Vietnamese firms have so far invested US$5 billion in Laos, mainly in agriculture and forestry sectors, however, there remains difficulties facing them when investing in the neighboring country, experts reported at a recent workshop on responsible investment for Vietnamese companies operating in the field of agro-forestry in Laos held by the Centre for Sustainable Community Development recently.
Vietnamese firms invest mainly in Lao agriculture and forestry sectors
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According to Dung, the first hurdle is the difficulty investors faced in grasping information and policies, determining the environment and investment opportunities, value chains and markets.
The implementation of laws and policies in practice has not helped clarify matters for long-term responsible investors. Therefore, responsible and sustainable investors have not been protected against short-term investors, he said.
Language and culture is also another barrier for Vietnamese businesses investing in Laos.
At the workshop, representatives of many Vietnamese companies investing in Laos admitted that not understanding Laos and its customs and taboos have reduced production efficiency, causing misunderstanding, troubles and unmerited losses.
According to the centre, investors need to be aware of unplanned investments such as supporting infrastructure, contributing to local cultural and sporting events to gain community support. Particularly, investors should pay attention to study and respect customary land use rights of local communities.
Not only large enterprises can share benefits but small businesses can also share benefits within their resources, it said, adding that long-term investment orientation companies have a clearer, stable and more harmonious vision and strategy.
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 the neighboring country has also increased by 40 per cent.
Vietnamese enterprises have reaped successes in Laos thanks to sound business opportunities, market scale and operation quality in the neighboring country.
“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.
Authorities of the two countries are also making efforts to remove obstacles facing inbound Vietnamese investment into Laos to further boost the investment. The Vietnam-Laos 2017 co-operation plan agreement was signed by the two governments recently, which stipulates that the countries will assign ministries to work to remove obstacles facing Vietnamese projects in Laos.
Nguyen Dinh Ba, Minister-Counselor from the Vietnamese Embassy to Laos, said that the Vietnamese and Lao governments are working to analyze 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.”
Two-way trade turnover between Vietnam and Laos has been also positive with over $900 million last year, up 10 percent against 2016. The trade value is expected to hit $4 billion in 2020.
