Vietnam and Laos Strengthen Economic Ties with New Trade Agreement

Vietnam and Laos have deepened their trade relations with the signing of a new bilateral trade agreement. The pact was finalized by Vietnam’s Minister of Industry and Trade, Nguyễn Hồng Diên, and Laos’ Minister of Industry and Commerce, Malaithong Kommasith, during a formal meeting in Vientiane, Laos, on April 8. The agreement comes in the context of an annual trade volume between the two countries that reached $417.8 million in the first quarter of the year, reflecting a slight decrease of 1.8% compared to the previous year. Vietnam’s export portfolio to Laos includes petroleum products, iron and steel, as well as machinery and equipment. On the other hand, Laos supplies Vietnam with essential raw materials such as rubber, wood, ore, and minerals.

During their discussions, Minister Diên noted the significant shift in trade dynamics between the two nations, highlighting Laos’s transition from a trade deficit to a surplus with Vietnam in recent years. He emphasized the increasing importance of Laos as a crucial supplier of raw materials for Vietnam’s manufacturing sector within the Association of Southeast Asian Nations (ASEAN). The ministers agreed on several initiatives to further promote bilateral trade, including the enhancement of border trade infrastructure. They plan to hold a variety of trade promotion activities, such as business forums, networking conferences, trade fairs, and market information seminars, aimed at fostering closer business ties and facilitating smoother trade flows.

Further solidifying their commitment, the two sides called for the effective implementation of a Memorandum of Understanding on the development and connectivity of Vietnam-Laos border trade infrastructure, which was signed earlier in January 2024. They also discussed reviewing and potentially amending the 2007 Hanoi Agreement and the Vietnam-Laos Border Trade Agreement to align them more closely with the current economic and trade realities. The talks also saw the signing of additional agreements aimed at strengthening cooperation in various sectors. A Memorandum of Understanding was signed between the General Department of Market Surveillance (GDMS) of Vietnam and the Department of Business Competition and Trade Inspection under the Lao Ministry of Industry and Commerce. This agreement focuses on enhancing collaboration in market management, exchanging information on respective policies and laws, and offering support in training for officials. It also aims to share best practices in enforcing administrative penalties for business and trade violations and to intensify efforts to combat cross-border smuggling, commercial fraud, and the illegal transportation of goods.

Another Memorandum of Understanding involved GP Holdings – the National Research Institute of Mechanical Engineering of Vietnam and Phonesack Group of Laos. This agreement focuses on the construction of infrastructure projects, such as warehouses and conveyor belts, which are essential for the transportation of coal, facilitating energy and resource exchange between the two countries. Both ministers agreed that these cooperation plans would be reviewed and updated annually or periodically, ensuring they remain aligned with each country’s legal frameworks and strategic priorities, thereby fostering a stronger economic partnership between Vietnam and Laos.