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July 6, 2023

Ahead of ASEAN Chairmanship, Laos Strengthens Economic Ties

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July 6, 2023

With Laos set to assume chairmanship of ASEAN in 2024, regional partners seem eager to elevate trade and economic ties. In late June, Malaysian Prime Minister Anwar Ibrahim made his inaugural visit to Vientiane, the first such trip for any Malaysian leader in seven years. During the visit, Électricité du Laos (EDL)—Laos’ national electricity production corporation—signed a Memorandum of Understanding (MoU) with Malaysian electricity company Tenaga Nasional, in a deal that would facilitate hydropower exploration in the country. Two further Memoranda of Cooperation (MoC) were signed in the fields of rail transportation and inland port activities. Prime Minister Anwar additionally invited Laos to enter the export market for halal products, a venture that couldboost the popularity of Lao exports in Malaysia and fellow Muslim-majority countries.

In late June, Vietnam provided the Lao government with a US$2.1 million grant to support the construction of a new secondary school, while Vietnamese and Lao universities signed a scientific cooperation agreement to encourage educational exchanges. The bilateral relationship between the two countries has grown increasingly crucial: facing a power shortage in the North, Vietnam has been boosting electricity imports from Laos and strengthening hydropower cooperation since May this year.

Meanwhile, the National Bank of Cambodia is set to sign an agreement with the Bank of the Lao People’s Democratic Republic to facilitate a cross-border digital payment system. The initiative, which will permit the use of QR codes in Laos to make payments using Cambodian bank accounts, will deepen economic ties between the two countries. Farther afield, a Lao export-import company has announced plans to begin exporting rice to the United States for the first time, following the recent success of Lao rice exports in Europe.

To continue attracting foreign partners and investors, the Lao government committed in late June to improving the country’s investment climate. Measures include introducing more transparent services, enhancing regulations to streamline investment management, and ensuring faster approval of new development projects. As Laos prepares to take on the regional leadership role in 2024, more trade and economic partnerships are to be expected in the coming months.

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