Land Use Rights for Foreign Investors in Lao PDR

Foreign individuals and entities, whether wholly or partially foreign-owned, may not own land in Lao PDR. However, they may obtain land use rights through:

• A lease from a Lao citizen or the State, or
• A concession granted by the State.

Lease Arrangements

Maximum Lease Term:
A lease between a Lao citizen and a foreign investor may be granted for up to 30 years, with extensions allowed on a case-by-case basis subject to:

• Agreement between the parties; and
• Approval from the Ministry of Natural Resources and Environment (MONRE).

Approval Process:
Prior to entering into such leases, approval is required from the Land Management Authority, based on recommendations from the provincial or city administration where the land is located.

Lease Term Limits:

• Developed land (land with buildings): Maximum term is 20 years.

• Undeveloped land: Maximum term is 30 years.
  These terms may be extended with agreement and approval from local authorities.

Renewals:
In practice, it is common for long-term lease agreements to include automatic renewal clauses.

Foreign Ownership of Structures

Foreign individuals or organizations may own buildings or structures that they construct or purchase on leased land. Ownership of these structures is transferable.

Additional Rights of Foreign Lessees

Foreign investors leasing land in Lao PDR have the right to:

1. Use the lease agreement as collateral in dealings with financial institutions, both domestically and internationally;
2. ‍Sublease the land use rights (limited to the duration of the main lease agreement);
3. ‍Pass on lease rights by inheritance for the remaining contract period;
4. Use the lease contract as capital contribution in other business ventures.

Obligations of Foreign Lessees

Foreign investors have a number of legal obligations, including:

1. Using the land in accordance with the purpose specified in the lease or company objectives;
2. Avoiding damage to land quality and refraining from environmental harm;
3. Respecting the rights and interests of others;
4. Complying with right-of-way rules;
5. Paying lease fees and applicable taxes;
6. Complying with all Lao PDR laws.

Contractual Requirements and Registration

Minimum Contract Requirements:
All lease or concession agreements must specify:

• The purpose of the land use;
• The lease or concession fee; and
• The actual term of the lease or concession.

Concession-Specific Provisions:
Concession agreements may also include tax rates applicable to the extraction or use of natural resources on the land.

‍Registration and Formalities:
All contracts involving the lease, sale, transfer, or mortgage of land must be:

• Registered with the municipal or district Land Management Authority that has jurisdiction over the property location;
• Witnessed by three individuals; and
• Stamped by the Village Chief, if required by the Land Management Authority, before acceptance for registration.