The central banks of Vietnam and Laos have recently held discussions to advance the use of their local currencies, the Lao kip and the Vietnamese dong, in bilateral trade and investment. The discussions, which took place during a professional workshop titled "Promoting the Use of Local Currencies between Laos and Vietnam," aim to reduce external risks by encouraging the use of the Lao kip and Vietnamese dong in commercial transactions and investments between the two countries.

Vietnam is currently Laos' third-largest trading partner, and the two countries have maintained a longstanding trade and investment relationship. This solid foundation serves as the basis for further cooperation in promoting the use of local currencies in future economic exchanges.

We organized the workshop as a platform for the two countries to exchange views, share expertise, and build mutual understanding on this subject. It also included a presentation on the "Cross-Border Retail Payment Project between Vietnam and Laos Using QR Codes." We are currently preparing this project, expecting to launch its first stage in September 2024. The project aims to enable seamless retail payments across borders between Vietnam and Laos by using QR code technology.

Participating in this project from the Vietnamese side are major banks, including Vietinbank, Sacombank, BIDV, Vietcombank, TPBank, NamABank, SHB, BVBank, and MBBank. On the Lao side, 13 banks have joined the initiative, such as BCEL, APB, BIC, JDB, LVB, and Vietinbank Lao, among others. This project is part of a larger movement in ASEAN countries to switch to using local currencies for trade and investment. This will lower the risks that come from changes in political, geopolitical, economic, and financial situations in other countries.

The two countries' national payment networks, the Lao Payment Network (LAPNet) and Vietnam’s National Payment Corporation (NAPAS), will oversee the management and implementation of the shared payment system. We also expect this initiative to enhance economic cooperation between the two nations, thereby contributing to regional stability and fostering deeper collaboration.

In terms of trade, Vietnam is Laos' second-largest export market. Key Lao export items in June 2024 included potassium salt ($80 million), mixed gold ($67 million), paper ($40 million), rubber ($29 million), and copper ore ($27 million). These figures highlight the growing economic interdependence between the two nations and underscore the importance of fostering smoother, more efficient trade channels through the use of local currencies.

Vietnam and Laos are in a prime position to demonstrate leadership in bolstering economic resilience and fortifying their partnership, particularly as the ASEAN region increasingly adopts local currencies for trade and investment. The use of local currencies in cross-border transactions will help mitigate risks associated with global economic changes and foster closer ties between ASEAN nations, while also encouraging wider international collaboration.

This move marks a significant step forward in Vietnam and Laos' ongoing efforts to deepen their economic cooperation and lay the groundwork for more resilient, diversified trade and investment activities in the future.