Foreign Investors Mandated to Open Bank Accounts in Laos

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The Bank of the Lao PDR (BOL) recently introduced a directive concerning the regulation of foreign currency, mandating that foreign investors establish designated bank accounts in Laos for processing financial transactions, as reported by Vientiane Times.

This decision stems from the government’s observation that the recorded inflow of foreign investment in the banking system fell below the agreed-upon investment capital. In response, the central bank aims to bolster foreign currency inflows into the banking sector to address the deficit in the overall balance of payments, stabilize the value of the kip, and alleviate financial challenges.

Under the new regulation, foreign investors must open bank accounts in Lao kip and foreign currencies at a commercial bank in Laos within 15 working days following the receipt of their business license or approval of their investment proposal. All financial transactions conducted by investors, including investment capital transfers to Laos, profit distributions, and repayment of principal and interest to foreign entities, must flow through these designated bank accounts.

Moreover, foreign investors intending to settle payments for goods, services, debts, dividends, and salaries must convert their foreign currency into Lao domestic currency through commercial banks, maintaining documentation for auditing purposes.

Furthermore, it is mandated that all investment capital specified in their approval or business license be transferred into Laos. If the transfer involves equipment or goods, relevant documentation must be provided to comply with regulations.

To ensure adherence to the directive, foreign investors are prohibited from conducting financial transactions through accounts other than those specifically designated for this purpose at a commercial bank in Laos. Additionally, they are restricted from currency exchange transactions through individuals or entities outside of commercial banks. These measures are aimed at enhancing transparency and regulatory oversight within the financial system.