Govt imposes new regulations on growing vehicle industry

The government has promulgated a new prime ministerial decree, which aims to more effectively administer the growing number of businesses involved in the import, sale and assembly of vehicles in Laos.
The Ministry of Industry and Commerce on January 3 posted the decree at https://www.laotradeportal.gov.la/, a government website that provides business operators with useful trading information.
Under the new decree, which Prime Minister Thongloun Sisoulith endorsed on December 27, the government makes it clear that the import and export of vehicles, dealerships, and assembly plants are different types of business.

In this regard, a company that wants to operate all three types of business must obtain three operating licences from the commerce ministry. In the past, some companies used a single business licence to both import and sell vehicles.
According to the decree, a firm which obtains a licence to import and export cars may operate only on a wholesale basis while a firm which has a vehicle sales business licence can operate both wholesale and retail businesses. 
A firm which has a vehicle assembly licence is only authorised to import parts and assemble them and sell the finished products to customers on a wholesale basis. If this firm wishes to engage in vehicle retail sales, it must also obtain a licence to operate such a dealership.
One of the main requirements that companies must fulfill under the decree is that a business wishing to acquire a licence to import and export vehicles must have registered capital of at least  4 billion kip for three-wheel vehicles and 5 billion kip for four-wheel vehicles.
A business that wishes to acquire a car distribution business is required to have registered capital of at least 1 billion kip for the sale of three-wheel cars and 5 billion kip for four-wheel vehicles. 
Companies that were given a business operating licence before the decree came into effect have one year to adjust their business operations to meet the requirements of the new decree.
Applications for a vehicle business operation licence can be submitted to the Ministry of Industry and Commerce. The licence registrar must issue the licence within 15 days after receiving all the necessary documents.
Policy makers say the main objective of the prime minister’s decree is to enable state agencies to effectively administer vehicle businesses, which have been growing rapidly in recent years.
The effective administration of vehicle businesses is aimed at limiting the number of operations that sell low quality vehicles, as these are harmful to the environment. The government’s policy is to encourage the sale of vehicles that are environmentally friendly, such as electric vehicles.
In addition, the government wants to encourage Lao companies to operate vehicle assembly plants through tax incentives, according to the prime minister’s decree.

By Ekaphone Phouthonesy
(Latest Update January 9, 2020)