Economic

1. Thai-Lao Trade Relations

Thailand is Laos’ prime trade partner. In 2009, the volume of trade was 71.98 billion baht (2.1 billion USD), a decrease of 12.02% from that in 2008. The value of export from Thailand was 56.04 billion baht (1.64 billion USD) while the value of import from Laos was 15.94 billion baht (0.46 billion USD). However, the proportion of Thai-Lao bilateral trade compared with total foreign trade augmented from 0.67% to 0.74%.

Main export products from Thailand are petroleum, car equipments and parts, steel, machine and textile. Import products comprise metal ore and metal product, fuel, log and timber, and plant.

The Thailand-Laos Joint Trade Committee, established in 1997 and co-chaired by the Minister of Commerce of Thailand and the Minister of Trade of Laos, is the mechanism to promote bilateral trade. This committee has been transformed, but with the same co-chairs, to Thailand-Laos Economic and Trade Cooperation Plan Meeting . The first meeting was held on 24-28 December 2006 in Vientiane.

The Royal Thai Government has a policy to support the import of agricultural product from neighboring countries, including Laos, by granting Generalized System of Preferences (GSP) both in ASEAN and ACMECS frameworks so as to help develop their economic potential. Moreover, the enforcement of ASEAN Free Trade Area (AFTA) since 1 January 2010, has enabled Laos to export products to ASEAN-6 countries (old members) without tariff (except some products). The remaining 4 members of ASEAN (Laos, Cambodia, Vietnam and Myanmar) are obliged to reduce tariff in accordance with AFTA regulation within 2015. Additionally, Laos is amending relevant regulations in preparation for WTO membership application.

2. Thai Investment in Laos

Thailand’s cumulative investment tops the chart of foreign investors in Laos (statistic in 2000-2009) with more than 200 projects and estimated accumulated value of 2.6 billion USD. Major projects are in the energy and mining sectors such as the Nam Theun 2 Dam and Nam Ngum 2 Dam. Other main foreign investors in Laos are China, Vietnam, France and Japan.

Hydropower attracts the highest value of foreign investment in Laos. This sector involves more than 40 projects totaling 11.7 billion USD. Mining comes second (3 billion USD) followed by service sector, agriculture, industry-handicraft, trade, construction, hotel and restaurant.

3. Energy

Laos intends to become ‘Battery of Asia’ or a source of energy reserve in the sub-region. It is capable of generating around 23,000 megawatts of electricity and will be able to produce 8,657 megawatt by 2020 according to its Social and Economic Development Plan. Currently, there are 11 large hydropower dams and 36 smaller ones that can totally generate about 1,670 megawatts of electricity.

Thai-Lao Energy Cooperation

The Thai and Lao governments signed a Memorandum of Understanding (MoU) on Electricity Development Cooperation in Laos on 4 June 1993. The MoU indicated that Thailand will assist Laos in developing electricity generating projects in Laos and 1,500 megawatts of electricity will be exported to Thailand within 2000. Eventually, the second and third MoU signed in 1996 and 2006 increased the amount of electricity to be purchased by Thailand to 3,000 megawatts within 2006 and to 5,000 megawatts within 2015 respectively. On 22 December 2007, the forth MoU extends the amount to 7,000 megawatts within/after 2015.

As of March 2010, there are 3 hydropower projects that already generated electricity to Thailand, namely Theun-Hinboun, Houay Ho and Nam Theun 2. Projects in progress are Nam Ngum 2 and an extension of Theun-Hinboun.