The strategic location of Lao Cai on the Kunming-Haiphong economic corridor, has made it become an alluring destination for foreign investment in Vietnam, particularly in the tourism, agriculture and construction industries. Currently, Lao Cai is the key passage for investments and trades between Vietnam and southwest regions of China.
However, Lao Cai has its own share of challenges despite the positive growth in investments and economy. Challenges such as inadequate infrastructure, lack of business information access, lack of land access, poor workforce quality, and unsatisfactory business support.
In this article, Cekindo will provide a bigger picture of this new and budding investment location so that you can be the first to get the most out of your foreign investment in Lao Cai, Vietnam.
Location and Infrastructure of Lao Cai
Lao Cai is a geographical location made up of eight districts. Its strategic location form the major economic corridor of Con Minh-Hanoi-Haiphong.
Compared to other mountainous areas, Lao Cai’s transportation network is considered better with five national highways. Thanks to the Noi Bai-Lao Cai expressway, it makes travelling between Lao Cai and Hanoi to be shortened from 7 to 3.5 hours.
China’s Kunming-Hekou railways and Hai Phong-Hanoi-Lao Cai corridor also help boost the trade in the Kunming-Lao Cai-Hanoi-Haiphong economic corridor, with a surging demand for freight services between China and Vietnam in recent years.
Noi Bai International Airport in Hanoi is the nearest airport to Lao Cai, and a proposal of building an airport in Sa Pa with a serving capacity of 3 million passengers a year has been submitted. Therefore, Lao Cai province is currently looking for funding from the government, as well as from private investors.
Major Industries for Investment in Lao Cai
Tourism, construction and agriculture are the main industries in the province. We will go into more detail in the sections below.
Tourism and Hospitality
Lao Cai has a great potential to develop into a main tourism hub in Vietnam. In 2018, more than 718,000 visitors arrived in Lao Cai with a profit of approximately US$583 million, proving that tourism and hospitality services present great investment opportunities. Among the eight districts, Sa Pa was the most visited. It is forecast that more than five million people will visit the province and 900,000 of them are from overseas.
With such a promising outlook, the government of Vietnam has also been upgrading the infrastructure and facilities in the province to boost its tourism further.
Lao Cai has abundant mineral resources. Thirty-five different and great quality minerals can be found in 150 mines in the province, hence Lao Cai is great for mining construction and processing investments. Take apatite ore for example, each year, more than three factories has the extracting capacity of 100,000 to 700,000 tons of this mineral.
In addition, a hydro-plant construction project with a total investment of US$35 million was commenced this year by a joint venture. The joint venture is between China’s Yunnan Power Grid Corporation and Vietnam’s Northern Power Corporation.
Agriculture and Forestry
Lao Cai has highland areas with 15 to 20 degrees Celcius that can grow many rare plants that other places can’t. The low land areas also produce many typical plants. Therefore, it provides great investment potential in agriculture and forestry. Currently, plants such as pineapple, tea, banana and tobacco give the highest return in profit.
Foreign Direct Investment in Lao Cai
In just three months in 2019, there were 20 foreign direct investment projects coming into Lao Cai with a total investment capital of US$540 million. Most of these investments are from Chinese investors, and the rest injected by South Korea, Singapore, Norway, the UK, the US and Denmark.
Furthermore, Lao Cai government has approved another eight foreign investment projects with a registered capital of US1 billion in several industries including tourism, pharmaceutical, urban development, services, etc.
Incentives to Attract Investments
Lao Cai’s authorities have also been seeking more capital through foreign investments in high technology agriculture, logistics, warehousing, copper and iron processing, and tourism sectors.
To attract more investments, the Lao Cai People’s Committee aims to cut down the time and red tapes to simplify the investment and customs process with other incentives such as land rental exemption, corporate income tax exemption and CIT reduction.
How Cekindo can Assist
No matter what your investment goals in Vietnam, Cekindo has the expertise and experience as a professional business consultant to help you plan your entrepreneurial journey, achieve your business objectives and reap the benefits of your foreign investment in Vietnam.
Contact us now to find out more by filling in the form below.