Private investment reaches 400 billion kip in Vientiane Capital

(KPL) Foreign and domestic private investment in Vientiane Capital has reached 400 billion kip, with 223 projects approved in the first six months of the current fiscal year. Investment by private domestic companies has outnumbered that of foreign companies. Some 214 of 223 projects are investments by local companies, according to a government report on the implementation of the socio-economic development plan in the first half of the 2012-2013 fiscal year. Most private investments were in basic infrastructure development, market-oriented agriculture and services, according to a report read by Minister of Planning and Investment, Mr. Somdy Douangdy at the 5th Ordinary Session of the National Assembly, July 8-26. Chinese investments top foreign private investment in Vientiane Capital, with Thailand, Vietnam and France, ranking second, third and fourth respectively. Companies from the Republic of Korea, the U.S.A and Australia also made investments in the first half of this year. The national economy has continued to expand in the first six months, despite uncertainties in the global economy, the report noted. It is expected that Laos will reach its 8.1 per cent growth target this fiscal year. All sectors, especially mining, hydropower, services, tourism and agriculture are trending toward increased expansion. Meanwhile, currency reserves are high with the central bank confirming the inflation rate remaining at 4.85 per cent.

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Japan funds three projects in Laos

The government of Japan, the largest provider of financial assistance to Laos, has provided more than 558.7 billion kip (7.4 billion yen) to fund three projects in Laos, a press release has said.

More than 417 billion kip in loans will be used to finance the expansion of the Nam Ngum I hydroelectric project, and more than 18.8 billion kip in grants will be provided for human resource development in 2013-2014.

Meanwhile, the remaining 123.8 billion kip will be used to build a water supply system in Thakhaek district, Khammuan province.

Deputy Prime Minister and Minister of Foreign Affairs, Dr Thongloun Sisoulith, signed the exchange of notes with his Japanese counterpart Mr Fumio Kishida recently in Tokyo to receive the financial assistance, according to the press release from the Lao Ministry of Foreign Affairs.

Dr Thongloun visited Japan to attend the 19th International Conference on ‘The Future of Asia’ in Tokyo, which took place on May 23-24. The conference was organised by the Japan-based news agency Nikkei.

On May 23, the Lao minister met with his Japanese counterpart.

“Both sides discussed and exchanged views on bilateral relations and cooperation, regional and international issues and signed the exchange of notes,” the press release said.

Dr Thongloun asked for Japanese assistance for an industrial park and urban development project in Vientiane, with Mr Kishida saying Japan will duly consider it, the Japanese Foreign Ministry said, as quoted in the Global Post.

Mr Kishida added that Tokyo hopes to promote defence exchanges and private-sector ties with Vientiane, the newspaper reported.

According to the Lao Foreign Ministry, Dr Thongloun and his delegates also paid a courtesy call on Japanese Prime Minister Shinzo Abe.

He also met with the Japanese Deputy Prime Minister and Minister of Finance, Mr Taro Aso, when the two ministers discussed the economics and financial situation of their two countries, the region and the world.

Japan has been the biggest provider of Official Development Assistance (ODA) to Laos. From 1958-2011, more than US$2,097 million of ODA was provided to finance development projects in Laos, according to the Lao Ministry of Foreign Affairs.

Japanese grants and loans have financed four primary areas – human resource development, agriculture and forestry, infrastructure development and hydroelectric development.

ODA has greatly contributed to the development of the Lao economy. Last fiscal year, more than US$704 million of ODA was provided to Laos by international organisations, friendly states and other donors.

By Times Reporters│27 May 2013│Vientiane Times

Investments in Cambodia up

Ha Noi (Viet Nam News/ ANN) — Vietnam’s investment in Cambodia has increased significantly in the last three years, but a mechanism to encourage and oversee investments in prioritized sectors is needed, according to diplomatic sources.

Tan Nguyen Tien, head of the economic section at the Vietnamese embassy in Phnom Penh, said Vietnam’s investments in Cambodia quadrupled from $566 million in 41 projects in 2010 to $2.5 billion last year.

Vietnam has in fact become one of the top five investors in the neighboring country.

Cambodia is the second largest destination out of 50 countries and territories for Vietnamese investment.

Vietnam’s investment contributes to 5 per cent of Cambodia’s GDP and has created over 30,000 jobs.

Tien said Vietnam Airlines’ direct services between the two countries and Viettel’s telecom service in Cambodia have helped boost Vietnamese investment in that country.

Besides, the increasing Vietnamese investment in Cambodia is drawing a growing number of Vietnamese travelers. Vietnamese are, in fact, the biggest group of visitors to the country.

Tien said Vietnamese investments in Cambodia included many projects in forestry – agriculture, energy, banking, aviation and telecom sectors.

There are also four projects in the energy sector with a total investment of nearly $800 million, five in finance-banking with $250 million, one telecom project capitalized at $150 million, and a civil aviation project worth $100 million.

Vietnamese FDI in Cambodia is expected to top $4 billion by 2015, and trade between the countries to increase from $3 billion last year to $5 billion by 2015.

The incremental investment will create an estimated 80,000 jobs and contribute $300 million to the country’s coffers annually, Tien said.

“The geographical proximity between the two countries will help bring more Vietnamese investors to Cambodia to explore business and investment opportunities,” Tien was quoted by the Vietnam Economic Times as saying.

But a better co-operation mechanism is needed to oversee economic sectors that require FDI and make Vietnam’s investment a cornerstone for co-operation between the two countries, he said.

Major banks show more agricultural sector trust

Major financial institutions show more trust in providing loans to the agricultural sector, evidenced by increasing agricultural loan disbursement, thanks to potential growth in the sector and better preparation of financial report among borrowers, according to industry insiders.

Acleda Bank, Cambodia’s largest domestically owned bank, has been increasing its percentage share of its loan portfolio into agriculture from 15 per cent two years ago to 19 per cent at the end of March.

While the bank’s total loan portfolio reached about $1.35 billion at the end of March this year, In Channy, the bank’s president and chief executive said $254 million was given to agricultural loans, which represents about 19 per cent of total lending.

“It [agricultural loans] is growing quite well,” said In Channy, “We are more confident to provide loans in the agricultural sector, thanks to better preparation of the financial reports of borrowers and the country’s agricultural development potential.” He added that another $16 million went to rice millers, but are considered separate from agricultural loans.

Acleda’s performance is not alone, and the trend is common in other financial institutions.

Bun Mony, president of Cambodian Microfinance Association, told the Post that while the total loan portfolio in Cambodian MFI industry reached about $1 billion at the end of March this year, he estimate that at least 30 per cent went to agriculture.

On behalf of suppliers, flexibility to the market trends is needed to stay competitive in the market, he said.

“With the export of agricultural products, for instance, milled rice is on the rise,” Bun Mony told the Post, “The country’s advantage in the sector is still a source of growth in the coming years.”

Experts have long said the shortage of loan activity in Cambodian agriculture hindered the sector’s development. The capital needed for inputs such as seeds and fertiliser, and the capital to purchase paddy rice to process have been mentioned so far.

Kim Savuth, the president of the Federation of Cambodian Rice Exporters agreed that accessing loans from banks and MFIs is easier compared to some previous years.

Nevertheless, he said farmers still suffer because of higher interest rates offered by micro lenders, while strict requirements from banks were still a barrier for rice millers.

“If banks could access loans by just reviewing business plans and reduce the dependency on collateral, it would be [of] much help to increase production capacity,” said Kim Savuth.

By Hor Kimsay│09 May 2013│The Phnom Penh Post

Foreign investment law having desired effect

U Aung Naing Oo also said that investment in the telecom and hotel industries is set to surge this year.

Food processing and the garment industries took the lion’s share of the slightly more than US$400 million in FDI in the manufacturing industry last fiscal year, with most of this coming from Singapore, China, Hong Kong and Japan, he said.

Senior economist Dr Maung Aung said the amount was slight when compared to FDI flows into manufacturing in other countries in the region.

The 50 percent jump last year, however, indicated that the new foreign investment law passed in November and the subsequent rules and regulations implemented in January were working, he said

The lifting of sanctions will also fuel FDI in Myanmar, he said. The European Union is lifting sanctions on all products except arms and ammunition, while the US is expected to allow Myanmar preferential access to its market by the end of this year.

Access to the EU and American markets will lead to a massive surge in investment in the manufacturing industry here, Dr Maung Aung said.

He said investment in manufacturing is critical because it creates jobs and provides technology transfers.

As a share of FDI, the manufacturing sector lags extractive industries, which receive about 80 percent of FDI, according to the Myanmar Investment Commission.

Vietnam trade deficit rises to USD800m

(MENAFN) Vietnam’s General Statistics Office announced that the country’s trade deficit reached USD800 million for the period between January and April, reported Xinhua News.The country’s export value was up 16.9 percent to USD39.4 billion on a yearly basis for the first four months, while imports rose 18 percent to USD40.2 billion for the same period.The amount of foreign direct investments, which contributes to crude oil exports, amounted to USD25.5 billion.It’s worth noting that the country earned a USD481 million trade surplus for the first quarter.

Registered FDI capital meets half annual target

HANOI (VNS)— The country attracted nearly US$8.22 billion in registered foreign direct investment (FDI) in the first four months of the year, meaning it was more than halfway to fulfilling the annual goal, according to the Ministry of Planning and Investment’s Foreign Investment Agency. During the period, the agency licensed 341 new FDI projects worth nearly $4.9 billion, up 14.9 per cent. It also allowed another 121 existing projects to raise capital by $3.34 billion, up 20.7 per cent. The agency reported that disbursed FDI during the period surged 3.9 per cent from one year ago to $3.75 billion. FDI registered capital went mainly to the processing and manufacturing industries. With $7.4 billion devoted to 164 projects, these industries accounted for more than 90 per cent of the country’s total registered capital.

Among 37 countries and territories investing in Viet Nam, Japan was the biggest foreign investor with registered capital of $3.6 billion, followed by Singapore and Russia with $2.3 billion and $1.1 billion, respectively. After approving an increase in registered capital for the Nghi Son Oil Refinery, Thanh Hoa Province topped the list of FDI attractors with $2.8 billion. The province was followed by Thai Nguyen and Binh Dinh with $2 billion and $1 billion, respectively. As for import-export, foreign firms in the first four months of the year earned $25.527 billion, an increase of 23.2 per cent against the same period last year that accounted for 64.7 per cent of the country’s total export value. Imports also rose 25.2 per cent to $21.76 billion. Experts urged relevant authorities to prepare for increasingly fierce competition with other countries in the region. They said that Japan, still the biggest foreign investor in Viet Nam, had poured billions of dollars into Myanmar as that country drew attention from the rest of the world. Japan also has more than 7,000 businesses in Thailand, much more than its 1,500 businesses in Viet Nam.