Vietnam established diplomatic relations with Laos on September 5, 1962. The two sides affirm to attach importance to strengthening the traditional and comprehensive relations between the two countries. Vietnam and Laos have the sound traditional, special friendship, solidarity and comprehensive cooperation between the two Parties, States and peoples across the fields, particularly in the economy, with two-way trade increasing 24.5% to US$1.4 billion in 2014.
Before Laos was a small and largely untouched market. Currently, although the small population limits sales opportunities, tourism, agricultural, mineral and hydropower potential offer significant long-term prospect to international investors, including Vietnamese ones. Thanks to big efforts in developing the trade and investment between two countries, Vietnam is now one of the biggest investors in Laos with the total investment of US$5.22 billion. Vietnamese businesses have helped Laos to improve infrastructure, labor productivity, state budget, and promote social welfare.
Besides these above progress, many companies and investors in both countries are still facing with difficulties in doing business with each other because of lack of data and information system on trade and industry between two countries, especially in Laos where the information infrastructure is still at the starting point of development process. Stakeholders in both countries recognize the need to innovatively and collectively work together to attract investment to stimulate jobs and growth.
As one of new efforts to facilitate trade and investment between two countries, the signing of the border trade agreement between Vietnam and Laos on 27 June, 2015 is expected to raise the bilateral trade to US$2 billion in 2015. The agreement would create a legal basis for boosting bilateral trade in line with the two countries’ time-honored friendship and comprehensive cooperation. The new border trade agreement comprises 23 articles, documenting that all border gates on land are open to trade. The import tax rates for goods made in Vietnam and Laos, as well as various products made by Vietnamese investors in Laos, will be reduced to zero. The agreement also regulates payments for trans-border trade, controls the transportation of cash via border gates, and manages the entry-exit regulations for humans and vehicles. According to this agreement, the Governments of Vietnam and Laos agreed to set up a joint Steering Committee on Border Trade and organize a biennial cooperation conference on the development of Vietnam-Laos border trade, and encouraged the establishment of a border trade entrepreneur association.