Background

A foreign individual (“Investor”) would like to operate a bar in Vientiane.

Questions from the Investor

1. What type of entity the Investor should register?
2. Is an investment licence required for the proposed activity?
3. Is an operating licence required for the proposed activity? If so, what government authority is responsible?
4. Is there a foreign shareholding restriction? In other words, is a joint venture with a Lao national required?
5. What is the minimum registered capital requirement to operate a bar?

Suitable Entity

There are several business forms in Laos, including the below:

Thus, a private limited company is the most suitable business form to operate a bar in Laos and the Investor proceeded with incorporation of a private limited company.

Investment Licence

Investments that are deemed by the government to be controlled businesses, e.g. plantation agriculture, certain manufacturing industries, transportation, leasing, insurance, legal and accountancy services, education, and casinos, require an investment licence issued by the Ministry of Planning and Investment (MPI) serving a registration authority for such controlled businesses.

In case of the operating of a bar, an investment licence is not required, and the application for the company incorporation was made to the Ministry of Industry and Commerce (MOIC) responsible for registration of companies involved in general business activities.

Operating Licence

In Laos, depending on the proposed activity, the investor may be required to obtain an industry-specific operating licence from a relevant ministry. In this case, the Investor needed to apply for the operating licence covering operation of a bar issued by the Ministry of Information, Culture and Tourism (MICT).

Foreign Shareholding

Lao PDR law does not prohibit 100% foreign-owned company to operate a bar. Consequently, the Investor was able to register a sole limited company, i.e. a private limited company with the Investor as a sole shareholder.

Minimum Registered Capital

Previously, a company that had one or more foreign investors was required to have a minimum registered capital of LAK 1 billion (approximately USD 100,000). Thus, the Investor registered such capital at the time of the company incorporation. However, we understand that such a requirement has been abolished since 2019 and, currently, there is no minimum registered capital requirement for a foreign-owned company operating a bar.

Having said this, it is always advisable to clarify current practice with respect to minimum registered capital and other applicable restrictions with relevant government authorities (in case of operating a bar, MOIC and MICT) before proceeding with the company incorporation in Laos.