Vientiane - Japanese investment in Laos hit $405.7 million (13.26 billion baht) last year, up 15% year-on-year, partly driven by manufacturing relocation after the 2011 floods in Thailand, media reports said on Wednesday.

Surging labour costs in China, especially in major cities, and Thailand's devastating floods in 2011 were key factors behind the move to increase investment in Laos, helping boost the number of Japanese companies based in the country to 60, said Motoyoshi Suzuki, economic adviser to the Japan International Cooperation Agency (Jica).

"I think that within the next two years, Japan will climb in the rankings from sixth to fourth largest for foreign investment in Laos, after China, Vietnam and Thailand," Mr Suzuki told the Vientiane Times

Mr Suzuki noted that past foreign investments in Laos had been mainly in real estate or golf courses, while Japanese companies tend to invest in manufacturing.

The economist said that the 2011 flooding in Thailand had made some of the 7,000 Japanese companies based in Thailand look into shifting their business to Laos.

Japanese multinationals Nikon Corporation and Toyota Motor Corporation will be shifting parts of their production bases from Thailand to Laos, the Vientiane Times reported.

The Japan External Trade Organization (Jetro), which assists Japanese companies in their overseas operations, plans to open an office in Vientiane this year.

Although still ranked among the world's least developed countries, land-locked Laos enjoyed an average annual economic growth of 8% between 2011 to 2013, according to the World Bank.

By bangkokpost.com

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