,000 Agency : Water Supply Authority of Lao PDR (WASA) To obtain a water and sewerage connection to the land where the building will be constructed, BuildCo must enclose the building permit or a correct construction certificate with the application. Obtain Building Usage Certificate 7 days no charge 12 Agency : Housing and Urban Planning Department Once the final inspection is conducted, a note is prepared by the Construction Management Committee of the Vientiane Capital or District Office. Approximately one or two weeks later the Building Usage Certificate, which allows the constructed building to be occupied, is issued. The document consists on a single page which is signed and stamped by the agency. Takes place simultaneously with previous procedure. Page 14 Doing Business 2020 Lao PDR Details – Dealing with Construction Permits in Lao PDR – Measure of Quality Answer Score Building quality control index (0-15) 6.5 Quality of building regulations index (0-2) 0.0 How accessible are building laws and regulations in your economy? (0-1) Not easily accessible. 0.0 Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 0.0 accessible website, brochure or pamphlet? (0-1) documents. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in- 1.0 house engineer; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 0.5 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Construction 0.5 (Latent Defect Liability or Decennial Liability)? (0-1) company. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 0.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans Being a registered 0.0 or drawings are in compliance with existing building regulations? (0-2) architect or engineer. What are the qualification requirements for the professional who supervises the construction on the ground? (0- Being a registered 0.0 2) architect or engineer. Page 15 Doing Business 2020 Lao PDR Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time. supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts • Tools to monitor power outages (0–1) (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 16 Doing Business 2020 Lao PDR Getting Electricity - Lao PDR Standardized Connection Name of utility Électricité du Laos (EDL) Price of electricity (US cents per kWh) 13.2 City Covered Vientiane Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 7 4.2 4.4 3 (28 Economies) Time (days) 87 63.2 74.8 18 (3 Economies) Cost (% of income per capita) 705.2 594.6 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 3 4.0 7.4 8 (26 Economies) Figure – Getting Electricity in Lao PDR – Score 33.3 70.0 91.3 37.5 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Lao PDR and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 99.3: Malaysia (Rank: 4) 98.7: Thailand (Rank: 6) 88.2: Vietnam (Rank: 27) 75.1: Regional Average (East Asia & Pacific) 58.0: Lao PDR (Rank: 144) 57.5: Cambodia (Rank: 146) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Lao PDR – Procedure, Time and Cost Time (days) Cost (% of income per capita) 800 80 700 Cost (% of income per capita) 70 600 60 Time (days) 500 50 400 40 300 30 20 200 10 100 0 0 1 2 3 4 5 *6 7 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 17 Doing Business 2020 Lao PDR reflected here, see the summary below. Figure – Getting Electricity in Lao PDR and comparator economies – Measure of Quality 9 8 8 8 7 7 Index score 6 5 4.0 4 3 3 3 2 1 0 Lao Cambodia Malaysia Thailand Vietnam East PDR Asia & Pacific Page 18 Doing Business 2020 Lao PDR Details – Getting Electricity in Lao PDR – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain the location clearance from the Village Chief Authority 1 calendar day LAK 30,000 Agency : Village Chief Authority Vientiane is divided into 9 Districts: Chanthabouly, Sikhottabong, Xaysettha, Sisattanak, Naxaithong, Xaythany, Hadxaifong, Sangthong & Pak Ngum. Those 9 districts are further divided into 481 villages and each village has a Village Chief. Prior to submission of the application for electricity connection to EDL, a Village Chief Authority must be informed about the be request for an electricity connection. Upon the receipt of the notification, the Village Chief will sign and stamp the application form, which can further be submitted to Électricité du Laos (EDL). 2 Submit application to EDL and await site inspection 5 calendar days LAK 0 Agency : EDL The application for an electricity connection can be submitted to EDL by the construction company or by the building owner (it is more common that the construction company submits the application). Usually the application is submitted in person with attached documents in hard copies. The following documents must be attached (1) Application for a connection as a new user; (2) Load and in house wiring designs; (3) Distribution panel design; (4) Building location approved by the Village Chief; (5) in some cases other clearances (wire designs + panel designs + estimate of how much the warehouse is going to consume). EDL reviews the documents and responds with the following information: (1) the nearest substation or the point where the connection can be made (2) distance between the substation and the building (3) recommendation of suitable transformers, a power transformer (PT) and a current transformer (CT), and ground resistance for the transformer. The distribution officer will send an engineer to the site to check how far it is from the distribution network, check the load and then issue a cost estimate. The utility obtains the neighbors consent to install electric poles on their property. It takes on average 1 week to obtain consent from all neighbors. 3 Receive site inspection by EDL and await estimate and technical conditions 14 calendar days LAK 0 Agency : EDL EDL will visit the site to determine arrangements for an optimal connection and aid the preparation of technical conditions. The engineer will check how far it is from the distribution network, check the load and then issue a cost estimate. It is required that someone from the applicant’s party is present at the site during the inspection. 4 Await preparation and approval of detailed technical design and installation plan 30 calendar days LAK 3,650,000 Agency : Electrical contractor The electrical contractor/construction company prepares a detailed technical design of the external connection and an installation plan. When the electrical contractor/construction company submits the technical design to EDL for approval, registration documents for the chief engineer have to be submitted as well. The construction company must propose and assign someone to be the chief electrical engineer who is responsible for designing and supervision of the project. The assignment has to be approved by EDL. The registration of the chief electrical engineer is valid only for the proposed project. The construction company has to register a chief electrical engineer for every project it carries out. The approval of the technical design is granted together with the proposal of the consumption fees so arrangements for the supply of electricity are completed at this stage as well. 5 Await completion of external works by electrical contractor 30 calendar days USD 16,500 Agency : Electrical Contractor Once the electrical design is approved by EDL the electrical installation company can start the external connection works. The meter can be installed during the final stage of the external connection works by the electrical contractor. 6 Testing of the Voltage Transformer by EDL 1 calendar day LAK 2,400,000 Agency : EDL The Voltage Transformer must be tested at the Testing Laboratory of EDL prior to the installation. A letter notifying EDL about the proposed date for testing the Voltage Transformer must be sent in advance. 7 Receive inspection of external works by EDL and receive final connection 7 calendar days LAK 1,000,000 Agency : EDL After the external connection works are completed by the electrical contractor there is an external inspection by EDL. During the inspection a representative of the construction company/electrical contractor has to be present. After the electrical installation is approved, the electricity can be supplied instantly. Page 19 Doing Business 2020 Lao PDR Takes place simultaneously with previous procedure. Page 20 Doing Business 2020 Lao PDR Details – Getting Electricity in Lao PDR – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 3 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) 4.0 System average interruption frequency index (SAIFI) 22.7 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 1.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? No Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? No Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://edl.com.la/ Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 21 Doing Business 2020 Lao PDR Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. • Reliability of infrastructure index (0-8) - Has no occupants, and no other party holds a legal interest in it. • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 22 Doing Business 2020 Lao PDR Registering Property - Lao PDR Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 6 5.5 4.7 1 (5 Economies) Time (days) 28 71.9 23.6 1 (2 Economies) Cost (% of property value) 3.1 4.5 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 10.5 16.2 23.2 None in 2018/19 Figure – Registering Property in Lao PDR – Score 58.3 87.1 79.3 35.0 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Lao PDR and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 79.5: Malaysia (Rank: 33) 71.1: Vietnam (Rank: 64) 69.5: Thailand (Rank: 67) 64.9: Lao PDR (Rank: 88) 57.5: Regional Average (East Asia & Pacific) 55.2: Cambodia (Rank: 129) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 23 Doing Business 2020 Lao PDR Figure – Registering Property in Lao PDR – Procedure, Time and Cost Time (days) Cost (% of property value) 3.5 25 3 Cost (% of property value) 20 2.5 Time (days) 2 15 1.5 10 1 5 0.5 0 0 1 2 3 4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 24 Doing Business 2020 Lao PDR Figure – Registering Property in Lao PDR and comparator economies – Measure of Quality 30 26.5 25 Index score 20 19.0 16.2 15 14.0 10.5 10 7.5 5 0 Lao Cambodia Malaysia Thailand Vietnam East PDR Asia & Pacific Details – Registering Property in Lao PDR – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Purchase a set of documents for the sale/purchase agreement 1 day LAK 15,000 Agency : Vientiane Capital National Resources and Environment Division, Land Management Sector The buyer or seller will purchase a set of documents containing all the required forms to complete the entire process. Notably, there is a form to be certified by the Village Chief Authority, two sale/purchase agreement, one for the buyer and one for the seller. The form to request the non- encumbrance certificate as well. The agency will also provide a guideline on how to complete this form. 2 Obtain the Village Chief certification on application form for the Land Title Accuracy 1 day LAK 30,000 Certificate Agency : Village Chief Authority The seller will take the application form (purchased in procedure 1) to the Village Chief to be certified. This certification is the proof that the seller is the rightful owner of the land and that there is no dispute on this land. This form will be submitted to the District Natural Resources and Environment Office to obtain the accuracy certificate. 3 Obtain the Land Title Accuracy Certificate ("Certificate") 3 days LAK 50,000 Agency : Vientiane Capital National Resources and Environment Division, Land Management Sector The buyer or their appointees submit the application form signed by the village chief where the land is located to the Vientiane Capital National Resources and Environment Division, Land Management Sector for verification of correctness of the land title. After receiving the application form, the Land Management Sector will verify the correctness of the land title compared with the Land Registry Book, Land Map and other related documents. If it is correct, the Certificate of Correctness of the land title will be issued. 4 Complete the LMA sale-purchase agreement form and the Registration Request Application 2 days LAK 500,000 Agency : Village Chief Authority The authorized representatives of the seller-company and buyer-company must execute a sale and purchase agreement in a form provided by the District Natural Resources and Environment Office, which is signed by three witnesses and by the village chief where the land is located. At the same time, the registration form is also certified by the Village Chief Authority. 5 Notarize the sale-purchase agreement 3 days LAK 40,000; (LAK 20,000 Agency : Notary's Office + LAK 5,000 per page) The Instruction No. 873/MoJ, dated October 10, 2014on the Implementation of the Notary Law requires for the parties (or their duly authorized representatives) to be present at the Notary Office in order to have the sale-purchase agreement notarized. They submit the Certificate of Correctness of Land Title to Notary Office along with the original sale-purchase agreement. The signed sale and purchase agreement is certified by the Notary Office to attest that land use rights have been appropriately transferred according to the agreement. 6 Registration of the sale-purchase agreement and issuance of the new Land Title 18 days LAK 31,197,090.55; (LAK Agency : Vientiane Capital National Resources and Environment Division, Land Management 135,000 (Land & stamp Sector Title) + LAK 50,000 The notarized sale and purchase agreement is submitted to the Vientiane Capital National (Verification fees) + LAK Resources and Environment Division, Land Management Sector for registration. After, a new land 30,000 (land Title Form) + title in the name of the Buyer will be issued and delivered to the new owner. 1% property value (Registration Fee) + 2% for the Tax Authority + service Fees of 300 sq.m. for land) Takes place simultaneously with previous procedure. Page 25 Doing Business 2020 Lao PDR Details – Registering Property in Lao PDR – Measure of Quality Answer Score Quality of the land administration index (0-30) 10.5 Reliability of infrastructure index (0-8) 2.0 Type of land registration system in the economy: Title Registration System What is the institution in charge of immovable property registration? Department of Natural Resources and Environment – at the provincial level In what format are past and newly issued land records kept at the immovable property registry of the largest Paper 0.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Department of Natural Resources and Environment – at the provincial level In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Paper 0.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information No 0.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Separate databases 0.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 0.5 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Only intermediaries 0.0 in the largest business city? and interested parties Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, in person 0.0 and if so, how? Link for online access: Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property Yes, on public boards 0.5 registration in the largest business city made publicly available–and if so, how? Link for online access: Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, in person 0.0 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property No 0.0 registration agency? Number of property transfers in the largest business city in 2018: Who is able to consult maps of land plots in the largest business city? Only intermediaries 0.0 and interested parties Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, in person 0.0 Link for online access: Page 26 Doing Business 2020 Lao PDR Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and No 0.0 if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 4.0 Are all privately held land plots in the largest business city formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 4.0 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Page 27 Doing Business 2020 Lao PDR Legal basis: Land law 2003 Article 49. (New) Land Title A land title is the only document which is considered as the main evidence for permanent land use rights. It is filled out based on information in the land register in one copy only and is handed over to the land owner who shall keep it as long-term evidence until there is a change according to the conditions prescribed in the laws. Ministerial Regulation 500 May 2008 on Land Legal Document Registration 2.1 Registration of land legal documents in the Land Registration Management System All documents concerning land parcels where a Land Title has been issued must be registered in the Land Registration Management System. Any document concerning land where a Land Title has been issued will not be enforceable unless and until it is registered. No other form of approval by the village administration or other parties will be recognized. This requirement to register documents affecting land in the Land Registration Management System applies to all persons or organizations including Government departments, State enterprises and other bodies, State organizations, political organizations and socio-economic organizations. Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Page 28 Doing Business 2020 Lao PDR Legal basis: Article 9. Land Management The State is charged with the management of land for the whole country in a centralized and uniform manner in which the government assigns management responsibilities to the national land management authority as prescribed in Article 10 of this law and it 12 coordinates with concerned sectors13 and local administrations, [and also] assigns responsibility for the management of land use to concerned sectors such as the Ministry of Agriculture and Forestry, the Ministry of Industry and Handicrafts, the Ministry of Communication, Transport, Post and Construction, the Ministry of Information and Culture, the Ministry of National Defence, and the Ministry of Security. Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Is there a national database to verify the accuracy of government issued identity documents? No 0.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local People's Court businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located Vientiane Capital in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 2 and 3 1.0 appeal)? years Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 29 Doing Business 2020 Lao PDR Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of Credit registry coverage (% of adults) movable collateral. • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 30 Doing Business 2020 Lao PDR Getting Credit - Lao PDR Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Strength of legal rights index (0-12) 6 7.1 6.1 12 (5 Economies) Depth of credit information index (0-8) 6 4.5 6.8 8 (53 Economies) Credit registry coverage (% of adults) 19.8 16.6 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 0.0 23.8 66.7 100.0 (14 Economies) Figure – Getting Credit in Lao PDR – Score 60.0 Score - Getting Credit Figure – Getting Credit in Lao PDR and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 80.0: Cambodia (Rank: 25) 80.0: Vietnam (Rank: 25) 75.0: Malaysia (Rank: 37) 70.0: Thailand (Rank: 48) 60.0: Lao PDR (Rank: 80) 58.0: Regional Average (East Asia & Pacific) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 31 Doing Business 2020 Lao PDR Figure – Legal Rights in Lao PDR and comparator economies 12 10 10 Index Score 8 8 7 7 7.1 6 6 4 2 0 Lao Cambodia Malaysia Thailand Vietnam East PDR Asia & Pacific Page 32 Doing Business 2020 Lao PDR Details – Legal Rights in Lao PDR Strength of legal rights index (0-12) 6 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents Yes to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description No of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; No and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third Yes party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Lao PDR and comparator economies 9 8 8 8 7 7 Index Score 6 6 6 5 4.5 4 3 2 1 0 Lao Cambodia Malaysia Thailand Vietnam East PDR Asia & Pacific Page 33 Doing Business 2020 Lao PDR Details – Credit Information in Lao PDR Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? No Yes 1 By law, do borrowers have the right to access their data in the credit bureau or No Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online No Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 0 854,389 Number of firms 0 29,645 Total 0 884,034 Percentage of adult population 0.0 19.8 Page 34 Doing Business 2020 Lao PDR Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James • Ease of shareholder suits index (0–10): Access to internal appointed 60% of the shareholder-elected members. corporate documents; Evidence obtainable during trial and - Has not adopted bylaws or articles of association that go beyond the minimum requirements. allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures • Extent of shareholder governance index (0–20): Sum of the made—that is, the transaction was not entered into fraudulently. extent of shareholders rights, extent of ownership and control - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and and extent of corporate transparency indices directors that approved the transaction. • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 35 Doing Business 2020 Lao PDR Protecting Minority Investors - Lao PDR Stock exchange information Stock exchange Lao Securities Exchange Stock exchange URL http://www.lsx.com.la Listed firms with equity securities 8 City Covered Vientiane Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Extent of disclosure index (0-10) 6.0 5.9 6.5 10 (13 Economies) Extent of director liability index (0-10) 1.0 5.2 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 3.0 6.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 0.0 2.0 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 0.0 2.4 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 0.0 2.6 5.7 7 (13 Economies) Figure – Protecting Minority in Lao PDR – Score 20.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Lao PDR and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 88.0: Malaysia (Rank: 2) 86.0: Thailand (Rank: 3) 54.0: Vietnam (Rank: 97) 49.7: Regional Average (East Asia & Pacific) 40.0: Cambodia (Rank: 128) 20.0: Lao PDR (Rank: 179) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 36 Doing Business 2020 Lao PDR Figure – Protecting Minority Investors in Lao PDR and comparator economies – Measure of Quality Lao PDR 01 6 0 3 Cambodia 0 10 6 0 4 Malaysia 6 9 10 6 5 8 Thailand 6 7 10 6 5 9 Vietnam 5 4 7 5 4 2 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 East Asia & Pacific 3.1 5.1 6.4 2.9 2.4 6.3 0 5 10 15 20 25 30 35 40 45 50 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 37 Doing Business 2020 Lao PDR Details – Protecting Minority Investors in Lao PDR – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 6.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) CEO alone 0.0 Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 1.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Not liable 0.0 Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Not liable 0.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) No 0.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of fraud 0.0 or bad faith Ease of shareholder suits index (0-10) 3.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) No 0.0 Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Preapproved 1.0 questions only Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 0.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? No 0.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? No 0.0 Extent of ownership and control index (0-7) 0.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Must the board of directors include independent and nonexecutive board members? Yes 1.0 Page 38 Doing Business 2020 Lao PDR Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? No 0.0 Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Extent of corporate transparency index (0-7) 0.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and directorships in other No 0.0 companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? No 0.0 Must Buyer's annual financial statements be audited by an external auditor? No 0.0 Must Buyer disclose its audit reports to the public? No 0.0 Page 39 Doing Business 2020 Lao PDR Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the • Collecting information, computing tax payable second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 40 Doing Business 2020 Lao PDR Paying Taxes - Lao PDR Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Payments (number per year) 35 20.6 10.3 3 (2 Economies) Time (hours per year) 362 173.0 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 24.1 33.6 39.9 26.1 (33 Economies) Postfiling index (0-100) 18.6 56.4 86.7 None in 2018/19 Figure – Paying Taxes in Lao PDR – Score 46.7 51.6 100.0 18.6 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Lao PDR and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 77.7: Thailand (Rank: 68) 76.0: Malaysia (Rank: 80) 73.6: Regional Average (East Asia & Pacific) 69.0: Vietnam (Rank: 109) 61.3: Cambodia (Rank: 138) 54.2: Lao PDR (Rank: 157) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 41 Doing Business 2020 Lao PDR Figure – Paying Taxes in Lao PDR and comparator economies – Measure of Quality 80 73.4 70 56.4 Index score 60 51.0 49.1 50 40 30 26.0 18.6 20 10 0 Lao Cambodia Malaysia Thailand Vietnam East PDR Asia & Pacific Page 42 Doing Business 2020 Lao PDR Details – Paying Taxes in Lao PDR Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Corporate 4.0 138.0 24% taxable profit 16.42 income tax Social Security 12.0 42.0 6% gross salaries 6.77 contributions Property transfer 1.0 1% sale price 0.61 fee (stamp duty) Property transfer 1.0 5% gain from the 0.25 tax transaction Vehicle tax 1.0 LAK 200,000 fixed fee 0.03 depending on type of vehicle Property tax 1.0 LAK 60 to 180 per square meter 0.02 Business 12.0 182.0 10% value added 0.00 not included turnover tax on sales (VAT) Employee paid - 0.0 jointly 5.5% gross salaries 0.00 withheld Social security contributions Fuel tax 1.0 included in the 0.00 small amount price of fuel Stamp duty on 1.0 immaterial per contract 0.00 small amount general contracts amount - about LAK 20,000 plus LAK 2,000 per page Tax on insurance 1.0 immaterial insurance 0.00 small amount contracts amount - about premium LAK 20,000 plus LAK 2,000 per page Totals 35 362 24.1 Page 43 Doing Business 2020 Lao PDR Details – Paying Taxes in Lao PDR – Tax by Type Taxes by type Answer Profit tax (% of profit) 16.4 Labor tax and contributions (% of profit) 6.8 Other taxes (% of profit) 0.9 Page 44 Doing Business 2020 Lao PDR Details – Paying Taxes in Lao PDR – Measure of Quality Answer Score Postfiling index (0-100) 18.6 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process Restricted to international traders and others Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT refund per 0.0 case study scenario Time to obtain VAT refund (weeks) No VAT refund per 0.0 case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 50% - 74% Time to comply with a corporate income tax correction (hours) 16.0 73.4 Time to complete a corporate income tax correction (weeks) 31.7 0.9 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 45 Doing Business 2020 Lao PDR Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about • Inspections by other agencies (if applied to more than 20% of exchange rates. shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 46 Doing Business 2020 Lao PDR Trading across Borders - Lao PDR Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Time to export: Border compliance (hours) 9 57.5 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 140 381.1 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 60 55.6 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 235 109.4 33.4 0 (20 Economies) Time to import: Border compliance (hours) 11 68.4 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 224 422.8 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 60 53.7 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 115 108.4 23.5 0 (30 Economies) Figure – Trading across Borders in Lao PDR – Score 95.0 86.8 65.1 41.3 96.6 81.4 75.3 83.6 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Lao PDR and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 88.5: Malaysia (Rank: 49) 84.6: Thailand (Rank: 62) 78.1: Lao PDR (Rank: 78) 71.6: Regional Average (East Asia & Pacific) 70.8: Vietnam (Rank: 104) 67.3: Cambodia (Rank: 118) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 47 Doing Business 2020 Lao PDR Figure – Trading across Borders in Lao PDR – Time and Cost Time (hours) Cost (USD) 70 300 60 60 60 235 250 224 Time (hours) 50 Cost (USD) 200 40 140 150 30 115 100 20 9 11 10 50 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 48 Doing Business 2020 Lao PDR Details – Trading across Borders in Lao PDR Characteristics Export Import Product HS 74 : Copper and articles thereof HS 8708: Parts and accessories of motor vehicles Trade partner China Thailand Border Mittaphab Bridge border crossing Mittaphab Bridge border crossing Distance (km) 27 27 Domestic transport time (hours) 2 2 Domestic transport cost (USD) 150 150 Details – Trading across Borders in Lao PDR – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 8.0 130.0 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 1.0 10.0 Import: Clearance and inspections required by 4.0 90.0 customs authorities Import: Clearance and inspections required by 3.5 102.5 agencies other than customs Import: Port or border handling 3.0 31.0 Page 49 Doing Business 2020 Lao PDR Details – Trading across Borders in Lao PDR – Trade Documents Export Import Bill of Lading Commercial Invoice Commercial Invoice Import customs declaration Packing list Packing list Road transit document Truck waybill Export Customs declaration Cargo manifest Permission from the Ministry of Mining in Lao Copy of business license Copy of the tax registration Copy of tax registration Copy of the business license Copy of the exporter license SOLAS certificate Copy of the import license Certificate of origin (Form D) Page 50 Doing Business 2020 Lao PDR Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. Page 51 Doing Business 2020 Lao PDR Enforcing Contracts - Lao PDR Standardized Case Claim value LAK 42,744,014 Court name District Court City Covered Vientiane Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Time (days) 828 581.1 589.6 120 (Singapore) Cost (% of claim value) 31.6 47.2 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 3.5 8.1 11.7 None in 2018/19 Figure – Enforcing Contracts in Lao PDR – Score 42.0 64.6 19.4 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Lao PDR and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 68.2: Malaysia (Rank: 35) 67.9: Thailand (Rank: 37) 62.1: Vietnam (Rank: 68) 53.0: Regional Average (East Asia & Pacific) 42.0: Lao PDR (Rank: 161) 31.7: Cambodia (Rank: 182) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 52 Doing Business 2020 Lao PDR Figure – Enforcing Contracts in Lao PDR – Time and Cost Time (days) Cost (% of claim value) 900 828 120 Cost (% of claim value) 800 103.4 100 700 Time (days) 581.1 589.6 600 80 483 500 425 420 400 60 400 47.2 37.9 300 31.6 29.0 40 200 21.5 16.9 20 100 0 0 Cambodia East Lao Malaysia OECD Thailand Vietnam Asia PDR high & income Pacific Page 53 Doing Business 2020 Lao PDR Figure – Enforcing Contracts in Lao PDR and comparator economies – Measure of Quality Lao PDR 2.5 0 1 Cambodia 2.5 1 0 1 Malaysia 2.5 4 2.5 4 Thailand 2.5 2 1 3 Vietnam 2.5 1 1 3 OECD high income 2.5 3.2 2.4 3.6 East Asia & Pacific 2.2 2.2 1.3 3 0 2 4 6 8 10 12 14 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Lao PDR Indicator Time (days) 828 Filing and service 119 Trial and judgment 344 Enforcement of judgment 365 Cost (% of claim value) 31.6 Attorney fees 27.9 Court fees 1.4 Enforcement fees 2.3 Quality of judicial processes index (0-18) 3.5 Court structure and proceedings (-1-5) 1.0 Case management (0-6) 0.0 Court automation (0-4) 0.0 Alternative dispute resolution (0-3) 2.5 Page 54 Doing Business 2020 Lao PDR Details – Enforcing Contracts in Lao PDR – Measure of Quality Answer Score Quality of judicial processes index (0-18) 3.5 Court structure and proceedings (-1-5) 1.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 0.0 2.a. Is there a small claims court or a fast-track procedure for small claims? No 2.b. If yes, is self-representation allowed? n.a. 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? No 0.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 0.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public No through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made No available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 55 Doing Business 2020 Lao PDR 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 56 Doing Business 2020 Lao PDR Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 57 Doing Business 2020 Lao PDR Resolving Insolvency - Lao PDR Indicator Lao PDR East Asia & OECD high Best Regulatory Pacific income Performance Recovery rate (cents on the dollar) No Practice 35.5 70.2 92.9 (Norway) Time (years) No Practice 2.6 1.7 0.4 (Ireland) Cost (% of estate) No Practice 20.6 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. .. Strength of insolvency framework index (0-16) No Practice 7.0 11.9 None in 2018/19 Figure – Resolving Insolvency in Lao PDR – Score 0.0 0.0 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Lao PDR and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 76.8: Thailand (Rank: 24) 67.0: Malaysia (Rank: 40) 48.5: Cambodia (Rank: 82) 40.9: Regional Average (East Asia & Pacific) 38.0: Vietnam (Rank: 122) 0.0: Lao PDR (Rank: 168) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 58 Doing Business 2020 Lao PDR Figure – Resolving Insolvency in Lao PDR – Time and Cost Time (years) Cost (% of estate) 7 25 6.0 20.6 Cost (% of estate) 6 18.0 18.0 5.0 20 Time (years) 5 14.5 4 15 3 2.6 10.0 9.3 10 2 1.7 1.5 1.0 5 1 0 0 Cambodia East No Malaysia OECD Thailand Vietnam Asia Practice high & Lao income Pacific PDR Page 59 Doing Business 2020 Lao PDR Figure – Resolving Insolvency in Lao PDR and comparator economies – Measure of Quality Lao PDR 2 2 0 0.5 Cambodia 4 3 3 3 Malaysia 2 3 2 0.5 Thailand 5 2.5 2 3 Vietnam 3 2.5 1 2 OECD high income 5.3 2.8 2.1 1.9 East Asia & Pacific 3.7 2.3 1.3 1 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Lao PDR and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 90 81.0 80 70.1 70 60 50 40 35.5 30 21.3 20 14.6 10 0 No Practice Lao PDR Cambodia Malaysia Thailand Vietnam East Asia & Pacific Page 60 Doing Business 2020 Lao PDR Details – Resolving Insolvency in Lao PDR Indicator Answer Score Proceeding No Practice According to the research conducted by the team, there were no foreclosure, liquidation or reorganization proceedings filed in the country in the last 12 months. Due to this circumstance, it is not possible to assess the time, the cost or the outcome associated with the insolvency scenario described in the case study. The main factors hindering effective debt resolution processes are the lack of the court system and outdated Law on Bankruptcy of Enterprises. Outcome piecemeal sale According to the research conducted by the team, there were no foreclosure, liquidation or reorganization proceedings filed in the country in the last 12 months. Due to this circumstance, it is not possible to assess the time, the cost or the outcome associated with the insolvency scenario described in the case study. The main factors hindering effective debt resolution processes are the lack of the court system and outdated Law on Bankruptcy of Enterprises. Time (in years) No Practice According to the research conducted by the team, there were no foreclosure, liquidation or reorganization proceedings filed in the country in the last 12 months. Due to this circumstance, it is not possible to assess the time, the cost or the outcome associated with the insolvency scenario described in the case study. The main factors hindering effective debt resolution processes are the lack of the court system and outdated Law on Bankruptcy of Enterprises. Cost (% of estate) No Practice According to the research conducted by the team, there were no foreclosure, liquidation or reorganization proceedings filed in the country in the last 12 months. Due to this circumstance, it is not possible to assess the time, the cost or the outcome associated with the insolvency scenario described in the case study. The main factors hindering effective debt resolution processes are the lack of the court system and outdated Law on Bankruptcy of Enterprises. Recovery rate No Practice (cents on the dollar) Page 61 Doing Business 2020 Lao PDR Details – Resolving Insolvency in Lao PDR – Measure of Quality Answer Score Strength of insolvency framework index (0-16) No Practice Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may file for 0.5 liquidation only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (c) Both (a) and (b) 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value options are available, of its assets but only one of them needs to be complied with Management of debtor's assets index (0-6) 2.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the No 0.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? No 0.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of No 0.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote No 0.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 0.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency No 0.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting No 0.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 62 Doing Business 2020 Lao PDR Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 63 Doing Business 2020 Lao PDR Employing Workers - Lao PDR Details – Employing Workers in Lao PDR Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 36.0 Maximum length of fixed-term contracts, including renewals (months) 36.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 131.7 Ratio of minimum wage to value added per worker 0.4 Maximum length of probationary period (months) 2.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 15.0 Premium for work on weekly rest day (% of hourly pay) 150.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 15.0 Paid annual leave for a worker with 5 years of tenure (working days) 15.0 Paid annual leave for a worker with 10 years of tenure (working days) 15.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 6.4 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 6.4 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 6.4 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 6.4 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 5.2 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 26.0 Page 64 Doing Business 2020 Lao PDR Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 52.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 27.7 Unemployment protection after one year of employment? No Page 65 Doing Business 2020 Lao PDR Business Reforms in Lao PDR From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Starting a Business: The Lao People’s Democratic Republic made starting a business easier by eliminating the requirement to obtain proof of business location from the Village Chief Authority for business registration. Getting Electricity: Lao PDR made getting electricity faster by allocating more staff to process applications. Lao PDR also improved the reliability of power supply by deploying an automated Supervisory Control and Data Acquisition (SCADA) system for outage monitoring and the restoration of service. DB2019 Trading across Borders: Lao PDR made trading across borders faster by streamlining the customs clearance process. DB2017 Starting a Business: The Lao People’s Democratic Republic made the process of starting a business faster by implementing simplified procedures for obtaining a license and a registered company seal. Getting Electricity: Lao PDR improved the regulation of outages by beginning to record data for the annual system average interruption duration index (SAIDI) and system average interruption frequency index (SAIFI). DB2016 Getting Credit: The Lao People’s Democratic Republic improved access to credit information by eliminating the threshold for the minimum size of loans to be included in the credit registry’s database and by expanding borrower coverage. Employing Workers: Lao PDR capped the duration of renewable fixed-term contracts (previously unlimited) at 36 months and reduced the maximum length of a probationary period from 3 months to 2. It also eliminated the requirement for third-party approval before an employer can dismiss one worker or a group of nine workers and reduced the severance payment for employees with 5 and 10 years of tenure. DB2015 Getting Credit: The Lao People’s Democratic Republic improved access to credit by implementing a modern, unified, notice-based collateral registry. Protecting Minority Investors: The Lao People’s Democratic Republic strengthened minority investor protections by introducing requirements for directors to disclose in detail their conflicts of interest to the other board members and for companies to promptly disclose related-party transactions to the Securities Commission and to include the information in their annual reports. DB2014 Paying Taxes: Lao PDR made paying taxes less costly for companies by reducing the corporate income tax rate—though it also introduced a new property transfer tax. DB2013 Starting a Business: Lao PDR made starting a business easier by allowing entrepreneurs to apply for tax registration at the time of incorporation. Paying Taxes: Lao PDR made paying taxes less costly for companies by reducing the corporate income tax rate. Trading across Borders: Lao PDR reduced the time to export and import by implementing the ASYCUDA electronic data interchange system at at the Thanaleng– Friendship Bridge border crossing. DB2012 Getting Credit: Lao PDR improved access to credit information by establishing a public credit registry. DB2011 Registering Property: Lao PDR made resgistering property faster by moving to a title system. Paying Taxes: Lao PDR replaced the business turnover tax with a new value added tax. DB2010 Paying Taxes: Lao PDR made paying taxes easier for companies by consolidating several taxes into one improved form and improving the lodgment process and staffing at the tax office. Page 66 Doing Business 2020 Lao PDR DB2008 Starting a Business: Lao PDR made starting a business easier by speeding up the process of obtaining an operating license and eliminating the requirement to obtain approval for registration of a new company from the relevant ministry. Trading across Borders: Lao PDR took measures aimed at making it easier to trade across borders, including the introduction of new regulations limiting the government agencies that may be involved in inspecting goods at the border. Page 67 Doing Business 2020 Lao PDR Page 68