Special Economic Zones See Dip in Foreign Investment


Special economic zones around Laos are currently seeing less interest by foreign investors than in previous years, as many try to come to an understanding with local regulations.

Vientiane Industry and Trade Area Special Economic Zone (VITA Park), at Km22 Nonthong in Xaythany district is one of the zones facing this problem, says Mr Sibounheuang Vienheuangphay the VITA Park president.

In previous years, various foreign investors, particularly from China, Japan and Thailand, have requested information regarding conditions and facilitation of investment in the zone, however Laos has only seen a few return to make the actual investment.

Mr Sibounheuang speculates that investors have difficulty comprehending the length of time it takes for approvals and the many tax payment stages under the regulations.

“Some companies do not have a deep understanding of the Lao rules and regulations,” he explains. “The investment promotion law is still the responsibility of various sectors which causes many foreign investors to have a different approach in their business operations here.”

It is hoped the special economic zone issues can be resolved in the upcoming year to further opportunities for foreign investors.

VITA Park is a joint partnership venture between the Lao Government, holding 30 percent ownership, and Nam Wei Development Co., Ltd., holding 70 percent ownership.

Phase I of the park project covers an area of 110 hectares and  future expansion projects intend to develop another 500 hectares.

Infrastructure at the park is now more than 90 percent complete, with  various industrial and commercial services comprising about 70 percent of the structure. This includes factories, dormitories, trade centres, vocational schools, a hospital, banks and other facilities.

According to the VITA official, a total of 49 companies have registered to invest in the park with around US$63.27 million, of which 23 companies have completed their projects, three factories are under construction and seven have began exporting their products.

The total export value has reached US$75.5 million, while imports are estimated to be around US$81.3 million.

The business venture has created jobs for local people with more than 1,200 positions expected after the completion of phase I and II of the park. Eventually 40,000-50,000 people will be employed after VITA Park has reached completion.

From 2013 to 2016, the park paid more than 2.25 billion kip and contributed over US$538,000 to the government. The project will continue to assist government revenue especially salary taxes on labour.