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OECD 2016 Investment Policy Review of Lao P.D.R.


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This presentation outlines the investment policy review process that the government of Lao P.D.R. is undertaking in partnership with the the OECD and ASEAN as part of an active programme of investment policy reforms.

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OECD 2016 Investment Policy Review of Lao P.D.R.

  1. 1. Investment policy review of Lao P.D.R. Vientiane, 2016
  2. 2. • Introduction Investment policy and related issues Stephen Thomsen, Head of IPRs, OECD Discussion • Investment promotion and facilitation and other policy areas Alexandre de Crombrugghe, OECD Discussion • Responsible business conduct Tihana Bule, OECD Discussion AGENDA
  3. 3. OECD Investment Policy Reviews using the Policy Framework for Investment
  4. 4. OECD Investment Policy Reviews Southeast Asia Forthcoming 2016 • Cambodia • Lao PDR • Viet Nam 2009 2010 2013 2014 2016 Reviews are undertaken jointly by the OECD and the government in partnership with the ASEAN Secretariat and based on the Policy Framework for Investment
  5. 5. 2015 April OECD mission, PFI presentation to the Taskforce April-June Government prepares answers to PFI questionnaire July Second OECD mission to discuss answers to questionnaire and for further fact-finding August-Feb. 2016 OECD prepares draft report December Lao PDR participates in ASEAN-OECD Regional Policy Network on Investment in Paris 2016 April OECD-MPI Seminar with ministries and stakeholders in Vientiane to discuss draft IPR of Lao PDR April-May Government and stakeholders provide written comments October Presentation of IPR to OECD Inv. Committee in Paris (optional) November Revised draft IPR circulated for final comments December IPR of Lao PDR launched in Vientiane or in ASEAN region Follow-up Results presented at regional or sub-regional level (including Regional Policy Network), other activities IPR of Lao PDR timeline
  7. 7. Lao PDR experienced remarkable economic results in the past 10 to 15 years 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0 100 200 300 400 500 600 700 800 900 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 GDP per capita (constant 2005 USD) GDP growth (annual %) ASEAN GDP growth (average annual %) Source: World Development Indicators
  8. 8. FDI has grown quickly 0 100 200 300 400 500 600 700 800 FDI inflows, 1986-2014 (USD million) Source: UNCTAD
  9. 9. FDI dominated by three largest neighbours and predominantly in natural resources China 30% Thailand 25% Viet Nam 20% Malaysia 4% Korea 4% France 3% Japan 2% Netherlands 2% Norway 2% Others 8% Electricity generation 29% Mining 23% Agriculture 14% Service 10% Industry & handicraft 8% Hotel & restaurant 4% Construction 3% Telecoms 3% Others 6% Approved FDI projects in Lao PDR by sector, 1989-2015 Approved FDI projects in Lao PDR by country of origin, 1989-2015 Source: IPD
  10. 10. And in relative terms Lao PDR is outperformed by most of its regional peers 31% 79% 26% 49% 68% 527 846 329 983 2700 0 500 1000 1500 2000 2500 3000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Lao PDR Cambodia Myanmar Viet Nam ASEAN FDI stock as a percentage of GDP FDI stock per capita (USD) Source: UNCTAD
  11. 11. • FDI has significantly contributed to economic growth, export earnings and government revenues, among others • Need to diversify into areas with opportunities for further growth in employment • Need to ensure environmental sustainability and social inclusiveness • With appropriate policies, benefits of FDI can be further maximised and potential costs minimised FDI impact can be further maximised
  13. 13. • Law-making process and regulatory implementation • The 2009 Law on Investment Promotion • Protection of property rights • Dispute settlement mechanisms • International investment agreements • Regulatory restrictions to FDI • Corporate governance Investment policy in Lao PDR
  14. 14. • More coherent law-making for an enabling investment policy framework needed: – Inclusive law-making process for more buy-in for reform – Prompt adoption of by-laws to ensure better implementation of new legislation – Need to strengthen the leading role of MoJ in law-making process to ensure consistency of the legal framework • Important positive step taken with the enactment of the Law on Laws: – Yet provisions of the Law on Laws are not yet fully applied – Need to further improve accessibility of laws and regulations Enhancing the rule of law in law-making process is a pressing priority
  15. 15. • Inconsistent and inadequate implementation is the biggest impediment to the ongoing regulatory reform process: – Adoption of implementing decrees often delayed (i.e., IP decrees), – Ambiguous legal language leaves room for inconsistent administrative practices; – Lack of capacity within government, esp. at provincial level; Implementing investment legislation remains one of the biggest challenges
  16. 16. • 2009 Law on Investment Promotion covers domestic and foreign investment: – Reflects a pro-investment stance – Lacks investment protection guarantees. • Priority actions for the revision of the law: – Adopt detailed and clear legal language; – Give particular attention to the definition of investment; – Clarify scope and content of existing protection provisions, esp. expropriation; – Revise ISDS provision: clarify procedural requirements and scope of the provision – Ensure consistency with other laws and with provisions of ACIA. Revision of the Investment Law: an opportunity for reinforcing core investment protection guarantees
  17. 17. • Lao PDR is among the last AMS not to have adhered to the ICSID Convention • No specialised courts (IP courts, land courts); • Unclear mandate of EDRC; claimants often bypass EDRC; • To prevent this, clarify the DS provision in the investment law; • No right of appeal against administrative decisions (e.g. expropriation); • Ongoing efforts to create an independent commercial arbitration body should be pursued; • More capacity-building programmes for judges on commercial matters are needed to improve investors’ confidence in the court system. Access to dispute settlement mechanisms is yet to be clarified
  18. 18. • Enactment of new land law still pending • Ongoing computerisation of land registration system, but no clear and updated land system yet • Land Use Rights cannot be used as collateral • Decentralisation of land administration is an obstacle to more consistency of administrative practices • Impetus for modernisation is needed at central government level Access to land
  19. 19. • Major legislative and institutional modernisation reforms have been achieved • Delays in adopting implementing decrees are a major obstacle to a consistent and efficient implementation of IP law • No specialised IP courts and unclear mandate of the IP dispute resolution division • Further need for capacity-building and awareness raising programmes for civil servants and the civil society Protection of Intellectual Property Rights
  20. 20. • Lao PDR party to 20 BITs and regional and multilateral trade and investment agreements. • Give covered investors substantive protection and access to investor-state dispute settlement mechanisms (ISDS) • Recent treaties concluded within the ASEAN framework reflect policy innovations: – more specific language on key provisions to better reflect government intent – more detailed regulation of ISDS International Investment Agreements: a cornerstone of Lao PDR’s investment policy
  21. 21. Lao PDR compares favourably vis-à-vis ASEAN peers in terms of FDI restrictions, but remains relatively restrictive ASEAN9² OECD average Non-OECD average 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 Singapore Cambodia Viet Nam¹ Lao PDR¹ Malaysia Thailand Indonesia Myanmar China Philippines¹ OECD FDI Regulatory Restrictiveness Index (open=0; closed=1) Source: OECD FDI Regulatory Restrictiveness Index database, Notes: (¹) Data refer to regulatory restrictions on FDI as of end-2015. For all other countries, data refer to the regulatory regime as of end-2014; (²) ASEAN9 refers to the average scores of the nine ASEAN member states covered. It excludes Brunei Darussalam which is not covered. Data for Lao PDR, Viet Nam, Cambodia, Singapore and Thailand are preliminary; (³) The OECD FDI Regulatory Restrictiveness Index covers only statutory measures discriminating against foreign investors (e.g. foreign equity limits, screening & approval procedures, restriction on key foreign personnel, and other operational measures). Other important aspects of an investment climate (e.g. the implementation of regulations and state monopolies among other) are not considered. All 34 OECD countries and 30 non-OECD countries are covered, including all G20 members.
  22. 22. Some measures in place are rather unusual when compared to the broad international experience (1/2) 1. stringency of some sector-specific restrictions Source: OECD FDI Regulatory Restrictiveness Index database, Notes: (¹) ASEAN9 refers to the average scores of the nine ASEAN member states covered (all except Brunei Darussalam). Data for Lao PDR, Philippines and Viet Nam refer to regulatory restrictions as of end-2015. For the other countries, data refer to end-2014. Data for Cambodia, Singapore and Thailand are preliminary. Data covers 64 countries in total, including all OECD and G20 economies. 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 OECD ASEAN9¹ LAO PDR OECD FDI Regulatory Restrictiveness Index (open=0; closed=1)
  23. 23. Some measures in place are rather unusual when compared to the broad international experience (2/2) 2. Discriminatory minimum capital requirement LAO 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000 0 20000 40000 60000 80000 100000 120000 140000 Minimum capital requirement, current US dollar Jordan's minimum capital requirement vs OECD and selected emerging economies GDP per capita, PPP (current insternational $) Lao PDR is one of the few countries that maintain a discriminatory minimum capital requirement for foreign investors, and a particularly stringent one Source: OECD Services Trade Restrictiveness database and World Bank’s World Development Indicators. Notes: data refer to minimum capital requirement for limited liability companies and is converted at current exchange rates as of 21-04-2015. There are 25 countries within the OECD Services Trade Restrictiveness database that reported to apply minimum capital requirements for investment in limited liability companies. The database 42 countries: all 34 OECD countries and OECD accession track and key partner countries (Brazil, China, Indonesia, India and South Africa). Usual Purpose Main issues • Protect consumers and creditors from risky and potentially insolvent business • Does not take into account firms’ differences in size or risks • Evidence: barriers to entry and negative impact on firm growth and access to finance Evidence
  24. 24.  Regulatory restrictions are spread among several laws and regulations • The 2009 Law on Investment Promotion provides only a generic statement on areas where investment may be restricted (art. 4) • Reference to a “Negative List”, but not clear if yet to be issued or refers to the list of “controlled business” • List of “controlled business” sheds limited light on Lao PDR’s investment regime  Important legal instruments are not readily accessible online. English versions, even more scarce. The regime provides limited transparency and predictability with regards to market access rules and conditions
  25. 25. • Lao PDR has made progress in developing a sound framework for corporate governance • Capital market remains small • Need to continue reinforcing the organisation of the state ownership function of SOEs • Need to strengthen the requirements for disclosure and transparency The corporate governance framework has improved but remains challenging
  27. 27. Core investment promotion and facilitation measures Investment promotion Investment facilitation Investment generation IPA Tax incentives SEZs / IPs Business linkages Image building Investor servicing Aftercare Policy advocacy
  28. 28. • Investment promotion and facilitation landscape dictated by the 3 existing routes to invest in Lao PDR • Challenging business environment – especially to start a business (153rd out of 189 on Doing Business) • Growing importance of SEZs, but still at an early stage of development and with no clear policy/strategy yet • Important role of tax incentives in investment promotion techniques – especially tax holidays • Few business linkages between MNEs and SMEs • Low labour productivity Overview of investment promotion and facilitation in Lao PDR
  29. 29. • Lack of proactive FDI attraction – especially in priority sectors; no clear investment promotion strategy to support economic diversification • Coordination of FDI attraction measures is weak; inconsistent messages are sometimes provided; competing activities do not serve the country’s overall development objectives. • The IPD is both regulating and promoting FDI; its role as the national IPA is not strong enough (focusing on concessions or beyond?) Marketing Lao PDR and attracting “quality investors”
  30. 30. • Different entry points for investors (3 one-stop shops) • Too much attention paid to one-stop-shops; multitude of burdensome administrative obstacles to start and operate a business • Deadlines and fees for licensing not clear and systematic, which leaves room for discretion, unpredictability and inconsistent application of laws • Lack of coordination between ministries • LBF well-perceived, but dialogue with the private sector can be more systematic through aftercare and policy advocacy Facilitating investment and reinvestment
  31. 31. Lack of transparency • Basic incentives clearly stipulated in the law but those in SEZs and concessions follow different rules • Concessions: who negotiates the master list? Are incentives easy to implement? • No clear and standard criteria for granting incentives; too much room for discretion Do incentives serve their purpose? • No existing cost/benefit analysis • High risks of revenue forgone vs. little chance of attracting FDI Using tax incentives more cautiously
  32. 32. Enhancing the development impact of FDI through business linkages Domestic firms’ characteristics Foreign firms’ characteristics Government policies and institutions Spillover potential FDI spillovers Absorptive capacities Education & training Access to finance SME development Trade policy Labour market regulations Investment policy & promotion IP rights Source: OECD (adapted from Farole and Winkler (2014), and Paus and Gallagher (2008))
  33. 33. Local suppliers in Lao PDR and regional peers (ranking out of 140 economies), 2015 Absorptive capacities: linkage creation depends on the availability of domestic SMEs 0 20 40 60 80 100 120 140 Myanmar Cambodia Lao PDR Viet Nam Philippines Thailand China Malaysia Local supplier quality Local supplier quantity Source: World Economic Forum
  34. 34. • SME development becomes increasingly prioritised in government plans but SMEPDO still lacks resources and capacity • Need to develop industry-specific capacity building • Need to facilitate information exchanges – Information dissemination, suppliers databases – Matchmaking events • Increase business involvement in human resource development strategies Absorptive capacities: SME and skills development at the centre
  35. 35. • Some FDI more likely to generate spillovers and linkages; some foreign investors are more inclined to source locally • Aftercare can help anchor investors in the local economy • SEZs tend to generate few linkages – except if they take a cluster focus, allow local companies to participate and are subject to a well-functioning inter-agency coordination Spillover potential: implications for FDI attraction
  37. 37. Infrastructure connectivity is key to attain the SEDP objective of enhancing economic integration and broader economic diversification • Lao PDR’s relatively high cost of accessing international gateways is a handicap for achieving its objectives • Crucial to link isolated rural areas to markets, and develop the targeted agro-processing industry • And to further develop the tourism sector: – Lao PDR account for less than 10% of tourists arriving in GMS countries; tourism highly concentrated in Vientiane – Insufficient last-mile transport infrastructure in secondary sites is a key impediment to more inclusive tourism activity Source: IMF export diversification and quality database, 2014. Note: (¹) Overall Theil Index refers to the sum of the extensive (more export items) and the intensive margins (more equally spread portfolio) as of 2010. The lower the value, the more diversified the economy is. The overall Theil index is the sum of the intensive and extensive components. The extensive Theil index is calculated for each country/year pair as: TB = ∑k (Nk/N) (µk/µ) ln(µk/µ), where k represents each group (traditional, new, and non-traded), Nk is the total number of products exported in each group, and µk/µ is the relative mean of exports in each group. The intensive Theil index for each country/year pair is: TW = ∑k (Nk/N) (µk/µ) {(1/Nk ) ∑i∈Ik (xi/µk ) ln(xi/µk )}. where x represents export value. Infrastructure connectivity is highly correlated with export diversification 0 1 2 3 4 5 6 7 0 1 2 3 4 5World Bank Logistics Performance Index, infrastructure indicator, score from 1 to 5 (best) Export Diversification (Theil index)(lower value=more diversified)¹
  38. 38. While Lao PDR has enhanced infrastructure connectivity over the last decade, upgrading the network remains necessary (1/2) 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 Cambodia China Indonesia Lao PDR Malaysia Myanmar Philippines Singapore Thailand Vietnam World Bank Logistics Performance Index, Infrastructure indicator, score from 1 to 5 (best) 2007 2014 Source: World Bank Logistics Performance Index database.
  39. 39. Limited ICT infrastructure and use is likely to contribute to higher trade costs • One of the countries with the most limited ICT availability and penetration in SEA Access to electricity has improved considerably , but still remains relatively limited compared to regional peers • Only ~70% have access to electricity compared to much higher levels in ASEAN peers • access to non-solid fuels for use in day-to-day activities also remains largely restricted Transport connectivity has also improved, but network quality is below regional standards • Road transport concentrates most on passenger and freight activity • Yet, only 16% of the network is paved • Over 87% of the Asian Highway network in Lao PDR: minimum desirable standard or below (Class III or below) • About 40% of the villages lack access to all-weather roads (particularly given Lao PDR’s vulnerability to natural disasters) While Lao PDR has enhanced infrastructure connectivity over the last decade, upgrading the network remains necessary (2/2)
  40. 40. • Nearly USD 3.3 billion needed in investments in transport (upgrade and expansion) between 2010 and 2015 to support the previous NSEDP • Independent estimates suggest that needs amount to 12% of GDP for overall economic infrastructure over 2010-20 period • But available resources amounted to only USD 650 million ( ~20% of estimated annual needs) • Funds for road maintenance cover only ~40% of annual needs • ODA has played a critical role: roughly 44% of available funds for road transport investments, including maintenance expenditures Estimated infrastructure investment needs exceed available funds at large Estimated investment needs, % of 2010- 2020 GDP Sources: Battacharyay, B. N. (2010), “Estimating demand for infrastructure in energy, transport, telecommunications, water and sanitation in Asia and the Pacific: 2010-2020”, ADBI Working Paper No 248, September.; ADB (2011), Lao PDR: Transport Sector Assessment, Strategy and Road Map, 2013 update, Philippines: Asian Development Bank.
  41. 41. • It seeks to establish a new PPP framework partly motivated by the large capital needs for infrastructure. A conceptual framework has already been issued • But the framework should not be motivated by fiscal considerations – PPPs will not bridge the infrastructure gap (users or taxpayers still have to pay) – Even the upgrade of one of the most important economic corridors (the NR 13) will likely require significant government support (e.g. upfront investment and/or availability payments) – But, private investments in infrastructure can help to increase the efficiency of infrastructure delivery in the appropriate environment • There is a need for improved planning and project prioritisation – Funding allocations seem to be determined annually and are not aligned with medium-term infrastructure plans – Need to strengthen value-for-money assessment framework to support a credible pipeline of projects (currently, no standard framework exists for preparing project proposals and feasibility studies). The government seeks to encourage greater private participation in infrastructure delivery through PPPs
  42. 42. • Reforms are in line with those in other ASEAN economies • Currently, Lao PDR has no proper PPP legal and institutional framework in place • The available draft Prime Minister PPP Decree (7th version) brings some key regulatory and institutional mechanisms to improve delivery capacity: • Dedicated PPP unit within the Ministry of Planning and Investment (not a guarantee of success, but helps bring necessary resources together) • Project Development Facility (can support government agencies in preparing and tendering projects) • Viability Gap Funding (to projects that have strong economic returns but may not be commercially viable) • Competitive bidding and a number of other aspects (e.g. lender’s rights) • Yet, some issues have not been addressed or are only weakly addressed at this stage • Draft language (English version) sometimes lacks clarity • Relation to existing Concessions regulation under the Law on Investment • Limited guidance is provided with regard to some critical issues for developing PPPs (risk allocation, unsolicited proposals etc.). • These can be further clarified in regulations and guidance documents, or in model contract provisions. But the framework would benefit from more clarity on principles and rules governing such issues (details can be set at project level for flexibility) Envisaged reforms: establishing a credible institutional and legal framework for private participation in infrastructure
  43. 43. • The government recognises the importance of promoting green growth and has taken some key steps to institute a policy environment for green investment • Basic legislation and strategies favour sustainable development and environmental protection: – Mitigating the impact of climate change (National Strategy on Climate Change 2010) – Enhancing energy security, incl. through renewables (Renewable Energy Development Strategy 2011) – Using natural resources in a sustainable manner (Environmental Protection Law, Mining Law, Law on Electricity, National Forestry Strategy) Recognition by the government of the importance to promote green growth
  44. 44. • Lack of policy coordination • Lack of institutional capacities to ensure effective implementation and monitoring of laws • Over-reliance on ODA for green growth promotion • No comprehensive renewable energy policy • No independent regulatory authority for electricity tariff formulation • Pricing mechanism for renewable energy-based electricity generation not appropriate • Incentives not sufficiently focused on renewable and sustainable energy projects But implementation challenges remain, including for renewable energy development
  46. 46. Scope and importance of RBC Relevance for policy-making Responsible business conduct at the OECD Global developments Opportunities in Lao PDR
  47. 47. • Goes beyond philanthropy • Focuses on addressing environmental and social impacts of business operations • Part of core business and risk management, including in the supply chain and business relationships • Important for all businesses RBC – Focus on Impact ensuring a positive contribution to overall developmentResponsible Business Conduct avoiding and addressing negative impacts 1 2
  48. 48. • Urgent need to address issues in global supply chains • Need for inclusive and sustainable growth • Complex issues not solvable by any one actor alone RBC – Focus on Impact
  49. 49. Clothing exports of selected economies (1990 vs. 2014) % of total world exports (1990 vs. 2014) Data source: World Trade Organisation Mexico Turkey China India Indonesia Bangladesh Viet Nam Pakistan
  50. 50. Textile & Garment Sector Supply Chain Yarn Spinning Weaving, knitting Dyeing, printing, Finishing Garment Manufacturing Brands, Buying houses, Trading companies RetailRaw material production
  51. 51. Textile & Garment Sector Supply Chain Aggravating factors Fast fashion & low prices Short-term contracts Purchasing practices Business models Illegal sub- contracting Use of temporary workers, homeworkers, migrant workers Sumangli scheme Small holder farmers; Use of temporary workers Inflexible delivery dates Business models Forced & bonded labour Child labour Occupational health & safety Excessive working hours Freedom of Association & Collective bargaining Wages Chemical use & water contamination Example salient risks
  52. 52. Multi-stakeholder approach to RBC Improving the business environment Protecting public interest and stakeholder rights Overcoming country risk perceptions Social licence to operate and risk management Compliance/ respecting stakeholder rights Competitiveness and market access Ensuring accountability/ respect of rights Framework to resolve issues proactively and constructively Shared understanding of responsibilities Government Businesses Civil Society
  53. 53. RBC at the OECD • OECD Guidelines for Multinational Enterprises – Clear role for home governments – Accountability – Sector Guidances • RBC in the Policy Framework for Investment and other policy areas – Development policy and co-operation; corporate governance; competition; taxation; finance • Outreach and dialogue
  54. 54. • Most comprehensive government-backed international instrument for promoting responsible business conduct • Recommendations from governments to businesses operating in or from adhering countries • Purpose: to ensure business operations are in harmony with government policies; strengthen the basis of mutual confidence with the society; help improve foreign investment climate; enhance contribution to sustainable development • Unique implementation mechanism • Endorsed by business, trade unions and civil society organizations OECD Guidelines for Multinational Enterprises
  55. 55. Application of the Guidelines
  56. 56. Concepts and Principles General Policies Disclosure Human Rights Employment and Industrial Relations Environment Combating Bribery, Bribe Solicitation and Extortion Consumer Interests Science and Technology Competition Taxation Scope
  57. 57. Implementing the Guidelines: Shared Responsibility Implement the Guidelines and encourage their use by businesses (domestic and foreign) Provide a policy environment that supports and promotes responsible business conduct Set up National Contact Points for the Guidelines Maximise positive impacts, minimise adverse impacts Carry out due diligence to identify, prevent and mitigate actual and potential adverse impacts Cover not only impacts related to own operations; but also in the supply chain and business relationships Responsibilities of Governments Responsibilities of Businesses
  58. 58. • One of the main global non-judicial mechanisms and a significant contribution to improving access to remedy in case RBC principles and standards are not observed • Mandate: – Help resolve practical issues through dialogue and consensus – Promote RBC and actively engage with stakeholders – Identify areas where additional guidance for businesses might be needed (i.e. sectors, regions, etc.) – Report on activities Implementing the Guidelines: National Contact Points
  59. 59. Implementing the Guidelines: National Contact Points 1% 3% 3% 3% 3% 4% 4% 4% 4% 6% 6% 11% 17% 34% Water supply; sewerage, waste management and… Human health and social work activities Accommodation and food service Construction Transportation and storage Other Information and communication Other service activities Electricity, gas, steam and air conditioning supply Agriculture, forestry and fishing Wholesale and retail trade Financial and insurance activities Mining and quarrying Manufacturing Percentage of cases by industry sector 1% 2% 3% 5% 6% 8% 15% 21% 24% 45% 55% Science and technology Taxation Competition Consumer interests Concepts and principles Combating bribery, bribe solicitation and extortion Disclosure Environment Human rights General policies Employment and industrial relations Percentage of cases by theme
  60. 60. Implementing the Guidelines: Guidance for Business OECD Due Diligence Guidance for Responsible Mineral Supply Chains (2011) OECD Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector OECD-FAO Guidance for Responsible Agricultural Supply Chains OECD Due Diligence Guidance for Responsible Supply Chains in the Garment & Footwear Sector (forthcoming) Responsible Business Conduct in the Financial Sector (forthcoming)
  61. 61. • Convergence and coherence on RBC since 2011 – OECD Guidelines for Multinational Enterprises – UN Guiding Principles on Business and Human Rights – Core ILO conventions • Sustainable Development Goals and Paris Agreement • Integration in numerous international, regional and domestic commitments: – G7 leaders statement – UNSC Resolutions – Trade agreements and bilateral investment treaties – Market access provisions – EU CSR Strategy and new directives – National strategies: UK Modern Slavery Act, French legislative developments, U.S. regulations/National Action Plan, Dutch agreement on textiles, Chinese guidelines – ASEAN practice differs country to country • Increasing integration of RBC in development finance, by investors, stock exchanges, banks, pension funds, and sovereign wealth funds Attention to RBC Increasing Globally
  62. 62. Promoting and enabling RBC is an opportunity in Lao PDR • Awareness of RBC is not wide-spread; perceived risks are high • Partial alignment with international principles and standards in areas related to RBC; scope for further alignment in important areas • Primary responsibility for ensuring that investment contributes to inclusive and sustainable growth and that stakeholder rights are protected rests with the government of Lao PDR • International investors should observe the OECD Guidelines and UN Guiding Principles • A comprehensive strategy for how environmental and social risks of investments are addressed is needed, including ensuring that any investment incentives and concession agreements are targeted and well-designed and coupled with due consideration of their environmental and social impacts • Broader promotion of RBC could support domestic industry development and diversification of the economy • Role of civil society could be expanded to increase transparency and accountability
  63. 63. THANK YOU!