Vietnam-Laos Trade Continues to Flourish

In recent years, the economic and trade cooperation relationship between Vietnam and Laos has seen significant progress and robust growth. With the existing development potential, the two governments have set a target for bilateral trade between Vietnam and Laos to grow not only at a rate of 10%-15% per year but also toward sustainable and stable development.

According to the Import-Export Department of the Ministry of Industry and Trade, Vietnam and Laos are geographically close, with convenient transportation advantages, as well as cultural and consumption similarities. The two countries share a border of over 2,300 km, passing through the administrative areas of 10 provinces and cities on each side, making this region a development hotspot with strategic positioning along the East-West Economic Corridor. The entire Vietnam-Laos border features 9 international border gates, 6 main border gates, 18 secondary border gates, and 27 openings, with 9 economic zones established.

The international border gate at Lao Bao connects trade between Vietnam and Laos.

Statistics from the General Department of Customs of Vietnam show that in the first nine months of 2024, the total value of import and export between Vietnam and Laos reached $1.5 billion, an increase of 25.5% compared to the same period in 2023. Laos continues to maintain a trade surplus with Vietnam. Exports to Laos reached $491.9 million, up 24% compared to the same period in 2023; imports from Laos amounted to $1 billion, a rise of 26.2% compared to the same period in 2023. This growth is very promising given the difficulties currently faced by the Laotian economy.

The international border gate Bo Y.

Main imported items from Laos include rubber, wood, wood products, ores, and minerals. Conversely, main exports to Laos consist of iron and steel products, vehicles and parts, machinery, and equipment.

However, the current trade turnover between Vietnam and Laos has only reached $1.65 billion, accounting for only 10% of Laos' total foreign trade and 0.2% of Vietnam's total foreign trade. According to the Ministry of Industry and Trade, this result does not reflect the potential and special relationship between Vietnam and Laos.

Therefore, to continue promoting trade and economic cooperation between the two countries, the governments of Vietnam and Laos have tasked their Ministries of Industry and Trade to negotiate, amend, and supplement to establish a new Vietnam-Laos trade agreement suitable for the current context. After a three-year negotiation process, the new Vietnam-Laos trade agreement was signed by the Ministers of Industry and Trade of both countries on April 8, 2024. The agreement covers important issues in trade cooperation between the two countries, including: regulations on market access for goods and services; trade facilitation; trade promotion and e-commerce application; cooperation against smuggling, trade fraud, money laundering, and illegal transportation across borders.

Increasing Border Trade and Strengthening Bilateral Trade

To enhance Vietnam-Laos trade, especially border trade, the Ministry of Industry and Trade has emphasized that in the near future, units need to focus on promoting, disseminating, and implementing international treaties and relevant legal documents, particularly the new documents recently issued.

In addition, developing border trade between Vietnam and Laos should be based on market demand for the main export and import items of both countries. For Vietnam, in the immediate term, the main exports to Laos remain iron and steel products, vehicles and parts, machinery, and equipment. The main imports from Laos primarily consist of rubber, wood, and wood products, ores, and minerals.

At the same time, a flexible and effective trade management mechanism for border trade and import-export activities needs to be established, from the central to local levels; a reasonable delegation of management of border trade and import-export activities should be given to the localities of the border provinces.

To promote border trade between the two countries, Deputy Prime Minister Bui Thanh Son has just signed Decision No. 1247/QĐ-TTg on October 23, 2024, issuing a plan to implement the Memorandum of Understanding on the development and connection of border trade infrastructure between the Government of the Socialist Republic of Vietnam and the Government of the Lao People's Democratic Republic (the Plan).

The purpose of the Plan is to effectively implement the Memorandum of Understanding on the development and connection of border trade infrastructure between the Government of the Socialist Republic of Vietnam and the Government of the Lao People's Democratic Republic (the Memorandum).

At the same time, it aims to facilitate coordination among ministries, sectors, and border localities of Vietnam, as well as between competent authorities of Vietnam and Laos in implementing the Memorandum through the focal agencies of both countries.

This contributes to promoting the development of border trade infrastructure between the two countries and serves as a basis for the border provinces of Vietnam to build plans for developing border trade infrastructure in their respective localities.

The Plan specifies organizing campaigns to disseminate the content of the Memorandum and relevant legal regulations of Vietnam and Laos to individuals, organizations, and businesses in both countries through mass media, publications, and specialized pages related to border trade infrastructure development; conferences, seminars, discussions, and training related to the Memorandum’s contents.

In parallel, policies for developing border trade infrastructure that align with the potential of Vietnam-Laos border provinces should be proposed; support for traders in integrating goods into distribution chains through border trade should be provided. Development of various types of border trade infrastructure in the provinces along the Vietnam-Laos border should be promoted.

A review of the types of border trade infrastructure needing upgrades, renovations, and a priority investment list for border trade infrastructure construction should be conducted. The focal agency will coordinate with the Lao side to agree on a list of border trade infrastructure that should be prioritized for construction, in accordance with the planning of each border locality at each stage; at least one type of priority border trade infrastructure should be selected for investment construction and reported to the government for a decision.

The Plan also indicates that both sides will continue to discuss and agree to enhance activities to organize and promote investment in the construction of border trade infrastructure in the border areas of Vietnam and Laos at least once a year.

Encouragement of Vietnamese and Laotian traders to participate in investing in the construction of border trade infrastructure according to current regulations should also be implemented.

A mechanism for connecting information between traders and border residents operating in border areas, as well as connecting Vietnamese traders with Laotian traders, needs to be established.

Strengthening information exchange, training, and resource development for state management agencies; developing a team of traders to invest and do business in border areas; the Ministry of Industry and Trade of Vietnam and the Ministry of Industry and Trade of Laos will serve as the focal points for coordinating with ministries, sectors, and border provinces of both sides to implement the Memorandum.