Malaysian companies are fast making inroads into the Laotian market for goods, services and investment as they take advantage of the country’s strong economic performance and policy reforms.

The signing of a Memorandum of Understanding (MoU) and an agreement during the official visit of Y.A.B Prime Minister Dato’ Sri Najib Tun Razak to Lao PDR from 1-3 June 2010 testified to this progress. The MoU was for the construction of the 240MW Don Sahong hydropower project in Champassak province, while the agreement was for the development of a piece of land in Savan-Seno special economic zone, which is operated by a Malaysian company.

Total trade between Malaysia and Lao PDR in 2009 was US$6.8 million (RM24.5 million). Malaysia’s imports included metal and timber products while exports included chemical products, textiles and electrical and electronic goods. While trade flow is still small, Malaysian investments in Lao PDR is on the increase. Malaysia is one of the leading investors in Lao PDR among the ASEAN Member States, with investments amounting to US$151.3 million for the period 2000 to 2009 which involved 43 projects. Malaysian investments in Lao PDR cover a broad spectrum of sectors including banking, construction, engineering and power generation.

To facilitate investments, Malaysia and Lao PDR had signed a MoU on the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. During the visit, two other MoUs were signed covering cooperation in education and sports.

Bilateral trade is expected to grow further once the Malaysian-Laos Association formalizes itself as the Malaysian-Laotian Business Council (MLBC).