Reviving Vietnam-Laos investment

Vietnam currently has 409 valid investment projects in Laos including 26 projects aiming to plant 70,000 hectares of rubber trees Photo: Le Toan

Nguyen Dinh Ba, Minister-Counsellor from the Vietnamese Embassy to Laos, told VIR that the Vietnamese and Laotian governments are working to analyse obstructions for Vietnam’s investment flows into Laos.

“Vietnam’s investment into Laos is slowing down, after a strong increase in the 2005-2010 period,” Ba said. “One of the key reasons is that many big projects in Laos have already been implemented by Vietnamese firms. Currently there are not many big projects that Vietnamese firms can do in Laos.”

Recently the Vietnam-Laos 2017 co-operation plan agreement was signed by the two governments, which stipulates that the countries will assign ministries to work to remove obstacles facing Vietnamese projects in Laos.

According to the Laotian Ministry of Planning and Investment, Vietnam currently has 409 valid investment projects in Laos, registered at about $3.6 billion, of which $1.5 billion has been disbursed.

The projects include nine hydropower projects, 47 mining projects, and 26 projects on planting industrial trees, which will yield 70,000 hectares of rubber.

According to the Association of Vietnamese Investors in Laos, over the past five years, Vietnam’s registered investment capital in Laos has climbed by 55 per cent, and the number of Vietnamese projects in its western neighbour has also increased by 40 per cent.

In 2015 and 2016, Vietnamese registered investment into Laos slowed to about $100 million. In 2016, three projects with a registered capital of $6.3 million were licensed, occupying 4.7 per cent of the total 63 foreign projects invested in Laos, and only 1.69 per cent of total foreign direct investment (FDI) that Laos attracted.

In this year’s first 10 months, only two new projects were licensed, registered at $12.86 million.

In 2010, Vietnam was Laos’ largest FDI investor. But its rank fell to third in 2016 and may drop to fourth in the time to come, according to the association.

“Many projects have produced profits, and positively contribute to the two countries’ development, generate employment, and do a very good job in contributing to ensuring the social security of Laos,” said Vietnam’s Party Central Committee’s Commission for External Relations in a document on Vietnam-Laos co-operation.

The key Vietnamese investors include Vietnam National Chemical Group (Vinachem), Hoang Anh Gia Lai Group, Viettel, Petrolimex, BIDV, and Long Thanh Golf Investment and Trading JSC.

Unitel, a joint venture established in October 2009 between Viettel and Lao Asia Telecom, occupies over 53 per cent of Laos’ telecommunication market share.

Vietnam’s biggest investment project in Laos, a $522.46 million project exploiting and processing potassium salt, began construction last year. Invested by Vinachem, the project will use potassium salt as material to produce potassium fertiliser.

One year ago, Vietnam’s Hoang Anh Gia Lai Group inaugurated the $36 million Attapeu International Airport in Laos’ southernmost province of Attapeu.

According to the Commission for External Relations, the two governments have also inked a deal on developing hydropower projects in Laos, and Laos will sell electricity to Vietnam.

Investment and trade between Vietnam and Laos are also expected to see new currents. A large catalyst will be the official friendship visit to Vietnam of Laotian Party General Secretary and State President Bounnhang Vorachith and his spouse from December 19-21.

The visit follows an invitation of Vietnamese Party General Secretary Nguyen Phu Trong and his spouse, and Vietnamese State President Tran Dai Quang and his spouse.

The commission said that the visit, Vorachith’s second to Vietnam, is aimed at “reaffirming Laos’ consistent foreign policy in its relationship with Vietnam, with special importance attached to further maintaining and strengthening the great relationship and special solidarity, and the comprehensive co-operation between Vietnam and Laos.”

Leaders will discuss solutions to further deepen the two countries’ political, trade, and investment co-operation. A joint statement will be released.

Two-way trade turnover hit $720.4 million in this year’s first 10 months, up 8.7 per cent year-on-year. Vietnam exported $462.2 million worth of goods to Laos, and spent $294.2 million buying goods from Laos.