Thai companies are losing out on investment opportunities in Laos to foreign companies that are busily snapping up opportunities and taking advantage of the country's rich natural resources, according to Rathakit Manathat, Thailand's ambassador to Laos.

Companies, especially from the Asean region, have seized a variety of opportunities to invest in the country. With Australian investment in gold and copper mining, Malaysian involvement in hotel and water park ventures, contracts for companies from Vietnam and China to develop the agricultural sector and Singaporean trading concerns, Laos has proved it has diverse opportunities.

Local companies need to find their niche in the country with which Thais share many similarities including language and culture, according to Rathakit.

"In the past Thai investors didn't have competitors [from other countries in Laos] but the trade and investment environment in Laos has changed due to its growing market," he said. "Thai investors should try to draw on their experience when developing new business partners in Laos."

Laos' economy has been growing at an average of 30 per cent per year for the past three years, according to Rathakit. In addition, the government has drawn up a national development plan to attract more foreign investors and it is trying to get a local manufacturing base in an effort to reduce imports.

Laos offers potential in electricity-generation, agriculture, lignite mining, garment manufacturing, as well as opportunities provided its raw materials, including wood.

So far the hydropower electricity sector has attracted investors from Thailand. Also China, Malaysia and Russia have put forward plans to the Laos government for power plants.

Some schemes to encourage more cross-border trade relations are already underway. The Board of Trade of Thailand, Federation of Thai Industries and Thai Bankers Association have submitted a proposal to the Laos' Foreign Affairs Ministry for approval to set up a Thai-Laos Business Council aimed at increasing trade and investment between the two countries.

Rathakit suggested investors study business regulations and make sure that they make contact with the right agencies and channels before jumping into Laos.

"Thai investors always think Thailand and Laos have a similar culture and that people can directly communicate with each other thanks to sharing a very similar language. As a result, Thai investors fail to study Laos investment regulations which can lead to business failure," he said.

A small number of Thai businesses are already in Laos. But the majority of trade between the two countries generally consists of border trade and purchasing electricity from Laos.

Thai businesses that have successfully invested in Loas include the Soon Hua Seng Group, which has a eucalyptus-forest plantation concession; Lampang Food Products, which opened the first canned-food manufacturing plant in Vientiane; the Wang Kanai Group and Mitr Phol Sugar Group, which have established sugar-cane plantations; and the Charoen Pokphand Group, which is in talks to lease up to 10,000 rai of land to grow corn to support its animal-feed business in Thailand.

Rathakit said that Laos is an ideal export gateway into Cambodia and China.

In addition, thanks to a planned regional transportation road link, "Route No 3" and "Route No 9" will soon link up the country's transportation network to Burma, Thailand, Vietnam and China, opening up the country as an overland transport point.

"The successful construction will turn Laos from a 'landlocked' to a 'land-linked' country," Rathakit said.

Achara Pongvutitham

The Nation

Vientiane