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Dinh Vu


Last updated: Tuesday, May 22, 2018


Towards Sustainable Investment in Laos and Cambodia

Posted: Tuesday, February 28, 2017

More than 100 businesses and agricultural business associates, management agencies concerning foreign investment, research institutions, domestic and international non-governmental organisations, banks, investment funds and international donors, etc attended the workshop "sustainable agricultural investment of Vietnam’s businesses in the Mekong sub-region."

The workshop was recently organised by the Vietnam Chamber of Commerce and Industry (VCCI), Oxfam International in Vietnam and the PanNature in Hanoi, with the purpose of creating a chance for the business community, the state management agencies, social organisations to share experiences and solutions to complete the draft of guidelines to minimise risks for the social environment for Vietnam’s enterprises investing in the agricultural sector in the Mekong sub-region.

According to the Foreign Investment Agency, Ministry of Planning and Investment, as of January 2017, Vietnam had 1,188 investment projects in 70 countries and territories, with a total registered capital of US$21.395 billion. The main markets are Laos (270 projects; US$5.12 billion); Cambodia (191 projects; US$ 2.89 billion), Russia and other countries in Africa, etc.

Investment sectors are mainly agriculture and forestry, tele-communications, mining, medical services and so on. These are Vietnam’s strong sectors for effectivecooperation with Laos and Cambodia. Among the investment projects in the fields of agriculture and forestry in Laos and Cambodia, the main projects are engaged in rubber plantation. As of this moment, Vietnam has 72 investment projects in the rubber plantation, with a total registered capital of US$ 2,175 billion. In general, rubber planting projects are rated good by the Governments of Laos and Cambodia with high economic efficiency, generating additional revenue for local workers, improving infrastructure and contributing to economic growth, social security in the host countries.

With the advantage of mechanisms and policies encouraging investment, external economic development in border areas of Vietnam - Laos - Cambodia as stipulated in Decision 482 / QD-TTg dated April 14, 2010 of Prime Minister and similarities of natural and socio- economic conditions, agriculture and forestry investments have come strong potential for promoting comparative advantages of the sector in relation to the economies of the three countries and the region. Agriculture, forestry and fishery sector is the second largest in the structure of foreign investment in Vietnam and is third in the structure of foreign investment (FDI) of Laos and Cambodia in the period 2011-2015.

However, alongside these achievements such as reducing poverty and improving infrastructure, investment activities of Vietnam’s enterprises in the agricultural sector also bear potential risks from cultural differences and environmental laws. These differences can lead to disputes and thereby affecting the implementation of projects as well as the image of Vietnamese investors in the region.

According to the Foreign Investment Agency, the legal system related to the investment in Laos and Cambodia is being amended so there are many changes; coordination between their State agencies is not really synchronised, affecting policy implementation.

On the other hand, the discussion of initial investment between businesses and competent authorities of Laos and Cambodia is very convenient, but during the implementation process, enterprises face many difficulties in administrative procedures, land planning, lack of consistency in the application of policies, etc. The coordination in policy formulation and joint action programmes to promote investment, trade and tourism remains slow, yet no specific and practical results; commitments and agreements are not really promoting development; preferential policies for foreign investment projects are limited.

To invest effectively, according to Mr Dau Anh Tuan, Director of Legal Department of VCCI, Vietnamese enterprises must abide by not only Vietnam’s laws but also the laws of the host countries. Accordingly, businesses need to be well prepared before investing abroad and have good sources of information to prevent conflicts.

According to Pham Quang Tu, Oxfam representative in Vietnam, investors should consult with affected communities throughout the investment process; develop and promote the implementation guidelines on social responsibility in the process of project implementation.

Quynh Chi

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