A nation disadvantaged by geography, Laos has turned to intense infrastructural development and foreign direct investments to accelerate economic growth. As the landlocked nation opens its doors to foreign money, who is it inviting, and what troubles lay ahead?

Once an ancient kingdom and a hub for overland trade, Laos has found it difficult to thrive in a globalised world, after decades of colonisation and war. The country’s mountainous terrain and modest population of 7.2 million have also left it with limited economic opportunities. To solve this, the government has generously welcomed foreign direct investments (FDI) since the 1980s, especially in major infrastructural developments, hoping to leverage capital and skills transfer to improve its economy.

Keep reading

The post Money flows: Who’s investing in Laos, and what problems do they present? first appeared on Open Development Mekong.

Although Prime Minister Prayut Chan-o-cha announced Thailand’s commitment to the United Nations Guiding Principles on Business and Human Rights (UNGPs) in 2017, outbound investment remains a largely unregulated sector.

Thai firms are significant investors in ASEAN countries, and Thailand’s foreign direct investment (FDI) in the region stood at US$2.37 billion in 2017 – behind only Singapore (US$18.75 billion) and Malaysia (US$3.99 billion).

Keep reading…

The post Are Thailand’s investments abroad sustainable? first appeared on Open Development Mekong.

Bilateral trade and investment from the US into Vietnam are expected not to see drastic changes under US President Donald Trump. Michael Sieburg, associate partner at Asia-Pacific marketing strategy consulting firm Solidiance, talked to VIR’s Hong Anh about the impact of the American withdrawal from the Trans-Pacific Partnership and other economic policies of the new administration on Vietnam. US President Trump has been talking about bringing jobs back to the US. To what extent will this affect US companies’ expansion plans in Vietnam, where a lot of local workers are employed? While Trans-Pacific Partnership related foreign direct investment might be negatively impacted by Trump’s actions, I do not believe his pledge to “bring jobs back to the US” will itself lead to investors switching their FDI plans from Vietnam to the US.

Keep reading

The post US turbulence should steer clear of Vietnam trade first appeared on Open Development Mekong.

Anti-globalization and protectionist attitudes are increasing in some countries, but Vietnam still has an open economy. This means big challenges for Vietnam in upcoming days. US President Donald Trump on January 23 officially pulled out of the 12-nation Trans-Pacific Partnership, a move that The New York Times said “put an end to the era of multinational trade agreements that defined global economics for decades”. Vo Dai Luoc, a respected economist, believes that Vietnam’s exports to the US will bear big influences by the move. A report from GDC showed that the US in 2016 was Vietnam’s biggest export market which consumed $38.5 billion worth of Vietnam’s products, accounting for 21.78 percent of Vietnam’s total export turnover.

Keep reading

The post How should Vietnam behave after the US abandons TPP? first appeared on Open Development Mekong.

Vietnam’s remarkable economic progress looks set to continue in the coming years, despite a regional slowdown which has affected other states in Southeast Asia. Its increasingly diversified and resilient economy has grown at a healthy rate – of above 6 percent – in each of the last two years, and looks well-placed to maintain its position as Southeast Asia’s top performer in 2017. Whilst Vietnam’s economy grew at 6.21 percent last year, other ASEAN countries such as Indonesia, Thailand, Malaysia and Singapore endured slower growth rates as a result of a slowdown in global trade and declining growth in China. Not only was Vietnam the top-performer in the region, but it ranked second behind India – the only country which achieved growth of over 7 percent in 2016 – in the list of fastest-growing economies worldwide. Vietnam’s astounding economic performance is reflected in the end-of-year statistics for the country, compiled by leading economic forecaster, Bloomberg.

Keep reading

The post An economic success story: How Vietnam became Southeast Asia’s top performer first appeared on Open Development Mekong.

Asia’s smallest economies are growing faster than giants like China, according to the World Bank. Cambodia, Laos and Myanmar will post the most rapid expansions in Asia after India from 2017 to 2019, sustaining growth rates of close to 7 percent, according to forecasts released this week. Among the least developed countries, the combined size of the three economies is less than $100 billion, about a third of neighbors like Singapore, Malaysia and Philippines. 
Located in the Mekong region, Southeast Asia’s frontier nations are stepping up their infrastructure drive to boost growth and diversify their economies as they seek to shed their image as the region’s backwater.

Keep reading

The post Asia’s smallest economies are among its fastest growing first appeared on Open Development Mekong.

Despite global uncertainty related to political shifts in the West and a continued Chinese economic slowdown, Cambodia showed strong growth prospects for the next several years, according to the World Bank’s latest report. The latest Global Economic Prospects report from the World Bank, titled “Weak Investment in Uncertain Times,” looked back on the previous year with a generally negative outlook, impacted by the unexpected election of Donald Trump in the US and the sudden Brexit vote in the United Kingdom to leave the European Union. In Asia, slower Chinese economic expansion continued to pose a risk to growth, but had not affected Cambodia as much as previously expected, with both China and Japan maintaining strong levels of foreign direct investment in the region, the report said. The World Bank estimated GDP growth in the Kingdom stood at 7 percent for 2016 and forecasted growth between 6.9 and 6.8 percent for the next three years.

Keep reading

The post Economy resilient to global headwinds: World Bank first appeared on Open Development Mekong.

Though it is the country’s biggest granary and fishery area, exporting $30 billion worth of products each year, the Mekong Delta still cannot attract major investments. A report of the Ministry of Planning and Investment shows that Vietnam has attracted $290 billion worth of foreign direct investment, while the disbursement has reached $160 billion. However, FDI in food processing industry is modest with $7.6 billion in investment capital and 521 projects. Foreign invested projects in food processing are mostly located in big urban areas such as Hanoi, HCMC, Long An, Binh Duong and Dong Nai. Meanwhile, Mekong Delta provinces, despite plentiful natural resources and labor force and a population of 18 million, remains unattractive in foreign investors’ eyes. Analysts noted that most of the foreign invested projects in the food processing industry are mostly in fields where investors can take back the investment capital quickly, such as raw farm produce processing, drink manufacturing and seafood processing.

Keep reading

The post Food processing industry in Mekong Delta still not attracting investors first appeared on Open Development Mekong.

Foreign direct investment for the whole of 2016 is expected to grow by just 2.7%, indicating that confidence in the Thai economy remains fragile, says Vallop Vitanakorn, vice-chairman of the Federation of Thai Industries. He said the likely FDI growth of 2.7% is low when compared with the 10%-20% seen when the Thai economy is performing well. As a result, the FTI expects the Thai government to hold more roadshows in order to attract more foreign investment and help offset contractions in investment caused by political turbulence over the past few years. “At this time, foreign investors have less confidence in the Thai economy, which deters further investment,” Mr. Vallop said. “This shows that the global economy and the Thai economy have not yet recovered fully.” In contrast, the government has set an annual foreign investment target value at as high as 550 billion baht, up from the previous target of 450 billion baht. 

Keep reading

The post FDI sluggish as investor mood dims first appeared on Open Development Mekong.