Vietnamese President Vo Van Thuong’s visit to Laos

Vietnamese president Vo Van Thuong visited Laos as its first country of destination after his nomination as the new president of Vietnam. Given the fact that the two countries have ideological and party relationships, it has become important for Vietnam to engage Laos as the country is facing challenges with regard to debt servicing and management of infrastructure projects. As per the economic data the annual trade between Vietnam and Laos last year was nearly US $1.7 billion. Vietnam president’s visit is primarily to look into intensifying ties between the two countries in areas such as agricultural products, food production, consumer goods , and also look for better avenues in border trade cooperation between the two  sides.

The two countries have also been working on joint development in sectors such as energy and mining industries. Vietnam has also proposed Vietnam -Laos railway project to boost trade and connectivity between the two countries. As it is well known that Laos is a landlocked country this rail route  will connect the port city of Vung Ang with Vientiane ,thereby  helping Laos to explore larger markets in East Asia. The proposed project which is likely to be nearly 555 kilometre long will be costing US  $5 billion and this will also help in integrating Laos with other markets across South East Asia. This rail link will also connect to the China – Laos railway line and help in better access to north Laos  products to reach  markets across the world.

Vietnam has been one of the major investors in Laos and has invested more than US $4.3 billion in projects related to trade, transportation, energy, power generation and other sectors. Vietnam has given  50 year concessionary loan to Laos in development of this railway project as well as its investment in deep sea port of Vung Ang. With Vietnam signing the free trade agreement with European Union last year, it has also been exploring freight train service to Europe and the pilot project was started in July 2021 when the first container containing cargo from Hanoi reached Belgium in August 2021. Interesting aspect is that Laos is one of the primary destination countries for Vietnamese investment. The Vietnamese businesses and enterprises have already contributed  U.S. dollar 200 million as taxes and other obligations to Laotian economy. In terms of trade profile Laos exports wood and wood products, fertilizers, rubber and corn to Vietnam.

In this context the visit of Vietnamese president to Laos on the invitation of the general secretary of the Laos  People’s Revolutionary Party is significant because Vietnam has been according highest priority to the country given its comprehensive cooperation and ideological solidarity with Laos. With the building of new dams and the excessive burden of external debt from China,  it has become pertinent for Laos  to look for other avenues of economic cooperation with its neighbouring  countries. The inflation in Laos  has increased to nearly 42 per cent  because of increasing energy and commodity prices. Furthermore, the cooperation between the two countries is important for laying the foundation of ASEAN community particularly  the three pillars related to political security community , economic community and social- cultural community.  Vietnam has been looking for consultations with Laos on managing the water flow along the Mekong as well as development of the greater Mekong subregion. The two countries are also looking for enhancing tourism cooperation as well as cooperation in areas such as training, human resource management and vocational capability building among the workers in Laos.

 Vietnam has been looking for enhancing capacities within Laos, and is willing to act as a regional value chain leader given the fact that Vietnam manufacturing has been making great strides . The two day visit of Vietnamese president has  deepened the friendship, and solidarity between the two countries. Laos has been looking towards Vietnam for the purposes of upgrading its economic operation and looking for joint projects particularly in the field of technology and scientific innovation, education and sports. Vietnam has preparing for 4 IR  and has been asking the other Southeast Asian countries in terms of making progress related to 4th industrial revolution and  work together for larger socio economic development in far flung areas of mainland Southeast Asia which has been untouched by the larger geopolitical and economic changes.

Vietnamese president engaged in a series of meetings with top leadership of Laos and the two sides agreed on working together in different fields so as to strengthen collaboration and implement the agreements which have been signed in the last few years given the fact that the two countries have a long historical relations and is critical for development of the region. During the visit Vietnamese president also offered a gift of 1 million U.S. dollars for the Laotian counterparts. There has been signing of the MOU on cooperation in technology and innovation as well as another agreement related to cooperation in science between the two sides. The regular engagement of Laotian leadership by the Vietnam’s top leadership clearly showcases Vietnam as a critical stakeholder in the development of the Mekong region. With the stress on developing better understanding on issues related to conflict resolution, sustainable development and achieving UN sustainable development goals along with helping Laos to manage  climate change, food crisis, water security and work towards similar policy approach  at regional level ,particularly in Southeast Asia and the larger Asia Pacific region,Vietnam is keen to be a trusted neighbour.

Prof. Pankaj Jha
Prof. Pankaj Jha
Pankaj Jha is faculty with Jindal School of International Affairs, O P Jindal Global University, Sonepat. He can be reached at pankajstrategic[at]