Although Thailand ranks as the biggest investor in Laos, China and Vietnam are the second- and third-largest. Laos receives financial support from China to help develop its domestic infrastructure, and social and military support from Vietnam has earned that country priority consideration.

The quarterly journal Thai-Lao Friendship Information and the Thai Foreign Ministry's East Asia Department hosted a seminar here yesterday called "Potential Economic-Cooperation Links between Thailand, Laos and Southern China".

Representatives from chambers of commerce in provinces bordering Laos shared similar views, saying Laos has a great potential for Thai investors.

That country's plentiful natural resources have attracted several countries. Thailand is focused on managing contract farming in Laos, particularly for crops that face yield shortages or high production costs in Thailand, such as maize and rubber.

However, the government should hold talks with the Lao government to fine-tune the process of formulating policies for economic and social development.

To facilitate bilateral trade in agriculture, the two neighbours should sign a standard contract-farming agreement for mutual benefit. Thailand should also provide financial and technological support, in order to convince Laos that Thailand is serious about long-term investment.

The Thai Agriculture Department said China and Vietnam had invested in rubber-tree plantations covering 300,000 in Laos. China's intention is mainly to serve its own high demand and shortage.

Charas said Phayao focused on the border trade for only a few years. The first in the province to conduct business with Laos traded farm goods through a system of contract farming.

The Phayao traders manage up to 10,000 rai of contract farms in Laos, mostly maize.

"We [traders] are negotiating with major feed-meal manufactures to buy raw materials from Laos. If successful, it will encourage us to expand trading volume and value," said Charas.

Pattana Sittisombat, chairman of the Chiang Rai Chamber of Commerce, said there was great business potential for commodities trading between Thailand and Laos. In particular, the chamber is negotiating with feed-meal producers and Lao farmers for a contract-farming deal.

In addition, the government's cluster strategy for the North involves creating not only a logistics service network, but also a supply chain for agricultural, industrial and One Tambon One Product goods.

The new R3 highway, which will eventually run all the way from Chiang Rai's Chiang Khong district through Laos to Kunming, China, will provide a good transportation route for goods. The highway project is aimed at generating economic wealth in the Greater Mekong Subregion.

"The road will also link with Thailand's logistics cluster to facilitate transportation and a freer flow of trade among the three partners," he said, adding that good infrastructure would create sustained development.

Next year, Thai logistics links among eight provinces will be completed, a plan aimed not only at creating investments, but also at promoting cross-border trade and tourism among the three partners.

Chalaempon Pongchabubnapa, Thailand's commercial counsellor in Vientiane, said the Kingdom had to provide more assistance to help Laos develop socially and economically, which would convince Laos to turn to Thailand.

Laos has come to be considered a strategic country by both China and Vietnam. China is looking for new markets for its goods, while Vietnam is looking more westward, since its back is to the sea.

Total Thai-Lao trade jumped 32 per cent last year, to US$998 million (Bt38.1 billion). Of that, Thai exports accounted for $775 million, giving Thailand a surplus of more than $500 million.

Lao Economic Affairs Department director-general Somchit Inthamith said the biggest trade obstacle between his country and its trading partner was different regulations. However, Laos had opened more markets by adopting more international regulations.

The Lao government has also become more concerned with mutual benefits with foreign traders.

"We have experienced losses from foreign investment in Laos. We don't want our partners to take too much advantage of Laos, but rather we would like to see mutual benefits," said Somchit.

"Laos is a sustained economy with prosperous natural resources. However, these resources have not been processed or developed into value-added goods. We want to see a comparative advantage," he said, adding that Laos hoped the Chiang Khong-Laos-Kunming highway would turn into a valuable transport corridor for the economic development of all three partners.

Achara Pongvutitham

The Nation

Chiang Rai