The government has granted a major Thai investor concession of a large area of land in two central provinces of Laos to grow sugarcane.
Lao National Land Management Authority Vice President Dr Akhom Toulalom signed the concession agreement with Mitr Lao Sugar company representative Buntoeng Vongkusolkit on Tuesday in Vientiane.
Under the concession agreement, the Mitr Phol Group has the right to grow sugarcane and build sugar processing facilities on 10,000 hectares of land in Khammuan and Savannakhet provinces. The agreement is valid for 40 years.
Lao National Land Management Authority President Kham-ouan Boupha, a number of government officials, company managers and staff attended the signing ceremony.
Mr Buntoeng said Mitr Lao Sugar would speed up the planting of sugarcane in the allocated area after receiving official permission to use the land.
He said the company believed one hectare of land would produce about 75 tonnes of sugarcane and thought this would be sufficient to supply processing factories which would produce sugar for export and domestic consumption.
A sugar processing plant began operation last year and processed about 221,000 tonnes of sugarcane, producing about 23,000 tonnes. Some 22,000 tonnes was exported to Europe and the rest will be distributed to local markets.
The company's first consignment of Lao sugar to Europe took place last month. The shipment was made possible through a contract with Tate & Lyle, the world's leading sugar trading firm.
This year the company plans to process about 400,000 tonnes of sugarcane, which will yield about 44,000 tonnes of sugar. The Thai group said they were conducting a feasibility study on another 10,000 hectares of land in the two provinces, hoping to sign a land concession agreement in the near future.
The company gained permission from the Lao government to conduct the feasibility study in March.
Mr Buntoeng said Mitr Lao Sugar had agreed to invest US$63 million to expand its production base in Laos after learning the country had considerable investment potential due to its large area of agricultural land.
He also said Savannakhet province shared a border with Thailand's northeast, where the company has another factory, making it easier to pass on skills, information and technology to the Lao factory.
Laos and Thailand had a similar language and culture, he said, making it easy for company staff to communicate with Lao people.
The company plans to buy one tonne of sugarcane for 150,000 kip (600 Thai baht).Mitr Lao Sugar is a unit of the Thailand-based Mitr Phol Group, one of the largest sugar producers in Thailand