Hear What They Said About Investing in Laos

Written by Li Min/Translated by Chen Zhiying

As the only landlocked country in the ASEAN countries, Laos will welcome its first modern railway— the China-Laos Railway at the end of 2021. This year marks the 30thanniversary of China-ASEAN dialogue relations and the 60thanniversary of China-Laos diplomatic relations, and Laos will serve as the Country of Honor of the China-ASEAN Expo (CAEXPO) this year. Under the important moment, the operation of the China-Laos Railway will not only add brilliance to the anniversary, but will also open up a new chapter in attracting investment to Laos.

What advantages will be brought by operating the China-Laos Railway? What should we focus on when investing in Laos? How will the 18thCAEXPO continue to promote China-Laos cooperation? Reporters fromChina-ASEAN PanoramaMagazine Agency participated in the Lao promotion conference held in Nanning, China on June 11, 2021. The promotion conference was one of the series events of Laos as the Country of Honor in the 18thCAEXPO and was held both online and offline under the theme of “Unlimited Business Opportunities Brought by China-Laos Railway”. It is in this conference that the reporter have found answers to the above questions.

China-Laos Railway brings development opportunities

In June 5, 2021, the construction of the China-Laos Railway has welcomed the good news of the safe operation of Jingzhai tunnel. So far, the 167 tunnels of the Railway have been fully connected, laying a solid foundation for the opening and operation of the Railway at the end of 2021.

“China-Laos Railway is one of the largest project in Laos under the Belt and Road Initiative. It will facilitate the circulation and transportation of goods, shorten the travel routes and time between the two countries, and become a key channel connecting the two countries. It is expected to strengthen bilateral trade and help Laos to transform from a landlocked country to a connectivity hub,” said Virasac Somphong, Consul General of Lao PDR in Nanning.According to him, in May 2021, Laos companies signed an agricultural products trade agreement with Chinese companies. Under the terms of this agreement, Laos will export nine kinds of agricultural products to China, with a total export value of about US$ 1.5 billion from 2021 to 2026.

“In 2020, the bilateral trade volume between China and Laos will reach US$ 3.55 billion. At present, China has become Laos’ second largest trade partner and Laos’ first largest foreign direct investment country,” said Wang Lei, Secretary-General of the CAEXPO Secretariat. “The opening and operation of the China-Laos Railway will provide significant opportunities and broader space for China-Laos cooperation.”The opportunities and space include not only the acceleration of trade logistics, but also more possibilities of two-way investment.

With the development the China-Laos Economic Corridor,the China-Laos Railway is endowed with more connotation and extension. Through comprehensive development, both sides hope to maximize the value of cooperation. According to Fonse Viresa, Deputy Director of the Department of Investment Promotion of the Ministry of Planing and Investment of Laos, the Lao government is carrying out a series of reforms to improve investment policies and business environment. Along the China-Laos Railway,many international logistics facilities such as expressways,airports and ports are built to continuously upgrade Laos’infrastructure and promote connectivity and cooperation along the Railway. The investment laws have also been revised many times. He said that investment in high-tech, clean agriculture, forestry processing, tourism development and other industries in Laos can enjoy many incentive measures and he sincerely invited Chinese investors to invest in Laos.

Investors have a keen sense of business, and a more enlightened Laos will surely attract their attention. But under great business environment, as market practitioners,enterprises are more concerned about how to take the next step correctly.

Hear what they said about investing in Laos

In recent years, more and more Chinese enterprises have gone to Laos to invest in infrastructure, energy, trade, agriculture,tourism and other fields. While bringing tangible benefits to the people of both sides, they have also accumulated valuable experience in investing in Laos.

According to Deng Lianghui, Vice Chairman of China-Laos Business Cooperation Promotion Commission of Lao National Chamber of Commerce and Industry, and, Rotating Chairman of Guangxi Federation of Overseas Chamber of Commerce,China-ASEAN region is a big market. If you wish to enter ASEAN market, you’d better find a field to work on first. A good operation at this field will help enterprises get familiar with the situation and culture of other ASEAN markets. Laos is a good choice to make investment. “Europe,the United States and other developed countries give Laos many preferential treatment in economy and trade.Chinese enterprises investing in Laos can make full use of these international policies. For example, some products exported to the United States can enjoy the tax-free policy.” Deng Lianghui pointed out that the traditional economy is transforming into a digital economy,and the promotion of Lao products often relies on social platforms such as Facebook. “Many small and mediumsized enterprises in Laos, including some e-commerce platforms, will choose to promote on Facebook and then combine with offline logistics. The payment method is often in the form of cash on delivery, which is quite different from China’s e-commerce market.”

Xie Xiaoxia, Assistant of the President of Guangxi Jinsui Agricultural Group Co., Ltd., shared some valuable experiences of enterprises investing in crop planting industry in Laos. In 2014,the company invested and established Laos Jinsui Agriculture Co., Ltd. in Oudomxay Province, Laos. Up until now, it has invested RMB 136 million yuan to grow 30,000 mu of bananas in Laos.

“Laos is a socialist country dominated by agriculture, with national political stability and overall security in local areas. Laos mainly believes in Buddhism, and its people are kindhearted, friendly and very easy to get along with,” said Xie Xiaoxia. “In government affairs, the local village head has great authority. The village head has to deal with the birth, aging,illness and death of the villagers. In particular, they must assist in land rent. As long as the villagers agree, the government will support the decision.The government at county level has the right to lease 100 hectares of land,and the provincial government is 1,000 hectares. Renting more than 1,000 hectares need to be approved by the central government. The provinces in Laos can introduce their own investment policies, and there are also some differences in tax policies.Therefore, enterprises wish to invest in Laos must know relevant conditions on investment.”

When it comes to the origin of investing in Laos, Xie Xiaoxia said frankly that it is related to the company’s participation in the 11thCAEXPO in 2014. She said that it was through the CAEXPO that they found Laos boasts good conditions to develop agriculture, thus they developed their projects there. To help the cooperation between enterprises of China and Laos, the CAEXPO can do more than that.

CAEXPO boosts China-Laos cooperation

The golden Pagoda in Vientiane, the capital of Laos, is shining, the early morning alms giving in Luang Prabang is quiet and solemn, and the “Elephant Festival” in Saiyaburi Province is lively and lovely... Through the Cities of Charm of Laos in the CAEXPO,people have got to know Laos better.From the cultural symbols in the Cities of Charm, to the best-selling products in the exhibition booth, the CAEXPO not only set up a stage for Laos to show its national image and carry out commodity trade, but also brought visible and tangible cooperation projects for Laos through holding investment promotion meetings, Laos-China Investment Promotion Forum,Laos-China Investment Dialogue and other activities.

Xie Xiaoxia said that the CAEXPO has played a role of multi-channel promotion and provided publicity in the China-Laos cooperation. At the same time, it has also built a bridge between China and Laos, so that the business information of the two countries can be transmitted, and ultimately achieve mutual benefit and win-win results.

It is reported that the 18thCAEXPO will continue to be held both online and offline. Laos, as the Country of Honor of the 18thCAEXPO, will also show its unique charm and business opportunities online and offline.

“Because of the pandemic, the CAEXPO has intensify efforts to build a never-ending exhibition and increase online communication and cooperation,an important trend of world economy,”said Deng Lianghui.

“Because of the impact of the pandemic, some foreign enterprises can not go to Nanning. We will help them to participate in the CAEXPO through two modes. One is online product display; the other is providing exhibition services for products sent by ASEAN merchants, so that to better combine the cloud CAEXPO with offline physical exhibitions,” said Deng Lianghui. “We will actively dock with the CAEXPO Secretariat to bring Laos’products, investment and cooperation opportunities to a wider Chinese market through the CAEXPO.”

“2021 marks the 30thanniversary of the establishment of China-ASEAN dialogue relations, the 60thanniversary of the establishment of diplomatic relations between China and Laos, and the Year of China-Laos Friendship.This year, Laos will serve as the Country of Honor in the 18thCAEXPO.The CAEXPO will further deepen the investment and trade cooperation between China and Laos by holding rich and colorful economic and trade activities,” said Wang Lei. And through the Lao promotion conference, we are even more looking forward to the series activities of Laos as the Country of Honor in the CAEXPO.