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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Vietnamese insurers deploy their troops overseas

The Foreign Investment Agency (FIA) has noted the growing tendency of Vietnamese businesses making outward investment when the domestic market has become narrower for them. (VIETNAMNET)

Laos, the promising land

Two Vietnamese enterprises have pioneered in exploiting the Lao market, including BIC, which in 2008 set up LVI joint venture with the Laos– Vietnam Joint Venture Bank and the Lao Foreign Trade Bank, and PTI, which established Lane Xang Joint Venture with the Lao Development Bank.

LVI is now the second biggest insurance company in Laos, while it is the most favorite insurance brand in the country. Its insurance premiums have been increasing rapidly year after year. The joint venture finished taking loss in 2012, while it got the ROE at 18 percent.

Following the impressive success of LVI, BIC has recently asked for the Ministry of Finance’s permission to increase its capital contribution in the joint venture. BIC plans to buy the 14 percent of stakes from the Laos– Vietnam Joint Venture Bank to increase its capital contribution ratio there from 51 percent to 65 percent.

PTI has also reported a successful business year in 2012 with Lane Xang, which has the fastest growth rate in Laos, which can be seen in the five-fold increase in the number of agents and the 2-fold increase in the number of workers.

According to Lai Manh Quan, General Director of Lane Xang, Laos is a small but potential market. The country’s economic growth rate is high, which is really the great opportunity for insurers to develop insurance products. Especially, since Lao people remain unfamiliar to “Bancasurance”, Quan said he can see a lot of more opportunities to cooperate with Lao banks to develop many other services.

Cambodia, an open market

A report showed that Vietnam is the seventh biggest foreign investor in Cambodia. Cambodia Vietnam CVI, the seventh one operating in the market, is the first insurance company which has the capital contribution from a Vietnam partner– BIDV Bank. CVI is now leading the Cambodian market in the insurance services in the aviation sector.

According to Cao Minh Son, CVI’s General Director, Cambodia is a“hot spot” for investment for 3 reasons. First, the US dollar has been used popularly in the country, which allows insurers to remit insurance premiums to Vietnam while no need to convert the money.

Second, Cambodian is a fast growing economy, and there are still few big international insurers.

And third, there is no limitation on the foreign ownership ratio in the finance service sector in Cambodia.

Myanmar promises golden opportunities

Myanmar has caught the attention of all the international investors following the statement on opening the market.

Vietnamese investors have also been nimble enough to set foot in the golden unexploited land. BIDV Bank, PetroVietnam, Hoang Anh Gia Lai, Simco Song Da, Viglacera, Vina Capital, ASV Pharma, Vietnam Airlines and the military telecom group Viettel all have arrived there to seek their opportunities.

The“golden opportunities” that analysts say are the unexploited industries, with 90 percent of industrial goods being fed by the imports. .Meanwhile, other important sectors such as service, healthcare service and finance remain underdeveloped.

BIDV has opened its representative office in Yangon, the biggest city of Myanmar in 2011. BIDV is considering setting up a 100 percent Vietnamese owned bank or a joint venture bank in the country as soon as the country opens the banking sector.

Chemicals giant looks to invest in Asia-Pacific

German chemicals giant BASF has unveiled its plans for a major investment drive in the Asia-Pacific region, where it hopes to take advantage of above-average growth to more than double its sales.

BASF, which currently generates around 16 percent of its revenues in Asia Pacific, announced plans to invest 10 billion euros ($13 billion) there by the end of the decade and create up to 9,000 new jobs.

The German giant said it aims to generate annual sales of 25 billion euros in the region by 2020, up from 11.7 billion euros in 2012.

More than 2.0 billion in regional sales would be achieved through new business and acquisitions by 2020.

In 2012, BASF booked total worldwide sales of 72.1 billion euros on a workforce of 110,000.

The cumulative annual growth rate for real chemical production for Asia Pacific is estimated at 6.2 percent until 2020, well above the world average of 4.0 percent, BASF said.

And the German group’s aim would be to “grow profitably at least two percentage points above regional chemical output.”

“To achieve this, BASF plans to invest 10 billion euros together with its partners by 2020 to further develop its local production footprint in Asia Pacific,” it said.

In March, BASF announced it would focus its business in Asia on chemicals destined for the textile and leather industries.

The group said it aims to produce around 75 percent of the total products it sells in Asia in the region by 2020.

“Local production improves resource efficiency by reducing the transportation needed for imports and exports, and by enhancing energy and raw material efficiency,” it explained.

BASF said it currently operates more than 100 production sites in the Asia Pacific region, including two highly-integrated sites in Kuantan, Malaysia and in Nanjing, China.

In addition to those main markets, BASF said it also hopes to explore “untapped markets in Mongolia, Laos, Myanmar, and Cambodia.”

“In the next decade, Asia Pacific will face huge challenges while remaining the fastest growing market for the chemical industry,” said BASF executive board member Martin Brudermueller.

BASF said it aims to conduct 25 percent of its global research and development (R&D) in Asia Pacific by 2020, with a total of around 3,500 R&D personnel in the region, up from around 800 in 2012.

It plans to establish research facilities in the areas of electronic materials, battery materials, agriculture, catalysis, mining, water treatment, polymers and minerals, it said.

Investors did not appear particularly enthusiastic about the massive investment drive and BASF shares were underperforming the overall market in Frankfurt on Tuesday, gaining a modest 0.21 percent, while the blue-chip DAX 30 index was up 0.85 percent.

By AFP   |   Tuesday, 04 June 2013

Laos will issue bonds in Thai market for first time this week

The Lao government will raise funds through the Thai capital market for the first time by issuing 1.5 billion baht worth of bonds to institutional investors on Thursday. The three-year bonds will carry a coupon rate of 4.5%.

Thailand is the most advanced capital market in the Mekong region and uses this strength to foster development of neighbouring capital markets.

Niwat Kanjanaphoomin, president of the Thai Bond Market Association, believes Laos will be able to attract foreign investors to its government bonds to be issued in the Thai capital market.

Bonds issued by foreigners to raise funds in the Thai capital market are typically required to have a credit rating, but Thailand’s Finance Ministry is making an exception in this case.

“The first lot of Laotian government bonds is small, but it’s good to test the market and build up investor awareness for a potentially larger bond issue in the Thai market or even the Laotian bond market later on,” said Mr Niwat.

Laos has appointed Twin Pine Consulting Co Ltd (TPC), a Thai advisory firm, to assist with the bond issue.

TPC is a regional advisory firm tailored to Southeast Asia, specialising in energy and agriculture.

The company was founded by Chiridacha Phungsunthorn, who has long experience in regional law, and Adisorn Vasukhup Singhsacha, a financial adviser with more than a decade in international banking.

Mr Chiridacha said TPC has other deals with Greater Mekong Subregion governments in the pipeline that could raise funds via the Thai bond and stock markets.

TPC works with LS Horizon Ltd, also founded by Mr Chiridacha and a pioneering regional law firm, when engaging with clients across the Mekong region.

LS Horizon has offices in Thailand, Laos, Myanmar and Singapore, with further expansion planned.

Successful projects done by LS Horizon in the past include advising on EDL-Generation Plc’s listing on the Lao Securities Exchange.

Mr Adisorn said the stock market in Laos opened two years ago and has two listed companies so far. Myanmar is also looking to launch its own stock exchange in 2015, while Cambodia has similar ambitions.

“Thais must first have a more open view towards their neighbours and an eagerness to grow, as we share a similar culture with other countries in Southeast Asia,” he said.

He said potential deals advised by TPC at present include providing advisory services to leading Myanmar companies in raising funds through the capital markets of other Asean countries, a real estate project in the heart of Yangon and a property fund for investment in Thailand.

24 May 2013│Bangkok Post

Mr Chiridacha said investment openings in Laos, Myanmar and Cambodia are promising, but the opportunities in Malaysia and Vietnam are slim due to differences in the legal and business cultures.

Indonesia is more intriguing than Malaysia and Vietnam, with energy and consumption-related businesses especially attractive, he said.

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

Investors see many opportunities in Laos stock market

HA NOI (VNS)— The Lao stock market holds opportunities for Vietnamese investors, with a newly born securities firm and a recent memorandum of understanding between the Lao Stock Exchange and Viet Nam’s bourses.

In March, Lao Airlines met with the country’s Securities and Exchange Commission Office to formally announce its intention to list.

There are currently only two listed stocks in the market: Banque Pour Le Commerce Exterieur Lao (BCEL) and electricity firm EDL-Generation (EDL-Gen). BCEL has fallen around 7 per cent since the beginning of the year, but EDL-Gen has risen 13.8 per cent.

Also in March, the Lao stock market welcomed a new securities company, Lao-China Securities Co Ltd. It expects to deliver a variety of services including brokerage and underwriting by July.

Another securities company – Lanexang Securities – is a partnership between Sacombank Securities (SBS) and the Lao Development Bank which opened in 2011.

On May 10, the Lao Stock Exchange met with the Vietnamese bourses to work on developing securities products and exchange of information. Accordingly, investors in Viet Nam can purchase Lao shares online via a system called “Home Trading”.

“The system will create more favourable conditions for Viet Nam – the 4th largest foreign investor the Lao stock market in 2012,” a representative from the meeting commented.

According to data from the Lao Stock Exchange, the current playground is dominated by foreign investors, who accounted for 58.46 per cent of the market last year.

However, foreign ownership is capped at 20 per cent in Laos.

The Lao government is considering increasing the cap following recommendations by its securities companies, but there has been no official decision.

The Lao stock market has high growth potential. It rose more than 35 per cent last year, becoming the 8th fastest stock market in the world, data from the Lao Stock Exchange showed.

As of yesterday, the LSX Composite Index had grown over 11 per cent since the beginning of this year. —VNS

ADB supports integration of regional energy systems

Vientiane (Vientiane Times/ ANN) — Countries in the Greater Mekong Sub-region can save US$14 billion over the next 20 years if they integrate their power transmission systems, according to a senior official from the Asian Development Bank.

A regional power grid connection would enable countries with hydro-power plants to export energy to other countries, saving up to US$700 million a year by reducing fossil fuel imports, the Bank says in its report on Asia’s Energy Challenge, released earlier this month.

A greater supply of hydro-power in the region would also help to reduce CO2 emissions by 14 million tonnes per year by 2020, the report highlights.

At present, countries in the region use different resources to generate electricity. Some, such as Thailand, Vietnam and Cambodia, rely on natural gas and imported fossil fuel, while others such as China and Laos harness hydro-power.

Countries in the region could share and exchange electricity generated from different resources if they connect their power grids, which would enable more efficient use of energy.

The ADB notes that while Asia has great potential for hydro-power development, only 20 percent of this resource has been utilized.

Laos has the potential to create an installed electricity generating capacity of 28,000MW, which would supply sufficient power to the whole of Thailand.

A senior economist at ADB Laos, Mr Soulinthone Leuangkhamsing, told Vientiane Times that Laos would benefit from regional power grid integration, saying Laos could export hydro-power in the wet season and import it in the dry season.

He said regional power grid connectivity would help Laos to secure sufficient power in the dry season, especially at a time when energy consumption is soaring. At present, Laos has to import electricity from Thailand for use in Vientiane during the dry season.

Mr Soulinthone said the export value of Lao electricity was about US$450 million in 2012, while the value of electricity imported in the same year was about US$45 million.

Laos should build hydro-power plants that are sustainable, he said, adding that energy development projects must protect the environment and ensure that people who have to sacrifice their land for dams have better lives after they relocate.

The ADB has provided loans for the Lao government to develop its national power grid, enabling provinces in the north and south of the country to access electricity for development purposes.