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Think tank: Laos-China railway opens doors for establishment of SEZs
The government’s top economic research agency has suggested that investment focus in areas which would make use of and maximise the benefits of the Laos-China railway.
There is the possibility of building Special Economic Zones (SEZs) along the 409-km route of the high-speed railway, with a focus on developing industrial zones, the National Economic Research Institute (NERI) recommended in its latest survey which was revealed recently.
The think tank also suggested creating a free trade zone, a logistics park, a smart city, an ecocity, and a high tech park along the under-construction railway, which is slated for operation in 2021.
All of the recommended areas boast potential that should be tapped to boost economic development, the survey suggested.
The NERI reported its survey findings on the establishment and operation of special and specific economic zones at the government’s monthly meeting in October.
As of June this year, some 12 SEZs offering tax breaks had been established and were operating across the country. These have attracted 503 local and foreign companies with registered capital of more than US$8.4 billion, although this figure falls far short of the target of US$34.5 billion.
SEZ outputs have made increased contributions to Gross Domestic Product (GDP), which was recorded at 0.72 percent and 0.85 percent in 2015 and 2016 respectively.
Laos’ strategic location, being centrally positioned among giant economies and as a gateway connecting China – the world’s largest economy – with the 10-member Asean regional bloc, gives the country outstanding advantages, NERI’s analysts suggested.
China and some Asean member countries including Laos have engaged in a plan to build a railway connecting Kunming to Singapore through Laos, Thailand and Malaysia. Once realised, this regional rail network will make land-locked Laos more interconnected and able to serve as a transport hub within the region.
NERI’s recommendation on the possibility of establishing SEZs along the Laos-China railway came as the Lao and Chinese governments agreed to create the Laos-China economic corridor along transport routes between the two countries.
The governments of both sides are working on a detailed plan for the economic corridor, which was agreed upon during a state visit to Laos by Chinese President Xi Jinping in November last year.
It is hoped that the SEZs, which currently provide 8,951 jobs for Lao nationals, will attract investment that diversifies Laos’ economy and lessens the reliance on natural resources.
NERI’s analysts suggested there is the potential for SEZs to attract more investment and make a greater contribution to GDP and national development by improving the business operating environment, which remains unimpressive.
Despite the government’s intensified efforts to facilitate investment and business operations, Laos has dropped 13 places to 154th in the global ease-of-doing-business (EODB) rankings, according to the World Bank’s latest annual EODB ranking index which surveyed 190 economies worldwide.
NERI recommended that the government address difficulties facing businesses in SEZs. Commonly encountered problems involve the issuing of work permits, applications for multientry visas, import and export procedures, and the issuing of real estate certificates as well as high transport costs.
The institute also underlined the need for the government to train and improve the skills of the workforce so Lao nationals can take up jobs in the SEZs.
NERI’s survey, which highlighted challenges and opportunities, also underlined the need to ensure that local people affected by the development of SEZs are given fair and reasonable compensation.
Source: http://www.vientianetimes.org.la/freeContent/FreeConten_Think.php