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Chinese bank eyes entry into Lao market
A major Chinese bank has expressed interest in opening a branch in Laos, hoping to capitalise on the increasing economic cooperation between the two countries.
Industrial and Commercial Bank of China (ICBC) Executive Director Mr Yang Kaiseng made the announcement during a meeting in Vientiane on Friday with Bank of the Lao PDR Deputy Governor Mr Bounsong Sommalavong.
Mr Bounsong said he welcomed the interest of the Chinese bank in opening a branch in Laos as this would boost bilateral trade and investment and forge closer economic cooperation between the two countries.
Both sides discussed the possibility of allowing both Lao kip and Chinese RMB accounts and payments – the demand for which is increasing along with bilateral investment.
The Chinese bank's interest in entering the Lao market comes amid an upswing in Chinese investment and trade in Laos.
According to a report from the Ministry of Planning and Investment, China is one of the top three foreign investors in Laos. Chinese firms have invested in 397 projects worth about US$2.71 billion from 2000 to 2010, making China the second largest foreign investor after Vietnam.
Bilateral trade between Laos and China also continues to increase and rose to about US$1 billion in value in 2010.
Economists predict that bilateral trade and investment between Laos and China will see a big surge following construction of the US$7 billion Laos-China railway. The Lao government has listed the high-speed railway as one of the mega investment projects to be undertaken in the next five years.
ICBC is one of the largest listed banks in the world with market capitalisation of US$233.5 billion and a workforce of 397,339.
At the end of 2010, the bank's total assets reached RMB 13,458.622 billion, representing an increase of RMB 1,673.569 billion, or 14.2 percent over the end of the previous year.
Having a 28.4 percent increase against the previous year in net profit to RMB 166.025 billion in 2010, ICBC defended its position as the world's most profitable bank, up by 12 percentage points from a year earlier.
The Lao government welcomes the presence of overseas commercial banks so that businesses can access capital for investment purposes.
Laos needs 127 trillion kip to ensure the country's targeted 8 percent GDP growth. The government believes an increasing number of commercial banks will enable the necessary funds to flow into the economy.
At present, there are more than 22 commercial banks in Laos, including banks based in Thailand, Vietnam, Cambodia and Australia.
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