Highlights
 

•  VRG’s Lao division scripts US$14.85 million in profit in 2024
   
• VRG’s rubber output in Laos touches 34,592 tons in 2024
   
• Prime Minister asks VRG to start tire units in Laos

Playing a key role in regional integration and long-term socio-economic transformation in Lao border provinces, Vietnam Rubber Group (VRG) has emerged as a strategic driver of Laos’ economic growth and Laos–Vietnam economic cooperation through its investments in Laos’ rubber cultivation and processing. VRG is scaling up its operations and exploring downstream expansion, and its presence is reshaping both the industrial landscape and rural livelihoods, mainly in southern and central Laos.

Hosting Vietnamese Prime Minister Pham Minh Chinh early this year, Lao Prime Minister Sonexay Siphandone lauded Vietnamese enterprises for their positive impact on local development, singling out VRG for its continued expansion into rubber deep processing. He said VRG could play a wider role by investing in the industrial and energy sectors.

Six companies in five provinces

Currently, VRG operates six rubber-centric companies across five Lao provinces—Champasak, Savanaket, Salavan, Bolykhamxay, and Oudomxay—commanding a registered investment of over US$254 million. With nearly US$164 million already utilized, the scale and seriousness of VRG’s intent are evident. These operations span over 26,600 hectares of rubber plantation, of which trees in more than 23,200 hectares are being tapped. VRG has also started three rubber processing plants in Laos, having a processing capacity of 34000 tons annually. The total output from the plants until early 2025 has been 344,150 tons of rubber.

Since the processing projects commenced, VRG generated a total revenue of US$555 million from its operations in Laos while the exports amounted to US$547 million.

The Lao government has now promised to support VRG’s proposals to extend land lease durations and identify new investment opportunities—moves that could cement the company’s presence in the Lao economy for decades to come.

Surpassing expectations in 2024

Despite global economic headwinds, 2024 was a year of outperformance for VRG’s Laos division. According to company chairman Tran Cong Kha, VRG’s rubber output in Laos reached 34,592 tons—93% of its target. But where the group truly excelled was in profitability. Post-tax profits touched US$14.85 million, an impressive 180% of the projections.

Revenue in 2024 stood at US$66.3 million, exceeding projections by 104%, while export earnings were recorded at US$64.72 million, 5% up from target. These numbers underscore the commercial viability of VRG’s cross-border ventures and the soundness of its agribusiness model amid volatile global rubber markets.

Two VRG subsidiaries—Viet Lao Rubber and Quasa Geruco—have already turned profitable. Other projects are progressing steadily, with profitability expected in the near future.

VRG which aims to secure carbon certification from its rubber assets, is eyeing expanding its plantation area in Laos as well. Prime Minister Sonexay Siphandone asked VRG to involve local people in this expansion drive. He also asked VRG to invest in downstream tire plants so that more employment is generated for local people and the economy is strengthened. He directed VRG to approach the PMO to tackle bureaucratic hurdles it faces.

Socio-economic footprint: More than just profits

VRG’s investment narrative in Laos isn’t solely about financial metrics. The company employs over 5,500 people in Laos, including nearly 4,800 local workers. While average monthly wages hover around US$269, the stability and consistency of employment mark a critical shift in rural livelihoods, especially among former nomadic communities.

Beyond employment, VRG has also invested in infrastructure and social services—roads, schools, health centers, electricity, and water supply systems—across its project areas. By the end of 2024, the cumulative value of such welfare contributions reached US$2.85 million. These interventions not only enhance the quality of life but also foster trust and community integration, which are integral to any long-term foreign investment.

VRG executives have also emphasized the role of rubber cultivation in transitioning communities from shifting cultivation practices to stable, income-generating agricultural livelihoods.

Navigating challenges and future prospects

However, it’s not all a smooth terrain for VRG. Several challenges persist, including legal frameworks for land use, delayed approvals amid volatile global commodity prices. The group is awaiting final approvals for extending land leases for its Quasa Geruco and Dau Viet Lao ventures from 30–40 years to 50 years. While technical ministries in Laos have already approved the extension, the process awaits finalization from the Ministry of Finance before being escalated to the Prime Minister’s office. This bureaucratic bottleneck reflects broader structural frictions in Laos’ investment environment which the PM has asked VRG to sort out through his office.

For 2025, the group targets a rubber production of 36,360 tons, but a modest revenue of US$66.03 million, and after-tax profits of US$9.95 million in Laos. The export value is expected to be 63.55 million USD. However, with the rubber prices hovering high, VRG is set to overshoot its projections.

A Long-Term Vision Rooted in Sustainability

Looking ahead, VRG is aligning its Laos operations with a broader strategic pivot toward high-tech agriculture, renewable energy, wood processing, and industrial rubber products. This multi-sector approach mirrors the group’s transformation in Vietnam, where it now oversees over 16 industrial parks with a 73% occupancy rate.

In Laos, the potential for similar diversification exists, provided regulatory clarity and inter-agency coordination improve. With forecasts from the ANRPC predicting supply shortages until at least 2028, VRG’s timing could prove fortuitous.

The recent launch of the China-Laos Railway has marked a turning point for Laos’ rubber industry, offering producers remarkable access to the Chinese and global markets. The railway paves the way for a new era of economic opportunity and growth across Laos. It occurs when rubber tappers in Laos see their income rise and their quality of life improve significantly.