Agribusiness opportunities growing in Laos
Published: 16 Jun 2014 Bangkok Post
Writer: Tanyatorn Tongwaranan
Laos has become one of the most captivating countries in the region for foreign investment in recent years, with a focus on natural resources.
Besides its mineral wealth and plentiful power supply, Laos also has 47% of unexploited forest and land areas that are suitable for various plantation activities, especially for rubber, coffee, timber…
Agriculture accounts for around 33% of GDP and contributes to the livelihood of approximately 75% of the population, most of whom are smallholders producing rice for domestic consumption. It thus has a central role to play in the country’s development, according to Research conducted in 2012 by Economists at Large.
“Local fresh produce from Laos has gained recognition and wider acceptance in recent years,” Pathom Taenkam, the vice president of the Thai Fruit & Vegetable Producers Association, told Asia Focus at a recent conference in Vientiane. “Many varieties of fresh vegetables, herbs and fruits have been exported to its neighbouring countries as well as to Europe and Japan.”
The country recently established Laos Good Agricultural Practice (Laos GAP) as a way to build confidence among farmers and consumers as the standard complies with the Asean GAP and other food safety standards standards in European countries.
“The launch of the Laos GAP Standard, although in its initial phase, will enhance and complement Laos’s food safety policy,” said Mr Pathom.
“This allows foreign investors and exporters to consider the country as a new supply base for fresh fruits and vegetables which could further be developed into other parts of the agribusiness chain chain in the future.”
Mr Pathom sees several factors that should appeal to Thai investors and exporters in Laos.
“We are well connected with good roads through several friendship bridges and our culture and language are closely related,” he said.
With vast open spaces, good fertile soil, abundant water and a favourable climate, different kinds of crops can grow from North to South. “Its location can be the source for various future food crop supplies , especially in the line of exotic fruit and vegetables.”
Roderick Campbell and Tristan Knowles, the authors of “Business Models for Foreign Investment in Agriculture” in Laos, state that agricultural investment, largely from Vietnam, China and Thailand, has grown tremendously since investment regulations were loosened since 2005.
Between 2005 and 2011, foreign direct investment (FDI) of between UScopy.1 billion and copy.7 billion has been approved for projects in the agriculture sector.