Lao PDR still has potential despite economic crisis, OR says

Disathat Panyarachun, CEO of PTT Oil and Retail Business Public Company Limited (OR), has expressed confidence that the company will be able to weather Lao PDR’s current economic crisis by developing its coffee export business. Despite the depreciation of its currency, he believes OR will still see returns on its investment in the country.

While Lao PDR might not be as strategically positioned as Cambodia, which OR uses as its second global base, it still has significant economic ties with China, he pointed out. This connection has led to substantial Chinese investment in Lao PDR, presenting opportunities for OR.

Additionally, OR has no competition from other Thai oil companies in Lao PDR. Chinese energy competitors are unlikely to enter the market due to high transportation costs. OR’s long-standing presence in Lao PDR for 20-30 years has resulted in strong business foundations and continuous revenue generation. The current focus is on making the OR brand a beloved one among the Lao people to ensure future growth.

Suchart Ramarch, director of OR, stated that OR places significant importance on its business in Lao PDR, allocating a five-year investment budget (2024-2028) of 8 billion baht, representing 12% of its total investment budget.

Racha U-thaichan, deputy CEO of OR’s International Business, said that OR’s business in Lao PDR focuses on both company-owned, company-operated (COCO) and dealer-owned, dealer-operated (DODO) models to foster local business growth. This aligns with OR’s concept of supporting community growth in all dimensions, including SDG (Small, Diversified and Green) business practices.

Lao PDR holds significant potential and growth opportunities, leading OR to implement business strategies in the Mobility group, including selling oil through PTT stations, product storage facilities, PTT Lubricants, and FIT Auto and FIT Express automotive service centres. OR is also expanding its clean energy market with EV Station PluZ. In the Lifestyle group, OR operates Cafe Amazon, convenience stores, and local food outlets like Khao Piak Puu.

“OR is expanding investments in countries like Japan, Malaysia, Vietnam, the Philippines, China, Oman, Cambodia, and Lao PDR. Each country has different factors, and OR uses successful models from Thailand to expand internationally,” Racha explained.

Economic issues affecting the Lao Kip’s value and production costs, including electricity and labour, have led many companies, including OR, to adjust prices. While this may temporarily slow purchasing power, Lao PDR remains a high-potential investment location in the long term.

“Lao PDR is a strategic location due to significant Chinese investment, leading to key infrastructure developments like the Vientiane-Vang Vieng expressway. OR recently expanded PTT stations to Nateuy, near the Lao-China railway terminus, a major hub for freight transport,” Racha explained.

In the short term, OR aims to maintain its business survival in Lao PDR, generating revenue from existing “cash cow” businesses like PTT stations and Cafe Amazon. In the long term, OR plans to go beyond the coffee bean business, including starting carbon credit initiatives related to coffee.

Peerawet Na Ranong, managing director of PTT (Lao), noted that Lao PDR’s oil market demands approximately 140 million litres annually, with PTT holding a 20 million-litre share, ranking among the top five alongside state enterprises, local brands, and other international brands. This year, OR expects oil sales through PTT stations and Cafe Amazon in Lao PDR to grow by 4% compared to last year, driven by business expansion in both oil and non-oil sectors.

OR plans to expand PTT stations from 56 to 63 this year, with 17 COCO and 39 DODO stations, and aims for 71 stations by 2030. Despite Lao PDR’s small population of 7.5 million, the influx of Chinese capital has increased oil consumption. Station expansions will also include their oil storage,  currently capable of storing 7.8 million litres, enough for 10 days, to ensure energy security in Lao PDR and prevent shortages.