Laos-Vietnam trade hub prospects are unconvincing

Tuesday, June 13, 2017

Subject

Lao and Vietnamese cooperation in infrastructure development and Laos's prospects as an inland trade hub.

Significance

Laos's government announced on May 25 that it is considering creating a public-private joint stock company to facilitate links with Vietnamese partners as both countries cooperate to develop the Vung Ang port. Proceeding with the project signals a renewed attempt to make Laos land-linked, rather than landlocked.

Impacts

  • Laos's leaders face a challenge encouraging neighbours to use the Vung Ang port.
  • Laos-oriented trade alone will be insufficient to make the port commercially viable.
  • In coming years, no major economic benefit for Laos directly stemming from the Vung Ang project is likely.
  • War-era unexploded ordnance may slow construction of the Vung Ang rail link.
  • Absent adequate private capital, sovereign debt could be required for the Vung Ang project, problematic for debt-burdened Laos.
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