Lao Bao special economic-commercial area - "Special" but still sluggish

	Illegally transporting gold and foreign currency worth nearly VND3 billion in Lao Bao
	Linking the North Central sub-region: The “resistance forces” comes from local ideology
	Police investigate the switching of 1,493 imported pigs

Gate B-Lao Bao Special Economic and Commercial Zone is gloomy.Photo: Quang Hung

Unlike many other areas, after 5 years of operation with the name Lao Bao Commercial Zone (Decision No. 219/1998/QD-TTg), in 2005, Lao Bao international border gate area became Lao Bao special economic zone. (Decision No. 11/2005/QD-TTg).

Especially because this is a border gate area with a key strategic position between Vietnam and Laos, located on the EWEC East-West economic corridor axis with the shortest route to ensure continuous traffic from inland Vietnam to Savannakhet.

More specifically, this is an area with a total area of ​​up to 15,804 hectares (including five communes and two towns along Road 9), has a general economic model, and has the same characteristics as an industrial park, an export processing zone, a border economic zone and is a "Special Non-Tariff Zone", which is allowed to apply pilot mechanisms and policies with the highest incentives in accordance with current regulations of Vietnam's law and international treaties to which Vietnam has signed or acceded.

As a result, this is an area that is assessed to have created an infrastructure system that is considered to be the most synchronous in all the current economic zones.

This area has attracted about VND1,663 billion to invest in the infrastructure system. In which, the state budget has allocated VND863 billion for 135 infrastructure projects; capital of enterprises and investors participating in the socialization of investment in infrastructure works: VND500 billion; ODA through ADB and other international organizations: VND200 billion.

From the number of 12 enterprises participating in operation in the first year of establishment (1998), there have been 400 enterprises registered for operation as of 2019. Updated data by 2019 has had 63 projects registered for investment with a total number of investment projects is 3,720 billion, (five FDI ​​projects). Fifty projects have been put into operation (invested capital is VND3,384 billion); 10 projects are under construction with an investment capital of VND336 billion. When it was first established, there were 1,000 individual business households registered to operate, at peak, there were 4,000 individual business households operating.

In the period 2006 - 2013, trade and service activities reached their peak, with the total import-export turnover through Lao Bao border gate increasing 3.5 times in the 2001-2005 period.

The total industrial production value of enterprises in the area in 2005 was only VND208 billion, by 2018 it will reach nearly VND2,000 billion (an increase of 100 times).

Out of offers, out of brilliance

In the middle of July, a reporter from Customs News was present at Lao Bao Special Economic and Commercial Area. Under the harsh sun of the central strip of land, before our eyes is a desolate, deserted scene, far from the usual look of busy and bustling economic zones.

Nestled on National Highway 9, Gate B leads to Lao Bao Special Economic and Commercial Area, and the working area has been abandoned, covered by trees. Inside this area, there are only bricks and stones lying scattered, the walls are covered with a thick layer of dust. Only a part of the outer area has been encroached to serve as a place to gather goods and vehicles.

Lao Bao town, which is considered the center of Lao Bao Special Economic and Commercial Area, which was bustling with buyers and sellers, is now deserted and gloomy.

The system of supermarkets and duty-free shops has sprung up, now it has closed its doors, changed owners, changed business purposes, and ceased operations. Going deep into the wings of Lao Bao international border gate are rows of factories and warehouses that are invested billions of dong but only let weeds grow, even losing their use.

The leader of Lao Bao border gate Customs Branch said that out of dozens of enterprises with import and export activities established since Lao Bao Special Economic and Commercial Area was "born", the number of businesses still operating could only be "counted on fingers".

If in the 1998-2005 period, Lao Bao Special Economic and Commercial Area had a brilliant development, in the 2014-2018 period, trade activities here began to decline.

Statistics show that import-export turnover through Lao Bao border gate decreased markedly. In 2014 reached US$398 million; 2015 reached US$181 million; 2016 reached US$137 million; In 2017 it reached US$180 million and in 2018 it is estimated to reach US$280 million.

One of the important reasons that strongly affect the development of Lao Bao Economic and Trade Zone is due to the "exhaustion of special preferential policies".

In 2013, the Prime Minister issued Decision No. 72/2013/QD-TTg stipulating the financial mechanism and policy for the EZ, like Cau Treo EZ (Ha Tinh) with some special preferential policies in Lao Bao special economic zone cut. Especially after 2016, when the Law on Import Tax and Export Tax (No. 107/2016/QH13) took effect, there was no hard fence here, which also means that the Special Economic Zone will have to be abolished.

In addition to the impact of the reduction of Vietnam's policy mechanism, Lao Bao Special Economic and Commercial Area is also affected by the change of Laos' policy mechanism plus the general deterioration of the region, which has reduced many possibilities. To attract investment in the area, many investment projects have to be transferred or changed their investment, production and business objectives.

Need a new model for a new era

In fact, in the area of ​​Lao Bao Special Economic and Commercial Area, not all businesses face difficulties and die prematurely when the preferential policy is no longer available. Two FDI enterprises, Camel Vietnam Rubber Co., Ltd and Chaichareon Viet Thai Co., Ltd., invest in production instead of relying on mere trade.

Sales Manager of Camel Rubber Vietnam Co., Ltd. Supawat Klangklang said that from 2005 up to now, the company's factories have operated stably, meeting the job demand for more than 500 workers. Products are not only distributed to the domestic market and exported to a number of countries.

Or like Chaichareon Viet Thai Co., Ltd., one of the first enterprises to invest in Lao Bao Special Economic and Commercial Area. "Importing raw materials for production investment, energy drink products under the Supper Horse brand have gradually gained a foothold among Vietnamese users, which is the secret to enterprises' stable operation during the past 20 years," said Nguyen Trong Dung, Deputy General Director.

It is known that the People's Committee of Quang Tri province is urgently collecting opinions from departments and agencies on the Project to develop the common cross-border economic and trade zone Lao Bao (Vietnam) - Densavanh (Laos). Accordingly, Quang Tri province proposed to build a common cross-border trade economic zone Lao Bao-Densavanh based on the model of "Two countries, one economic zone" sharing the same mechanism, policy and operation management; have special preferential policies with the principle of equality and mutual benefit, respecting each other's independence, sovereignty and territorial integrity.

It is expected that ADB will continue to provide financial support in upgrading National Highway 9 phase 3; coordinate with JICA to finance the construction of Dong Ha - Lao Bao railway connecting with Densavanh - Savanakhet - Vientiane railway, forming a railway parallel to the national highway on the East-West Economic Corridor (EWEC) are favorable factors to help Lao Bao Special Economic and Commercial Area develop in the coming period.

(Part 3: Vision and priorities)