Laos Sustainability Report

22 23 Legal and compliant operations O Compliant management In the development and construction of projects, the company attaches great importance to the compliance training of Chinese employees working overseas, organizing employees to study documents such as Project Concession Agreement (CA Agreement), and to conscientiously perform clauses of the agreement. The company strictly abides by laws and regulations including Laos Investment Law, Labor Law, Customs Duty Law, Environmental Protection Law, Social Security Law, Foreign Exchange Law and Administration Law on Import and Export. We engage local renowned lawyers and financing risk consultants, accounting firms, taxation firms and relevant consulting institutions to provide technical guidance and intelligent support for our business operations to ensure that our operations are legal and compliant. The Nam Ou River project successfully passed relevant compliant operations inspection of the Laotian government In July 2017, 22 people from the Department of Energy and Business (DEB) under the Ministry of Mines and Energy of Laos and other relevant government authorities involving the Master List and labor administration conducted special inspection regarding the construction progress, labor employment and imported materials and equipment of level-1 and level-3 Hydropower Stations of the second phase of the Nam Ou River project, and the project successfully passed the inspection. "As an important hydropower project in Northern Laos, the Nam Ou River project is of representative and exemplary significance. The project is constructed strictly following the agreement and has a high level of compliance. We hope that the project will progress smoothly to contribute more to local development." -Official of the Ministry of Mines and Energy of Laos Integrating into local development Cooperate with local companies In project development, PowerChina pays attention to having good cooperation with local enterprises, and allocates projects like reservoir area resettlement, reservoir area cleaning, and environmental monitoring to local companies for execution. By providing fund support, technical aid and O Train local talent Sticking to the principle of localized development, PowerChina actively hires local human resources and solves the local employment issue. Nam Ou River Basin Hydropower Co., Ltd. under PowerChina provides over 1,600 employment opportunities for the local community, including such positions as driver, translator, copy writer, logistics personnel, cleaner and security guard. In addition, the company's resettlement village construction project offers more than 12,000 employment opportunities for local people, increasing their income. Considering the characteristics of local Laotian employees, the company has established a talent management mechanism of "selection, use, growth, joint development, PowerChina facilitates the growth and development of local construction and relevant enterprises, and boosts rapid development of multiple industries like transportation, packaging, building materials, and import trade. retention" that satisfies the engineering construction needs and suits the local characteristics, and created a unique new model of "personnel localization". During the construction period of the Nam Ou River project, employee localization rate is as high as over 50%, satisfying the requirement of the Laotian government for labor usage, and the rate is even higher during the period of operation. The company attaches importance to the professional progress of Laotian employees, and improves their work skills and work competence level through methods like training and apprenticeship, training a large number of professional and technical personnel for Laos. Sponsoring Laotian students to study in China The Nam Ou River project maintains active and close communication with the Laotian Embassy in China, hires returned students who studied abroad, and sponsors local outstanding Laotian students to study in higher institutions of education in China, nurturing local engineering and management talent for the company's projects. Through training and development, many local outstanding employees of the projects have assumed positions of supervisors and assistant managers, becoming part of the company's high-end management talent. In September 2017, the first group of six selected Laotian students went to Wuhan University in China for further studies. Personnel localization PowerChina provides over 1,600 employment opportunities for the local community 6 selected Laotian students went to Wuhan University in China for further studies Tax payment according to law PowerChina strictly complies with various local laws and policies of Laos. We support the inspection of taxation authorities, pay taxes on time and in full, and ensure legal and compliant operations. For the second phase of the Nam Ou River project, the company discussed with Laos' State Administration of Taxation regarding taxation issues, specified the taxation obligation of contractors and subcontractors of various levels of the Nam Ou River phase II project, standardized taxation work flow such as registration and declaration, and effectively avoided the taxation risk of EPC contractors and subcontractors of the Nam Ou River phase Il project. This has created a new way of working in the prevention of taxation risk, that is, aligning with, reporting to and communicating with taxation authorities when the project starts, and laid a solid ground for the company to conduct legal and compliant business operations. Power Construction Corporation of China In May 2017, PowerChina was granted "Commendation of Taxation Work" by the Tax Department of the Ministry of Finance of Laos. Further studies Laos Sustainability Report

View entire presentation