Vietnam and Laos signed an agreement on bilateral border trade in the central province of Nghe An. The agreement promises to bring enormous benefits to both sides as it helps boost two-way trade turnover and strengthen economic and commercial cooperation and integration into ASEAN and the Greater Mekong Sub-region (GMS).
Broad scope of cooperation
The agreement, which consists of 23 articles, will take effect after a number of procedures are finalised.
The agreement will build and develop Vietnam - Laos border gates into gateways and transshipment bridges for other countries in the region and the world into each other nation and facilitate trade in the region on the one hand and strengthen trade and investment cooperation between Vietnam and Laos on the other.
Besides, the two countries will strengthen the close relations in economy, trade, society and culture between border provinces of the two countries in a bid to build the Vietnam - Laos common borderline into the borderline of exchanges, peace, stability, friendship, cooperation and sustainable development. Regarding social security, the two sides will promote socioeconomic development and poverty reduction, especially for communities where ethnic minorities live, mountainous and remote areas of the two countries to strengthen security, defence and social order and safety along the Vietnam - Laos border.
The agreement will designate specific border crossings to be used exclusively for border trade in line with bilateral and international multilateral treaties to which the two countries are signatories. Under this agreement, the tax rate on goods imported from Vietnam into Laos and vice versa will be zero. In order to attract and encourage investment in the border areas, Vietnamese investors who run production facilities in Lao provinces sharing the border with Vietnam will be exempt from value-added tax and other technical barriers on products they ship back to Vietnam.
The agreement also commits to strengthening cross-border trade, investment and tourism promotion, developing trade support services and facilitating trade at border gates. The two countries will set up Vietnam - Laos Border Trade Steering Committee, encourage the establishment of a association of cross-border traders, and organise the biennial Vietnam - Laos Border Trade Cooperation Conference.
Trade growth expectations
The two countries have witnessed a strong trade growth in the past years. The two-way trade turnover reached US$1.3 billion in 2014, up 14.2 percent year on year, and US$686 million in the first six months of 2015.
However, the result is incommensurate with the potential of the two countries, especially when Vietnam and Laos are members of the ASEAN Economic Community (AEC) scheduled to be established at the end of 2015. Vietnam always runs a wide trade gap with the neighbouring country. According to the statistics from the General Department of Vietnam Customs, in 2013, Vietnam incurred a trade deficit of US$245 million, 1.5 folds higher than in 2013, after its imports from Laos jumped 50.4 percent.
Vietnam’s exports to this market make up a small share. Laos ranks 33rd out of 200 markets Vietnam shipped its products to. In ASEAN, Laos is just above Myanmar and Brunei in trade with Vietnam. Vietnam’s major exports to Laos are iron and steel, petroleum and motorcycle components.
On the import side, Laos ranks 28th among suppliers of goods for Vietnam. Timber and wooden products are the primary exports of Laos to Vietnam.
Huong Ly
Vietnamese
