Vietnam and Laos build on friendship

Vietnam and Laos have reaffirmed their special bond through a raft of new agreements

State President Nguyen Xuan Phuc and Thongloun Sisoulith, Party General Secretary and State President of Laos, last week underscored during the former’s official friendship visit to Laos that both nations will further strengthen bilateral cooperation in defence, security, drug prevention, search and rescue, electricity trading, and mineral processing and exploitation (see box).

This visit was the first overseas by President Phuc after he had been re-elected to be the Vietnamese state president for the 2021-2026 tenure on July 26 at the first session of the 15th National Assembly. It also demonstrated the importance the Vietnamese Party and state, and Phuc personally attach to preserving, protecting, and increasingly fostering the great friendship, special solidarity, and comprehensive cooperation between Vietnam and Laos, according to Vietnam’s Ministry of Foreign Affairs (MoFA). “Both nations will advance strong and breakthrough solutions to unleash all resources for bilateral economic cooperation,” said a MoFA statement. “All hurdles from enterprises’ projects in respective countries must be removed radically.”

Fostering trade and investment

At present, Vietnam has 209 valid investment projects in Laos, registered at nearly $5.2 billion, ranking third among countries investing directly in Laos. These projects are focused on banking, finance, property, forestry, agriculture, services, and telecommunications. However, only over $2.2 billion has been disbursed so far. Last year, nine projects were newly licensed and increased capital with total registered capital of $143 million, up 130 per cent on-year.

Under a joint statement signed in October 2019, both governments had tasked relevant ministries, agencies, and localities to review all Vietnamese projects in Laos in order to remove all obstructions in a timely manner so that implementation can be ensured as scheduled. Some projects, especially key ones in the sectors of hydropower, mining, and rubber plantation, are facing difficulties.

Currently, many major Vietnamese initiatives and groups are in good operation in Laos, such as the Xekaman 1 hydropower plant, Muong Thanh Vientiane Hotel, Viettel’s telecommunications project, Ha Do’s Nong Tha urban area, Laos-Vietnam Bank, Vietcombank, VietinBank, and Sacombank, and a number of projects by Vietnam Rubber Industry Group and Hoang Anh Gia Lai. Many Vietnamese investments in Laos have become effective and profitable, and have made positive contributions to both nations’ development, according to the MoFA.

Both countries’ bilateral trade turnover in the first half of this year hit $670 million, up over 36.5 per cent on-year. The figure stood at over $1 billion in 2018, $1.2 billion in 2019, and less than $1 billion last year due to COVID-19. The two countries are striving to keep a stable annual increase of 10-15 per cent in bilateral trade turnover.

Vietnam and Laos are also focusing on infrastructure development to facilitate trade and investment ties. They are expanding the Vung Ang 1, 2, and 3 port projects in the central province of Ha Tinh under a deal signed between both governments.

In April, the Vung Ang Port area received the first container cargo, which will facilitate transportation from Vietnam to Laos, Thailand’s north-eastern region. The capacity of transporting containers at the Vung Ang deep seaport has been strengthened to receive vessels ranging from 5,000-100,000 tonnes, and provide services for between 50,000 and 1.2 million containers, handling goods between 3-20 million tonnes by 2030. For Laos, the Vung Ang deep seaport plays an important role in promoting maritime transport and regional connectivity to boost Laos’ economic growth through transportation and trade exchanges.

Both nations also agreed to seek investment capital for building strategic transport projects including the Hanoi-Vientiane Expressway and the Vientiane-Vung Ang Railway.

During talks last week with Laos Deputy Prime Minister and Minister of Planning and Investment Sonexay Siphandone, Vietnamese Deputy Prime Minister Le Van Thanh proposed that both nations further expand ties in institution-policy, infrastructure, and human resources.

“Many Vietnamese companies wish to invest in Laos, and we hope Laos’ government and authorised agencies will create the best conditions and incentives to Vietnamese investors,” Thanh said. “The two nations have ample room for trade and investment cooperation, and I think it is necessary to set up a special working group in charge of drawing up specific cooperation programmes and removing roadblocks for joint projects.”

Siphandone said the two sides should step up border trade and collaboration in electricity and mining, intensify infrastructure connectivity, and upgrade border gates to facilitate trade and transportation of goods.

Vietnamese fruits are favoured in Laos, he said, noting the two countries’ ministries and agencies would work on mechanisms and policies on goods production and exchange, and increase online exchanges in the context of COVID-19.

Furthering friendship

Also last week, State President Phuc along with Lao Party General Secretary, State President Sisoulith and National Assembly Chairman Saysomphone Phomvihane attended the handover ceremony of the Lao National Assembly building in the capital of Vientiane. The $112 million building is a gift presented by the Vietnamese Party, state, and people to their Lao counterparts. It was completed after nearly 38 months of construction. Vietnam’s Ministry of Construction was the project’s main investor and Army Corps 11 of the Ministry of National Defence was the main constructor.

Covering 23,400sq.m, including a construction area of about 7,100sq.m, the new building is built on the foundation of the old one at Thatluang Square in downtown Vientiane. The building is regarded as a long-lasting symbol of special solidarity between the two parties, states and peoples, said Vietnamese President Phuc.

He also attended and spoke at the ninth National Assembly of Laos. He said there were few bilateral relationships in the world like the one between Vietnam and Laos, which have supported each other over the years. He emphasised the close relations between the nations’ founding fathers and comrades.

President Phuc said, “In the hearts of each Vietnamese and Laotian citizen, the special relationship between Vietnam and Laos is always strong, as stated by His Royal Highness and President Souphanouvong: ‘Higher than the mountain, longer than the river, wider than the sea, more beautiful than the full moon, more fragrant than any flower’.”