HCMC – Vietnam and Laos are considering using their local currencies, the Vietnam dong and the Lao kip, for bilateral trade and investment to reduce reliance on foreign currency and minimize external risks.
The central banks of both countries – the State Bank of Vietnam and the Bank of the Lao PDR – recently held a workshop to discuss this initiative. This move is expected to enhance economic stability by reducing the impact of global currency market fluctuations.
The cross-border payment systems will be managed by the Lao National Payment Network (LAPNet) and the Vietnam National Payment Corporation (NAPAS).
The project will involve several banks, including VietinBank, Sacombank, BIDV, Vietcombank, TPBank, NamABank, SHB, BVBank, and MBBank from Vietnam, as well as 13 banks from Laos, such as BCEL, APB, BIC, JDB, LVB, STB, Vietinbank Lao, Phongsavanh Bank, Sacombank Lao, ACLEDA, MBBank Lao, MJBL, and Indochina Bank.
At the workshop, both sides introduced a cross-border retail payment project utilizing QR code technology. The first phase of this project is expected to begin in September.
Using local currencies in trade and investment is a growing trend in ASEAN countries, including Laos, as a strategy to safeguard their economies from geopolitical and financial risks.
Vietnam is Laos’ third-largest trading partner, and both countries have a history of strong commercial ties. The shift to local currencies is anticipated to further boost economic cooperation.
According to the General Department of Vietnam Customs, trade between Vietnam and Laos increased by 11% in the first half of 2024 compared to the same period last year to US$927 million. During this period, Vietnam reported a trade deficit of US$349 million. Exports from Vietnam to Laos totaled US$289 million, up 7.4% year-on-year.
