Laos is becoming a new investment target for Japanese firms amid rising labor costs in China and political uncertainty in Thailand, according to a Japanese investment promotion body.

The Japan External Trade Organization will open an office in Vientiane next year because of the rising number of Japanese investors coming to Laos for its relative economic and political stability, it announced earlier this week.

There are now about 60 Japanese companies investing and running businesses in Laos up from only 27 in 2009, the Japanese government-sponsored organization was quoted as saying in The Japan Times on Wednesday.

JETRO said Laos was appealing to Japanese investors because of its political stability, cheap labor and robust economic growth.

Most of the firms establishing themselves in Laos are based in China, where labor costs are rising, and Thailand, which is facing both political turmoil and flooding.

The latest investors from these countries include Nikon and Toyota, which will both be building parts in Laos for their production bases in Thailand.

JETRO said the timing of its opening in Vientiane was still being determined by the Lao government.

The organization will help expand trade and investment between Laos and Japan. It will also build ties with Asean as the 10-nation bloc tightens its economic integration to achieve the Asean Economic Community in 2015.

“We believe the office will make it easier for Japanese companies to send missions to Laos and for us to assist Japanese infrastructure exports and help promote local industries such as silk weaving and wooden handicrafts,” JETRO’s planning department’s senior coordinator for Southeast Asia, Seiya Sukegawa, said.

Japan has provided technical assistance to Laos to develop human resources and infrastructure over the past several decades, aiming to create more favorable conditions for Japanese firms to invest in one of the most resource-rich countries in Asean.

Laos’ location in the center of the nations on the Mekong River makes it an attractive destination for investors. The country also shares a border with China, which is the second largest economy in the world, and is rich in natural resources and fertilized land suitable for agriculture.

But there are challenges presented by a lack of skilled labor forces and infrastructure. The Lao government is mobilizing funds to address those shortcomings.

Japanese Prime Minister Shinzo Abe and Lao Prime Minister Thongsing Thammavong met this week.

By Ekaphone Phouthonesy

(Vientiane Times)