On July 11, 2024, President To Lam’s official visit to the Lao People's Democratic Republic and the Kingdom of Cambodia marked a significant milestone in strengthening the trilateral ties among Vietnam, Laos, and Cambodia. The visit highlighted Vietnam’s commitment to deepening solidarity and seizing new opportunities for cooperation, reinforcing the long-standing historical bond among these three neighboring nations on the Indochina Peninsula. Connected by shared geographical features such as the Mekong River and Truong Son Mountains, the three countries have consistently built their relationship on mutual support, with economic cooperation forming a critical pillar of this partnership.

Deepening Economic Ties Through Strategic Trade Cooperation

The cooperative relationship between Vietnam, Laos, and Cambodia has been primarily driven by strategic trade. As regional and global developments accelerate, the three countries have reaffirmed the importance of maintaining strong economic ties to ensure sustainable growth. By adopting a coordinated approach to trade, they aim to enhance economic integration, address emerging challenges, and capitalize on evolving opportunities in the global market.

Vietnam and Laos, sharing a border across 10 provinces, benefit from an extensive network of international and auxiliary border gates. These border crossings, equipped with modern infrastructure, play a crucial role in facilitating the flow of goods and services. This infrastructure has significantly improved transportation efficiency, reducing transit time and logistical costs compared to other Asian countries. These efficiencies, along with preferential tariff reductions like 0% import duties under the ASEAN Trade in Goods Agreement (ATIGA), have bolstered trade activities, ensuring smoother trade flows and increased competitiveness.

Laos, with its more relaxed product quality standards and a positive perception of Vietnamese goods, has emerged as a favorable market for Vietnam’s exports. Products like agricultural goods, processed foods, and consumer electronics have found a welcoming market in Laos. Moreover, Laos’ recognition of product certifications from exporting countries, including Vietnam, facilitates easier market entry for Vietnamese businesses. The strategic geographical location of Laos, with access to Thailand and China, also offers Vietnamese exporters opportunities to tap into larger markets, thereby reducing transport costs and improving competitiveness.

Between 2016 and 2023, trade between Vietnam and Laos remained robust, consistently exceeding $1 billion annually, with an average growth rate of over 10%. In the first half of 2024, trade volume reached approximately $931.4 million, marking an 11.5% increase compared to the same period in 2023. Vietnamese exports to Laos totaled $284.2 million, reflecting a 5.5% increase, while imports from Laos surged to $647.2 million, representing a 14.4% growth. The expanding trade portfolio includes items like wood products, minerals, textiles, and consumer goods, underscoring the diversity of trade relations.

During the signing of a recent trade agreement, Vietnam’s Minister of Industry and Trade, Nguyen Hong Dien, emphasized that economic cooperation is a vital aspect of Vietnam-Laos relations. The agreement aims to enhance mutual support, particularly in tackling counterfeit goods, improving consumer protection, and ensuring smoother customs procedures. The Vietnamese government is actively working with Lao counterparts to establish a more transparent regulatory environment that benefits traders, investors, and consumers on both sides of the border.

Vietnam-Cambodia Trade Relations: Sustained Growth and Future Potential

Vietnam-Cambodia trade relations have shown remarkable growth over the past decade, reflecting a strong commitment from both nations to expand economic cooperation. Between 2010 and 2015, trade volume almost doubled, growing from $1.8 billion to $3.35 billion, with an impressive average annual growth rate of 18.5%. This growth momentum continued between 2016 and 2020, with trade reaching $5.31 billion, driven by sectors such as agriculture, textiles, construction materials, and consumer goods.

By 2022, trade between Vietnam and Cambodia surpassed $10.57 billion, marking an increase of nearly 11% compared to 2021. This achievement was driven by increased demand for Vietnamese agricultural products, machinery, and consumer goods in Cambodia, alongside significant imports of Cambodian agricultural products, textiles, and rubber. While the economic slowdown in 2023 posed challenges, early 2024 witnessed a rebound, with bilateral trade reaching $4.6 billion in the first five months, a 13.4% increase from the same period in 2023.

The Vietnam-Cambodia Border Trade Agreement, along with various other trade facilitation measures, has contributed to the ease of doing business between the two nations. The improved customs procedures, joint trade missions, and regular business forums have created a more conducive environment for Vietnamese businesses to enter the Cambodian market. Additionally, investments in infrastructure, such as road upgrades and better logistics facilities at key border crossings like Mộc Bài-Bavet, have enhanced connectivity, making the movement of goods more efficient.

Strategic Recommendations for Enhancing Trade with Laos and Cambodia

To further boost trade with Laos and Cambodia, the Vietnamese Ministry of Industry and Trade has encouraged businesses to familiarize themselves with relevant legal frameworks, including the Vietnam-Laos Bilateral Trade Agreement, the Vietnam-Laos Border Trade Agreement, and the Vietnam-Cambodia Border Trade Agreement. These agreements provide valuable trade incentives, reduce administrative hurdles, and offer clearer guidance on customs procedures, enabling businesses to make the most of existing opportunities.

Public and private sectors in Vietnam are urged to collaborate on expanding production capabilities to meet the growing demands in Laos and Cambodia. This includes exploring new markets for processed goods, agricultural products, and consumer goods, all of which have shown potential for increased sales in both neighboring countries. Furthermore, there is an emphasis on strengthening logistics networks and supply chains, which will help maintain the competitiveness of Vietnamese products in the region.

To capitalize on these developments, Vietnam has also been exploring joint investment opportunities with Laos and Cambodia in areas such as infrastructure, energy, and digital connectivity. The potential for deeper cooperation in renewable energy, particularly hydropower and solar energy projects, is seen as a promising area that could benefit all three nations, ensuring sustainable development and energy security. Digital connectivity initiatives, including e-commerce platforms and cross-border payment solutions, are also under consideration to enhance trade efficiency and expand the scope of economic cooperation.

A Vision for the Future: Regional Economic Integration

The continued economic partnership among Vietnam, Laos, and Cambodia is not just about boosting trade figures; it is also about fostering regional stability and long-term prosperity. As part of the broader ASEAN Economic Community (AEC), the three countries are working to align their economic policies, regulations, and standards to facilitate smoother trade flows and attract more foreign investment. The combined efforts of Vietnam, Laos, and Cambodia in promoting economic integration contribute significantly to the realization of the AEC’s vision of a seamless regional economy.

The trilateral relationship, built on trust, shared history, and mutual benefits, is poised for further growth as the three countries focus on infrastructure improvements, regulatory reforms, and trade facilitation measures. With continued cooperation and strategic planning, Vietnam, Laos, and Cambodia are set to enhance their roles as key players in the region’s economic landscape, driving growth not only for themselves but also for the wider ASEAN community.