Presently, Lao People's Democratic Republic in the eyes of foreign investors is seen as a continuously developing country in terms of economy, industry, tourism life of people. It is also an emerging country worth investing in both in terms of GDP growth rate of 4.7% in 2021, which is now expected to reach 5.6% in 2022, and there are abundant natural resources. Therefore, this Laos is called "Trade gateway or land link" because it has a long area and borders with China, Vietnam, Myanmar and Cambodia, which are important countries in driving the economy. This makes it conducive to transportation and logistics systems. In addition, although Laos has a population of only 6.7 million, it has significantly higher purchasing power, especially products from Thailand which has been continuously favored among Lao consumers.

 

To promote and provide opportunities for Thai entrepreneurs who are interested in doing business or are doing business in Laos to see the channel, so the factors that make the development of logistics business between Thailand and Laos is of interest now. This is because of the opening of the Lao PDR-China railway that connects both the rail and road goods routes.

 

To accommodate the transition from railways with a track size of 1.435 meters and a track size of 1 meter from Thailand, arrive at Na Leng Land Port for a distance of 2.8 km. The construction has been completed and was opened in June 2022 in addition to helping to promote Thai-Lao border trade. What Thailand will benefit from this train is that the northeastern region of the 20 provinces will connect the transportation system of Lao PDR to ASEAN, makes it easy to import and export goods between the borders. Land Link or the use of a link service is a route that transports goods. If goods from China are transported to Thailand and ASEAN including products from Thailand that will be sent to China and Europe, Land Link services will have more cash left in the business than before. It was found that in 2021, the trade value of 20 provinces in the Northeastern region of Thailand and China is 2.58 trillion baht. Thailand and the European Union with a value of approximately 1.12 trillion baht

 

Therefore, the development of the linkage route of Lao PDR is like a new water pipe and a golden opportunity for Thai investors. Because new routes were opened, such as sea transport to the east coast at the port of Wung Ang hoping to attract customers from Isaan to use the service. Because it is a shortcut distance from the Thai border From Nakhon Phanom to the pier, only 240 km. This train route Construction will begin in November 2022, it is estimated that in about 5 years it will be completed. We cannot deny that this route may pull some customers out of Laem Chabang Port. For products that will go to Japan, America, China, Taiwan because the price is cheaper. The original route through Laem Chabang.

 new investment sites to watch in the Lao PDR market in 2022

Laos currently has 12 special economic zones, namely 1) Savannakhet District, located in Savannakhet Province, 2) Boten Dankham District, located in Luang Namtha Province, 3) Golden Triangle District. Located in Ton Phueng Town, Bokeo Subdistrict 4) Phu Khiao Special District, located in Khammuan Subdistrict 5) Non Thong Industrial and Commercial Zone Located in Vientiane Capital 6) Xaya Settha Combined Development Zone Located in Vientiane Capital 7) Dong Pho Si District Located in Vientiane Capital 8) Bueng That Luang Specific Area Located in Vientiane Capital 9) Long Thanh Dedicated District Located in Vientiane Capital 10) Thakhek Special District 11) Champasak Special District 12) Luang Prabang Special District. There are two special economic zones that are currently interesting among investors, namely;

 

Udomxay

One of the northern new market Located in the enclave of Phongsaly Province, Luang Prabang is currently classified as a Special Economic Zone and open to foreign investors to invest in large numbers because it is the center of logistics Thus creating a smart city (Smart city) by businesses that are suitable for investment is agricultural products including the cultivation of maize, soybeans, rubber, non-toxic vegetables and plants used as alternative energy In terms of mining resources, such as zinc and iron, etc.

In addition, Oudomxay Province is a city where the China-Laos high-speed train runs through. to support more freight forwarding which was opened for use in 2021, so this district is suitable and worth doing business in logistics. Thai businessmen who are interested in investing in real estate Sales-management or investment in setting up distribution centers, car accommodation, new city shopping centers and IT centers should hurry to study and invest for business opportunities.

Luang Namtha

A special economic zone that is characterized by the northern area adjacent to China in Yunnan Province and on the west side, next to Myanmar with an area that is easy to trade with many countries, including another city that the Thai-China-Laos railway cuts through. As a result, travel and transportation will be faster. In the future, Luang Namtha Province will become an important border point that will attract a large number of Chinese tourists. This makes it suitable for tourism businesses such as tourism, hotels, food and beverages, souvenirs and transportation, etc. It is an opportunity for Thai entrepreneurs. who have expertise in the tourism sector.

In addition, Luang Namtha Province is also located on the R3 route, which is an important transportation route connecting Thailand (Chiang Rai) - Laos - China (Kunming). making it a point of transporting goods into China by land and the important Mekong River.

Opportunities and tips for Thai investors

1. Culture and lifestyle of Lao people

- Product naming techniques

In general, most Lao people choose quality products and are familiar with using the same brand. It makes me believe that the new formula must always be better than the old formula. Therefore, if a new product is produced, it must be clearly stated that it is a “new formula” and the quality of the product must be better than the original formula. Because most Lao people tend to trust close people more than word-of-mouth advertising. Therefore, if the product is not really good, it will definitely affect sales. In addition, Lao people believe in the meaning of the word. Therefore, the product name must be a word that has auspicious meanings such as "have wealth" "have luck" and should be an easy-to-remember name.

- Online Marketing

For entrepreneurs, they should not focus on selling products through Facebook channels, only one channel because the Facebook usage rate of Lao people is only 2%. If you want to advertise, you should choose to use motivational messages or to install large advertising signs, such as tracking taxis. or along the way. But be careful and study the language usage, although Isan of Thailand is similar to Lao, but the meaning of some words is different.

2. Shareholding

Able to hold shares in the freight forwarding agency business in Lao PDR, with a shareholding of not more than 49%, except in the case of establishing a branch office or a representative office can hold a majority of shares and must be approved by the Lao Foreign Investment Management Committee. And in the case of hiring Lao employees, foreign investors must provide training for Lao workers to upgrade their skills or send Lao employees to train abroad.

 

3. Important transportation sources in Lao PDR

Most of the logistics business is based in Vientiane. Since it is the main economic city, there are also important border trade checkpoints, such as the Friendship Bridge Checkpoint.(Vientiane) Boten Toll Plaza (Luang Nam Tha Province) Dansavanh Toll Plaza and the Savannakhet checkpoint (Savannakhet) Huai Sai Toll (Bo Kaeo) Nong Nok Khian Checkpoint (Chaweng Attapeu), Thakhek and Napha Toll Plazas (Khammouan), Wang Tao Toll Plazas (Champasak Province), Kaen Thao Toll Plaza (Chaiburi Province) and Pak San Toll Plaza (Bolikhamxay Province).

4. Trade contacts

Emphasis is on collaborating with entrepreneurs in the Lao Freight Forwarders Association (LIFFA) and targeting Thai customers who import-export products to Laos. Major products such as refined oil, foodstuffs, consumer goods, machinery, cement and construction equipment, etc.

5. The train route that is beneficial to investors

Through the new transport routes China-Laos electric train, Thai entrepreneurs can build a distribution center business and logistic in the form of a joint venture with Lao entrepreneurs to take advantage of the privilege of crossing to neighboring countries and service businesses that Thailand has expertise in such as hotels, restaurants, souvenir shops, and massage spas. However, Thai investors should study regulations related to trade and investment should be done well before investing. Moreover, Agriculture and Livestock Business can rely on trade benefits to export to China because it is a country that has borders and good relations between the Chinese and Lao governments. It can also do technology-intensive industries and supply chains in special economic zones with benefits and conducive to investment. If counting until June 30, 2022, the China-Laos Railway have total of 3.36 million passengers transported by railways within Lao PDR, which has served 4.8 hundred thousand passengers, 4.69 million tons of freight trains and goods across the China-Laos border so far. 7.7 hundred thousand tons

At present, Lao PDR is considered a country to keep an eye on. Because the government pays attention to the infrastructure system and open the country for more investors to invest in Laos. Therefore, trading with Lao people is not a challenge beyond the ability of Thai entrepreneurs. Because Lao people believe in Thai products as the original capital. Therefore, it is considered an advantage that Thai products will have the opportunity to export and penetrate the Lao market. For this reason, the information that Thai entrepreneurs receive will be useful and help their business to be successful.

For customers interested in doing business in CLMV or Great Mekong Subregion (GMS) countries such as Cambodia, Laos, Myanmar and Vietnam, Siam Commercial Bank has foreign branches ready to take care and provide services. For more information, please go through https://www.scb.co.th/en/corporate-banking/international-network.html

Thank you for good information from Siam Commercial Bank Vientiane Branch https://www.scb.co.th/en/corporate-banking/international-network/laos.html

References

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