Foreign direct investment and knowledge transfer in Laos

The Laos government has supported a policy towards foreign direct investment (FDI) since 1988. The investment-related laws and regulations have been amended and improved from time to time in order to create more and more favourable business and investment environment in the country, as well as to better facilitate the inflow of FDI. Hence, this case study is to compare the modes of investment of the multinational corporations investing in Lao People's Democratic Republic. The multinational corporations selected include Charoen Pokphand Laos, Huawei Laos and Hoang Anh Gia Lai Attapue. This article has demonstrated the different modes of FDI that these three companies selected as their business strategies when starting to do business in Laos. It has found that green field investment is likely to support agribusiness more whereas branch is good in supporting up-to-date technology in countries with a low technology development. Each selected mode focuses strongly on the potential for cost saving as well as on solving the problem of low productivity and low labour skill of the host country. To sum up, the host country must make a decision on whether to attract resource-seeking or non-resource-seeking FDI.