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Special/Specific Economic Zones: Laos’ Top Incubator of Economic Growth

Throughout Laos’ economic expansion history, a number of initiatives have been launched to improve the investment climate in the country. One of those successful initiatives is the Special/Specific Economic Zone or SEZ.

Since the first was set up in 2002, there are now 12 active special and specific economic zones nationwide. About 377 companies from Laos and overseas have thus far invested in the zones which cover an area of 19,612 hectares with a total registered capital of US$8 billion, of which US$1.8 billion has already been spent, according to a government report.

SEZs have generated revenues of over US$20 million for the government and created 20,000 jobs of which more than 9,000 have been jobs for Lao people.

In 2017 alone, some 71 companies invested in the zones (an increase of 30 companies when compared to 2016), with a registered capital of over US$92 million. Of the total 71 companies, 58 firms were foreign and have invested in services (48%), trading (37%) and the industrial sector (15%).

The largest number of firms investing in the zones are from China (38 companies), followed by those from Laos (13 firms), Thailand (6 firms), Japan (5 firms) and Malaysia (3 firms). Over the past few years, the government has restructured the management of SEZs and improved the capacity of its human resources to better facilitate foreign investment in Laos. The government has attached great importance to the development of SEZs, aiming to attract investment from the private sector in Laos and overseas and generate more domestic jobs and boost socio-economic development.

Graphic courtesy of RFA

In addition, the government is committed to attracting more quality investment to the zones in various forms, with efforts being centered on investment promotion for the SEZs.

Previously, the management authorities of SEZs also worked with Lao embassies in foreign countries, particularly in China, Japan and many countries in Europe, to help attract investment.

By investing in SEZs, investors benefit from a tax break policy which will contribute to lowering their production costs for export.

Apart from its abundant natural resources, geographic location in the middle of the region and relatively low cost of labor, Laos enjoys tariff exemptions under the Generalized System of Preferences (GSP) from over 50 countries.

According to the government report, approximately US$2 billion have poured into special and specific economic zones in Laos by private investors over the past 16 years.

Setting up a Business in the SEZs

In order to set up a business in a special or specific economic zone, companies need to apply for a license with the Secretariat to National Committee for Special Economic Zones (NCSEZ). The terms of the investment will depend on the type, size and location of each special and specific economic zone. In general, however, investments on special or specific economic zones cannot exceed 99 years and are reviewed on a case by case basis with the approval of the government.

Investing in a SEZ can be done in two ways: general investment and promotional investment. A general investment allows the developer or investor to invest in all sectors within the SEZ, except those forbidden by the government, such as trading of arms, drugs, poisonous chemicals, etc. Promotional investment, on the other hand, involves industries that are strongly supported within s SEZ and regulated by the SEZ Administrative Committee. These activities include investment in electronic industries, scientific and new technology research, tourism infrastructure, organic products, etc. 

The application process for investing is the same for general and promotion investment. Each economic zone is equipped with a One Stop Service Office to facilitate investment applications within the zone. This system allows investors to interact with only one regulatory authority, which in turn acquires the necessary licensing and approvals from various government bodies. Both domestic and foreign investors and legal entities must submit the investment application to the Economic Board of the SEZ in which they wish to invest.

Benefits of Investing in SEZs

Some of the benefits offered by the NCSEZ to developers and investors that wish to start businesses in the special economic zones include tax exemptions for importing equipment and raw materials for infrastructure construction, and reductions in income tax and value added tax (depending on the business type). In addition, foreign investors have been given the right to reside in Laos with their families during the time of the investment, among some other privileges as indicated by the laws and regulations.

Where are the current SEZs in Laos?

Existing SEZs include Savan-Seno Special Economic Zone in Savannakhet (a central point in the East-West Economic Corridor), Golden Triangle Special Economic Zone in Bokeo, Boten Dankham Specific Economic Zone in Luang Namtha, the Vientiane Industrial and Trade Area (VITA Park), Saysettha Development Zone in Vientiane, Phoukhyo Specific Economic Zone in Khammouane, the That Luang Lake Specific Economic Zone in Vientiane, Long Thanh-Vientiane Specific Economic Zone, the Dongphosy Specific Economic Zone, Thakhek Specific Economic Zone and the Pakse-Japan Specific Economic Zone in Champasak.

Sources: Vientiane Times, Investlaos.gov.la, ASEAN Briefing

NERI: Can Laos Reach Its Tourist Target This Visit Laos Year 2018?

While the government has set a goal of attracting 5.2 million tourists with projected revenues of approximately US$910 million, the National Economic Research Institute (NERI) shares a slightly more cautious view.

NERI believes that limited promotional advertising for the campaign, a relatively high cost of general services and living costs, and lack of tourism products all combine to prevent Laos from reaching its ambitious goal. Additionally, lack of infrastructure,  tourism site accessibility, lack of tourist activities and safe transport services all work against the country’s efforts.

Last year, the number of foreign tourists who visited Laos dropped 8.7% compared to 2016. Visitors from Europe decreased 27 percent, 2 percent for Korea and 11 percent for Thai, NERI reported.

Meanwhile, the tourism sector in the region, especially Thailand, Vietnam and Cambodia have been experiencing tremendous growth. NERI has recommended that the government prioritize and promote Visit Laos Year throughout the country and globally.

In the past few months, the government in cooperation with a variety government bodies and commercial businesses, has promoted activities associated with Visit Laos Year through public media. Local authorities have also organized cultural festivals and traditional activities to promote tourism and attract visitors, as well as awareness among Lao people to help to promote national culture and traditions.

Relevant departments have advised traders, public and private transport providers and service entrepreneurs around the country to offer good service at fair prices to tourists when they visit Laos. The Ministry of Information, Culture and Tourism (MOICT) has also invested billions of kip to cooperate with CNN media to promote activities within the country, according to an official from the Tourism Marketing Department.

On a more positive note, the government expects the service sector to grow by 6.4%, covering 41.83% of GDP this year. Services is one of the main sectors driving economic growth and is expected to grow by 8.5%, with the number of tourists expected to increase by 6%, according to the Ministry of Planning and Investment. MOICT reported that during 2016, Laos earned US$724 million from tourist arrivals, a slight reduction from US$725 million in revenue in 2015.

Source: Vientiane Times

Hailstorms Pummel Vientiane Capital, Major Power Outages Citywide

Hail storm in Vientiane Capital

A fierce tropical storm ravaged its way across the nation yesterday, bringing some relief from the scorching weather, but causing widespread damage due to strong winds and hail.

Hailstorms hit many parts of southeastern Vientiane, inundating homes and penetrating rooftops. Hailstones as large as ice cubes were noted by some surprised residents, which ripped through trees and pummeled traffic.

Many cars were left waiting out the storm by the side of the road.

Widespread electricity cuts and power outages were experienced in four districts of the nation’s capital, including Saysettha, Sikhottabong, Sisattanak and Naxaythong districts.

In some areas, power cables were cut or utilities poles were blown down by strong winds, while technicians from Electricite du Laos (EDL) rushed to the scene.

Construction materials fall on a utility pole
Construction materials fall on a utility pole

 

A utility pole blown down by the storm. Photo: EDL
A utility pole blown down by the storm. Photo: EDL

The inclement weather is set to continue until Friday afternoon, according to a notice by the Weather Forecast and Aeronautical Meteorology Division of the Meteorology and Hydrology Department in Vientiane.

All residents are being urged to take proper precautions and reduce speed when driving.

Photos: Mahason, EDL.

Who is Nang Sangkhan (Miss New Year Queen)?

In recent years, Laos has become increasingly open to international women’s beauty pageants as evidenced by its sending contestants to the Miss International Queen, Miss Grand, Miss World, Miss International, and most notably Miss Universe Pageants. There, the beautiful women are adorned in modern attire, sports gear, national dresses and of course, swimsuits.

However, in Lao beauty pageants, the more layers a woman has on, the better. Gorgeous handmade silk dresses and sparkling gold jewelry are in style and if one wants to be the Miss New Year Queen (Nang Sangkhan), that’s what you have to wear.

Traditionally, the Miss New Year Queen Competition was only held in Luang Prabang. Nowadays, the other provinces have their own Miss New Year Pageants. Apart from the Miss Laos competition, it’s one of the most talked about pageants in the country.

Who was Nang Sangkhan in early Lao mythology? Here’s SEASite’s brief introduction to the legend of Kabilaphom:

Kabilaphom, the legendary Heavenly King with a four-faced head, often asked people to solve riddles. If they provided the wrong answer, he would have them beheaded. One day, he asked a particularly wise young man to solve a complex riddle within seven days. Feeling confident in the difficulty of the task, Kabilaphom stated that he would forfeit both his own head and his Kingdom if the young man were successful. On the seventh day, the young man solved the riddle and Kabilaphom subsequently ordered his seven daughters to proffer his head to the wise man. However, because Kabilaphom possessed such great powers, severing his four-faced head would be a catalyst for disaster. If his head fell to the ground, the earth would burn. If it were submerged in water, oceans and rivers would boil. If thrown into the air, tornadoes would destroy the earth. To avoid such devastation, Kabilaphom instructed the young man to present his head to his daughters to keep deep inside the earth. In a demonstration of respect, however, Kabilaphom’s head had to be paraded on a sacred silver receptacle in an annual procession to prevent the occurrence of natural disasters. Therefore, during the annual New Year Festival, the seven daughters, each recognizable by her own characteristic animal, flower, and other identifying features, parade Kabilaphom’s four-faced head for all to see.

The Four-Faced Head of Heavenly King, Kabilaphom

And this daughter is Nang Sangkhan (Miss New Year Queen) who is chosen, along with her other 6 sisters (runners-up), to parade their father’s head in an annual procession that is quite a spectacle in itself.

Here’s a look at some of this year’s Miss New Year Queens!

 

Miss New Year Queens Luang Prabang 2561. View more photos at Diamond Studio.

 

Miss New Year Queens Vientiane Capital 2561. View more photos at Miss Vientiane FB Page

 

Miss New Year Queens Champasak 2561. View more photos at Miss Champasak FB Page.

 

Miss New Year Queen Savannakhet 2561

 

Miss New Year Queen Xekong 2561

 

Miss New Year Queens Khammouane 2561.
Source: Muan
Photo Credit: Ketsana Keosouvannaseng, Kham Kham, Tourism Savannakhet, Koud Svl, Thongdee Bouabane Photos Grapher, Diamond Studio, Laos, Luang Prabang Moradok, Nounee Soukthavee

Luang Prabang to Begin New Flights to China

Laos and China plan to open additional flights between world heritage site Luang Prabang and Changsha, the capital of China’s Hunan province, toward the middle of the year.

Direct flights are also expected to open at that time, the Vice President of the overseas Chinese association of Hunan province in China Mr Sun Min Sheng told the Deputy Minister of Information, Culture and Tourism Mr Savankhone Razmountry, when Mr Savankhone recently led the large Lao delegation from the ministry on an official visit to Hunan province in the initiative to promote exchange and cooperation, which ran from April 16-20 in Hunan province.

The first Lao airlines flight between Vientiane and Changsha of Hunan province opened in 2015, where the flight was two-times per week, for example Monday and Friday.
Mr Sun said “Laos is very beautiful country, especially Luang Prabang province and many other parts, which is why we plan to open additional flights between our capital city and Luang Prabang, aimed at promoting tourism and cooperation of both countries.”

He has visited Laos twice, and he said that the cooperation and relationship of both countries had a strong friendship, and this was strengthening day by day.

He continued, stating that the population in Hunan province of people doing business in Laos is over 100,000. And the province ranks first among Chinese provinces with most people in Laos. In addition, the province also has a chamber of commerce established in Laos. Mr Savankhone said during the visit last week that “After our first flight opening from between Vientiane and Changsha in 2015, and with the Lao consular opening at the end of last year, it enhances strength and cooperation of our two countries, especially our peoples.”

Tourists, particularly Chinese tourists and investors, have also helped to contribute and develop Laos through visits and doing business in Laos. The opening of further flights would also foster comfortable business conditions for Chinese, encouraging investment in Laos, and Lao to invest in China, he said.

He said “Next year, it will also celebrate the ‘Visit Year’ between Laos and China, with our visit also being one part to promote the celebration.”

Head of Information, Culture and Tourism Department in Luang Prabang Mr Soulithip Norkhounphonh said that Luang Prabang currently has international flights between its province with Bangkok and Chiang Mai of Thailand; Singapore; Malaysia; Siem Reap of Cambodia; Hanoi of Vietnam; Busan of Korea; Kunming and Jinghong of Yunan province in China; and Chengdu of China.

The Lao Airlines’ fleet currently comprises four A320 of planes, four ATR72-500 and three ATR72-600 with international flights to Cambodia, China, Korea, Singapore, Thailand and Vietnam.  Also, charter flights are possible to Japan, Myanmar, Philippines, Indonesia, Mongolia, Brunei, China and Taipei.

The airlines domestic ex-Vientiane routes include services to Luang Namtha, Bokeo, Oudomxay, Luang Prabang, Xieng Khuang, Savannakhet and Champassak provinces.

Hunan province is located in central China, with a population of over 72 million people. It has 13 cities, one autonomous region, and 122 counties.

 

Souce: Vientiane Times

Laos Government Approves Minimum Wage Increase

Laos Minimum Wage Increase Approved

The government of Laos has officially approved an increase to the nation’s minimum wage, from 900,000 kip to 1.1 million kip per month, according to a statement from the Prime Minister’s Office.

The increase will take effect from 1 May to coincide with International Labor Day.

According to Director General of the Lao Federation of Trade Unions (LFTU) Labor Protection Department, Mr Ounkham Ounyaseng, the wage increase will prove critical to improving the livlihoods of many Lao people.

He says that 900,000 kip is not enough to live on, with the cost of household goods steadily increasing in Laos. Employers must sympathise with their employees and assist them in improving their living standards.

Mr Ounkham also stated that he believed many employers didn’t have a good understanding of the concept of a legal minimum wage, or other rightful benefits such as overtime.

While some employers have stated that the wage increase may make recruitment more difficult, many entrapraneurs believe that the wage increase will attract the interest of laborers who may otherwise have sought work in neighboring countries, where wages are higher.

The last time the minimum wage was increased was in 2015.

In recent years, the increased cost of living has contributed to the growing trade deficit in Laos.

The Lao Minister of Industry and Commerce, Mrs Khemmani Pholsena spoke at a National Assembly session last year, saying that the prices of food staples in Laos are 10-20 percent higher than market prices in Thailand and Vietnam.

Source: Vientiane Times

Laos Simply Beautiful Music Video Released

The official promotional music video for the Visit Laos Year 2018 campaign song entitled “Laos Simply Beautiful” has just been released and it’s wonderful!

29 People Killed In Road Accidents During Pi Mai Lao

Pi Mai Lao has come to be a top favorite holiday among Lao residents and tourists. Every mid-April for about 3-4 days, most of the country willingly shuts down (government staff are off and most private businesses close operations) as people prepare to perform their religious obligations and for a massive nationwide water festival.

But as the merry making atmosphere permeates across society, so too does an ominous cloud of tragedy.

According to the Department of Traffic Police (Ministry of Public Security), a total of 29 people were killed in road accidents nationwide during the Pi Mai period from April 14-16.

The Department said on Tuesday that this year’s Pi Mai celebration witnessed 207 road accidents occurring nationwide and leaving 385 people injured.

“Most of the road accidents during Pi Mai were caused by drunk driving and the violation of traffic rules,” said Lt. General Khamsone Sidavong, Deputy Director of the Department of Traffic Police.

Luang Prabang recorded the highest number of deaths with 8 people killed in road accidents during Pi Mai followed by 6 in Vientiane and 5 in Khammouane.

This year witnessed an increase in the number of people killed in road accidents as it rose by 7 or over 30% year on year, according to Lt General Sidavong.

Source: KPL