The value of Japanese investment in Laos for 2013 reached 405.7 million U.S. dollars, an increase of almost 15 percent over the previous year, local media reported Wednesday.
Japanese economic expert and Executive Advisor to the Government office and Ministry of Planning and Investment Motoyoshi Suzuki said that the prospects for continued Japanese investment look strong.
With Laos' strong economic growth, Japanese investors see the country as a new production base. Improvement of the country's infrastructure and legal framework as well as cheap labor are seen as a major selling point. "I think that within the next two years, Japan will climb in the rankings from 6th to 4th largest for foreign investment in Laos after China, Vietnam and Thailand," Suzuki said.
According to Suzuki, while a large amount of foreign investment in Laos was centered largely on real estate and golf courses, Japanese investors will focus on manufacturing, services and agro- forestry. "Manufacturing, for example, offers good job opportunities for people," he said, adding that one hectare of manufacturing will provide far more jobs than one hectare of agriculture.
Suzuki said that previously, Japanese investors were cautious about investing in the country because of limited infrastructure. However, due to the considerable improvement of these sectors over recent years, many Japanese have reassessed their stance towards the country.
Laos' stable labor costs and political climate make a compelling argument to Japanese investors. In 2009, there were 27 Japanese investment projects in the country but that number rose to 60 in 2013.
According to Suzuki, flooding and political instability in Thailand have made many Japanese investors consider splitting their production bases. Many of the 7,000 Japanese companies in Thailand are looking into the feasibility of shifting their businesses to Laos.
The Japan External Trade Organization (JETRO) plans to open an office in Laos. The move comes as Japanese companies Nikon and Toyota look to establish part of their production base in Laos.
JETRO have commented that Laos is appealing to Japanese investors because of its political stability, cheap labor and robust economic growth./.