Challenges for Vietnamese investors in Laos, Cambodia

15:05 | 23/03/2017 Investment

(VEN) - Countries in the Mekong Sub-region, especially Laos and Cambodia, have attracted Vietnamese investment, mostly in agriculture.  

Most Vietnamese agricultural investment projects in Laos and Cambodia are in rubber planting

At a recent workshop on sustainable Vietnamese agricultural investment in the Mekong Sub-region, Doan Thanh Nghi, a representative of the Ministry of Planning and Investment, said that Vietnam began to invest overseas in 1989 and from then until January 2017, carried out 1,188 investment projects in 70 countries and territories, with total registered capital of more than US$21.39 billion.

Laos and Cambodia have been the most attractive overseas investment destinations for Vietnamese businesses. Laos has attracted 270 Vietnamese investment projects with total registered capital of US$5.12 billion, Cambodia 191 projects with US$2.89 billion. Vietnamese investment in Laos and Cambodia has been concentrated on agriculture (mostly rubber planting), forestry, telecommunications, mining, and medical services.

According to Doan Thanh Nghi, overseas Vietnamese investment reflects the growth of the domestic business community, in particular, and the Vietnamese economy, in general. In his opinion, overseas investment also helps domestic businesses increase their presence in foreign markets and avoid trade protection barriers.

Despite positive results, overseas Vietnamese investment in agriculture has faced risks due to differences in culture, law, and business environment. These differences may lead to disputes and affect the implementation of investment projects, as well as the image of Vietnamese investors.

To promote sustainable overseas investment in agriculture, in the opinion of Pham Quang Tu from Oxfam, a leading international nongovernmental organization, domestic businesses have to abide by the regulations and policies not only of Vietnam but also of the countries in which they invest. He advised businesses to update themselves on policy changes adopted by Laos and Cambodia as they both remain developing countries and continue to change their laws and policies.

According to Pham Quang Tu, many Vietnamese businesses did not conduct market research before investing in Laos and Cambodia. Their lack of knowledge about land ownership in these two countries has led to disputes hindering their investment projects. Many Vietnamese businesses do not know that land in Laos and Cambodia is under individual ownership, and that after receiving investment licenses from the local governments, they have to negotiate with local residents. Therefore, businesses need to study the lay of the land before investing in these neighboring countries, Pham Quang Tu said.

Knowing the mechanisms and policies of countries in which they invest, and abiding by them, will help Vietnamese businesses minimize disputes, especially in the field of land.

Nguyen Hanh