Laos and Vietnam are set to Launch a new payment system enabling direct trade transactions in kip and dong currencies. Starting in September, the cross-border micropayment system will allow Vietnamese consumers to pay in Laos using QR codes.
On 22 August, the Bank of Laos (BOL) and the State Bank of Vietnam held a conference to promote the use of local currencies in bilateral trade. Attendees included representatives from commercial banks in both countries, as well as payment service providers like the Lao National Payment Network Co. Ltd (LAP Net) and the Vietnam National Payment Corporation (NAPAS).
The meeting introduced the Vietnam-Laos Cross-Border Retail Payment Connection Project, which will facilitate transactions through QR codes. The initial phase of the project will involve nine Vietnamese and 13 Lao banks. The joint payment system will be managed by NAPAS and LAP Net.
This initiative aligns with a broader ASEAN trend towards using local currencies for trade, aiming to reduce dependence on foreign currencies and mitigate risks associated with geopolitical and economic fluctuations. By using kip and dong directly, both Laos and Vietnam can streamline trade, lower transaction costs, and enhance financial stability.
According to the BOL, ASEAN countries, including Laos, tend to use local currencies to hedge against political and economic changes and to foster regional cooperation.
Vietnam is currently Laos’ third-largest trading partner, with a robust history of trade and investment cooperation. The introduction of the kip-dong payment system is anticipated to further solidify this partnership, paving the way for more integrated and resilient economic relations between the two nations.
