This document summarizes a study on foreign direct investment (FDI) in the sugarcane industry in Laos. The study examines Laos' investment laws and the factors influencing investors' decisions to invest in Laos, particularly regarding sugarcane. It reviews literature on sugar industries in various countries. The methodology includes interviews with Thai sugar companies that have invested in Laos to understand the variables affecting their investments. The results indicate sugarcane is a major Laotian industry and Thai companies were attracted by land concessions and opportunities for contract farming with local laborers.

1. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 3. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
THE ANALYSIS OF LAW AND INVESTMENT IN SUGARCANE
INDUSTRIES IN LAOS PDR
Miss Nukanda Methakeelatikorn
Graduate Student, Thammasat International Trade Law and Economics Program
Thammasat University, 2 Prachan Road, Bangkok 10200 Thailand
Email: nutto_aza@hotmail.com, Tel: +8861-040 7522
ABSTRACT
The objective of the study were to examine the investment in LAOs PDR and find out the suitable
pattern of ownership of investment under LAOs PDR foreign investment law. A sample of
investment cases was selected from top range market share in sugarcane industries that expand
their branch in LAOs PDR. This study choose 2 from 49 investors in sugarcane industries. By the
way, the thesis will study as follows: 1.) To study law, international investment . The study
investment laws and legal concessions for investment in Laos PDR. 2.) To study the underlying
causes or factors that cause investors decide to invest in Laos PDR. especially in Sugar cane and
sugar industry 3.) To study the form of the owner (Pattern of Ownership)
of foreign investors in Laos PDR., especially in Sugar cane and sugar industry, including case
studies on how to choose the form of ownership of the investor in such manner .
INTRODUCTION
Sugar industry is a very important crop in Thailand. And it is an industry which has a relatively
high stability. Consider whether, in view of the production. The production value is at least 3.5
billion baht each year. Since the production year 2002/2003onwards, Thailand is considered a
manufacturing activity of high value. And the population is about 1 million households in this
professional field. Or not less than 5 million people a career as a cane. Including a career -
employed workers in the sugar industry. Role in the sugar industry will find that each year the
sugar industry has created jobs and an annual production value of not less than five billion baht in
circulation in the economy. For the export of sugar is classified as agricultural income from
exporting at a higher level as well. Currently, exports rose to 2nd range after a country Brazil
(USDA United States Department of Agriculture cited the Institute of Strategic Trade, 2011 ) and
from the past, is likely to rise to the present. And the data indicate and forecast that this industry
will grow two times in the next 5 years ( interviews Mitr Phol, 2014 ) and sugar cane
industry is the industry that creates jobs and generates significant revenue to the economy both in
Thailand and Laos PDR.
The present work aims to study the analysis on FDI in Sugar Cane Industry in Laos PDR. The
planning of the paper is as follows. After the brief introduction of chapter I, the available
literatures are summarized in chapter II. Research methodologies are mentioned in chapter III.
Analysis and findings are in chapter IV. Lastly chapter V concludes the paper.
LITERATURE REVIEW
Pallapa ( 2001 ) show that the expansion of sugar production and exporting on Euro Zone is
subjected to the term of GATT ( that by using administrative measures to promote the production
of sugar under the GATT 1968 ). The agreement will guarantee about employment and standard

2. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 3. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
cost of living for employee in this field. Furthermore, GATT will provide the price of sugar under
sugar quota system.
Sugar industry in Europe was a result of “Single European Act” or called “SEA” and the
management of the sugar industry in the EU under the laws and regulations of the European
Economic Community (EEC) eliminate barriers within the EU zone.
Meanwhile Europe is the main importer of raw sugar from Laos PDR as of being “ Least
Developed Country “
George ( 1990 ) Since 1991, Cuba has trade agreements with the Soviet Union. Cuba has a lack of
incentive to optimize their production. When trading system from the Soviet collapse. Cuba is
facing severe competition in the global market. After that Cuba have to make a regulation, law,
trade law and law of investment both for domestic and foreign investor for this industry.
There are organizations in the Dominican Republic called “ The Dominican Federation of Sugar
Planters ( FEDOCA )” is the organization that oversees all domestic sugar producers. In addition,
there is also the National Sugar Institute ( The National Sugar Institute or INAZUCAR ) is
governed by the highest authority in the sugar industry. Which has issued the policy, price and
marketing policy to the state and to the agency inspections to ensure compliance with the essential
joint. Legal requirements will helps in matters of international trade, both in terms of price and
taxes for exporting. As well as providing financial support for research and technological
development and efficiency that will affect the industry as a whole.
National Sugar Trading Corporation ( 1980 ) Sugar cane and sugar industry in the Philippines. In
Prior year 1977, Sugar industry was conducted under representative of government which each
agency is working as independently. In such a monopoly operating under a representative of
government.
Including the Philippine Sugar Commission ( the Philippines Sugar Commission or
PHILSUCOM ) which is responsible for the sugar cane pricing and sugar. That is the only one
who has the monopoly power to being both buyers and sellers in this industry. The scope of power
assign a ceiling price of sugar market.
Furthermore the power focused on terminating the contract with the factory or the purchasing of
sugarcane growers produce cases not abide by the agreement. And the power to regulate all
research in the industry. Later , PHILSUCOM has founded a trading company of the National
Sugar ( the National Sugar Trading Corporation or NASUTRA ) is a company that represents a
government as a monopoly trading sugar for domestic consumption and for exporting. Because
this company has totally supported from the government.
RESEARCH METHODOLOGY
The study is essentially an analysis of primary data and secondary data. That mainly study use
descriptive method and documentary research. The data was collected from Thailand Board of
Investment, Office of The Cane and Sugar Board, Economic Survey and various website.
Furthermore the study use questionnaire for find out the result of law and economic analysis in
Sugarcane industry. By researching and compiling of the law, the analysis focused on the Law of
Investment in Lao PDR., Law on obligations of Laos PDR., Law and land concessions. The
method used in each study and the objectives are as follows.
3.1 The primary data
The data is collected by interviewing entrepreneurs, including Mitr Phol sugar mills and KSL
Sugar Plc .The study analyze the variables that affect investment in the form of a variable in
Economics and Law. To study the relationship of different variables that were associated with an

3. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 3. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
investment in this industry. However, the study will analyze Investment in both terms of economic
theory and in law theory. Analysis of the structure of the industry and sugar cane. We will refer to
collective investments in Thailand Model and Brazil Model ( from an interview of sample plant ).
After that, the study concern about the factors of foreign direct investment such as land , labor ,
capital , technology and markets in sugarcane industry. In addition, the analysis and investment
patterns suggest other pattern of investment or pattern of ownership that can happen in the future.
To guide investor can decideto invest in the way that will prompt with their business.
3.2 Secondary Data
The information collected from research, reports and related articles from the Board of Investment
(The Board of Investment of Thailand), Department of Agriculture ,Department of Industrial
Promotion Office of the Cane and Sugar. And legal analysis, the study focus on the law related to
the investment .
Objective: The specific objectives of the paper are as follows:
O1. The study investment laws and legal concessions for investment in Laos PDR.
O2. To study the underlying causes or factors that cause investors decide to invest in Laos PDR
O3. To study the form of the owner (Pattern of Ownership) of foreign investors in Laos PDR.,
especially in Sugar cane and sugar industry.
RESULT AND DISCUSSION
Sugar cane industry in Laos PDR
Sugar cane industry in Laos PDR is one of the biggest industries and ranks 1st industry that the
top 2 biggest sugar mills in Thailand decided to invest in terms of production,
consumption, export and growth. Sugar cane industry in Laos PDR has mainly consists of
Sugar plants, sugar mills, technology, contract farming, Laos labors, land concessions, regulation,
and foreign investment law. All factors impact to investor especially “ Land Concessions” . In
2004/05, Laos PDR announced a concession of land to foreign investors for investment in
agriculture and Industry. Mitr Phol Sugar, one of the biggest sugar mills in Thailand, decide to
joined the concession of land to investors. Like KSL group has decided to join with Laos in 2004.
Both of investor have many different factor to decided expand their business in Laos. Show as a
Table 6 below,
The research show that investors in many countries decide to invest in Laos PDR. The value of
investment increase from year to year since 2003. Especially in agricultural sector, as show in
table 4 and picture 5 that agricultural sector was 3rd range of all sector in Laos PDR. And this
sector directly impact on Laos GDP.
Furthermore the pattern of investment that classified in 3 types of investment, as show in
Table 2.

4. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 3. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
Table 1The table shows the foreign investment in Laos has been approved.
Year 2003 - June 2010
( Unit of Fund: Thousands of U.S. dollars )
2003*
2004 2005 2006 2007 2008 2009 2010
Numbe
r
Of
project
6 40 46 69 100 156 64 481
Fund 2,322 43,671 92,907 155,0192 137,220 148,657 397,761 978,230
Fund
(domes
-tic)
217 3,945 3,393 31,987 26,586 25,874 33,450
125,452
Foreign
invest-ment
2,705 39,72
6
89,514 123,105 110,63
4
122,78
3
364,31
1
852,77
8
Source: The Board of Investment of Thailand ( *conclude only last four months of 2003 )
Table 2
The table shows the foreign investment in Laos has been approved.
Classified by Pattern of Ownership
Year 2003 - June 2010
( Unit of Fund: Thousands of U.S. dollars )
Pattern of
Ownership
2003*
2004 2005 2006 2007 2008 2009 2010
Business in the form of contract
Number of
Project
1 3 4 2 5 2 2 19
Fund 246 1,972 20,982 885 21,934 3,561 268,400 317,980
Join Venture
Number of
Project
3 24 21 32 38 63 23 204
Fund 430 10,821 8,510 124,429 38.730 68,087 94,304 345,311
Direct Investment
Number of
Project
2 13
21 35 57 91 39 256
Fund 2,246 30,878 63,415 29,778 76,556 77,009 35,057 314,939
*conclude only last four months of 2003
Source: The Board of Investment of Thailand

5. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 3. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
Table 3
The table shows the value of the investment in the Lao PDR
Classified by investors
(Unit: USD)
No. Country Year 2009 Year 2010
Number of
Project
Value of
Investment
Number of
Project
Value of
Investment
1 Thailand 37 908,641.398 4 3,736,040
2 China 47 932,892,867 16 344,028,084
3 Vietnam 48 1,421,214,766 4 49,905,000
4 French 77 11,732,567 1 210,000
5 Japan 5 3,730,000 1 8,107,960
6 South
Korea
18 74,874,000 3 3,350,000
7 India 3 2,477,000 - -
8 Australia 2 66,000 1 500,000
9 Malaysia 7 10,924,582 1 150,000
10 Singapore 3 5,689,150 1 5,300,000
Source: The Board of Investment of Thailand, Ministry of Industry
Note : The fiscal year of the Laos PDR. is October to September of the next year.
Table 4
The table shows foreign direct investment by sector and investment in various fields
inLaos PDR during year1989 - 2008.
Manufacturing sector Number of
Project
Fund
Unit : Million USD Percentage of
investment
Electric energy and
hydropower
38 5,184.39 54.42
Mine 135 1,747.35 18.34
Agriculture * 257 523.30 5.49
Industrial sector and
291 501.76 5.27
Crafts
Service 269 486.86 5.11
Construction 53 286.54 3.01
Communication 17 263.40 2.77
Hotels and restaurants 115 172.51 1.80
Financial institution 16 133.80 1.40
Wood industry 60 101.39 1.06
Trade 160 63.88 0.67
Cloth 67 50.15 0.53
Adviser 69 10.47 0.11
Source: Ministry of Planning and Development of the Lao PDR.year 2009

6. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 3. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
Picture 5
Picture shown the top 3 Sector which the most impact to Laos GDP
Source : IMF Lao People’s Democratic Republic : Selected Issues and Statistic Appendix ,
September 2009
Table 6
Factor that impact on Sugar cane industry in Laos in case study Mitr Phol group and KSL group
(2005 – 2014)
Source: researcher 2014
The study was concluded to the chart in picture 7 and 8. In Economic view, foreign direct
investment or any pattern of ownership in other country, the investors have to focus on 2 factors;
cost and benefit. Because the project that make more benefit and try to less the overall cost of
production. Theory in this field always use “Comparative Advantage” for making decision of
investment. On the other hand, in law view, there are 2 trading partner; Home State and Host
State. And the important issue are the meaning of asset such as asset w mean to estate, real estate,
equity, bond, right, copyright, trademark and intellectual property. There are a bit different in 2
view of investment both in factors and meaning. Anyway, the study will analyze that both of
economic and law can explain the way to choose the pattern of ownership on foreign investment
under related law, especially in Sugar cane study.

7. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 3. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
Picture 7
Foreign Investment in view of economic
Picture 8
Foreign Investment in view of economics

8. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
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CONCLUSION AND SUGESSTION FOR FURTHER STUDY
Though there are many promising dynamics which support good growth of Sugarcane industry in
Laos PDR, there are still some significant constraints which, if not addressed sooner, can
impede the growth prospects of this Industry. Furthermore the limit of information from the
interview/ One of the biggest constraints is that this industryare capital intensivecreate a strong
entry barrier and allows lesser number of players to enterthe market. Lesser players mean lesser
competition and lesser competition means reduced effortsto improve the quality standards. The
second constraint is land scarcity, land scarcity lead to permit the foreign investor for invest in
host state. In Laos, government open “ Land Concession” for all supported industry such as
agricultural sector, service sector, and manufacturing sector.
In order to study the legal analysis of the investment in sugar cane industry. Three key issues :
firstly Investment of Lao PDR. , secondly, include the reason or factors that cause investors to
Thailand . Finally, a form of ownership entity (Pattern of Ownership) of foreign investors in sugar
cane industry. All of 3 issues above, focus on investment in Sugar cane industry that expand from
Thailand’s investor to the Laos PDR.
This thesis study of foreign investors to invest in Thailand just some of the examples . This is due
to restrictions in certain important aspects of the participation of investors. To disclose the details
to know. To be used in the analysis of this thesis . Attributed to investments of investors in
Thailand. Sugar cane and sugar industry case studies to date have been few . Most investments are
scattered in several industries. By failing to point out the pros and cons of investing in such
industrial company. The statutes and regulations of the Lao PDR. has changed . Since the start of
the sugar mill , the investment analysis comparing the investment of new investors . There may be
obstacles and limitations over the two investors . Those who interviewed the two cases insights
and suggestions for foreign investors. To invest in Lao PDR. Whether an investment in any given
industry . Investment conditions should be investigated. And industry support in the Lao PDR.
Before the process of investment in the first phase. May take a long time and were required
following - up regularly.
There are currently investing in the sugar industry has expanded into many more countries , such
as Cambodia, China and Australia. These are countries that have many varieties pattern of
ownership especially sugar cane industry. Researchers have found that finding investment in this
industry will lead to the variety and can be solved and comparable across countries . This may
lead to the conclusions that may be helpful in the future.
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