Lao assembly rejects SEZ bill

Lawmakers say the draft law wasn’t specific enough about how zones would be governed.
By RFA Lao
2023.11.28
Lao assembly rejects SEZ bill Some members of the Lao National Assembly sought better control over special economic zones, such as the Boten Special Economic Zone [shown in 2022] in Luang Namtha Province bordering China.
Credit: RFA

A draft law that sought to exert greater government control over Special Economic Zones in Laos was rejected by the National Assembly because lawmakers felt it wasn’t specific enough, sources in the country told Radio Free Asia.

The move comes amid concerns about the nearly non-existent oversight that Lao authorities have over the zones, called SEZs, that have drawn foreign investors, particularly from China, to set up casinos and scam-related businesses. They have also become a magnet for human trafficking.

The Golden Triangle SEZ in the northern province of Bokeo, for instance, has been described as a lawless, de facto Chinese colony that Lao police have virtually no control over.

The draft law proposed a new department in the Ministry of Planning and Investment called the Special Economic Zone Authority that would “supervise and manage” the vast tracts of land. Another large one is the Boten SEZ, which borders China in Luang Namtha province.

But many lawmakers expressed reservations during a National Assembly meeting on Nov. 16 and 17, saying they felt the proposed law didn’t go far enough and didn’t specify how the zones would be supervised, or state the rules by which foreign nationals living in the areas would be governed. 

“The drafted law focuses only on promotion of investment but doesn’t mention about the supervision, management and governance of the SEZs at all,” Ketkeo Sihalath, a representative from the capital Vientiane said. 

“If there is no supervision, a problem might be that the number of people living in the SEZs is not so small,” he said.

Most of the foreigners living in the SEZs are workers, and the government should keep track of births, deaths and relocations within the zones, he said.

“We should also specify what language and what currency they use in the special economic zones and how the SEZs should be governed,” he said.

The vote count was not made public.

Hazy

Government officials have conceded that current laws governing SEZs are inadequate as they do not clearly indicate which authorities have jurisdiction.

According to the current vaguely-worded law, the Decree on Special Economic Zones, an SEZ is defined as “an area that has a special administration and management to create favorable conditions to attract investment.”

The zones were set up to attract foreign investment to the impoverished country. Currently, the country has 21 special economic zones covering 33,000 hectares (127 square miles) of land that has attracted 1,377 businesses worth US$419 million, according to the Lao Ministry of Planning and Investments.

In 2023 alone, the zones attracted 111 companies that invested $121 million.

“The management and supervision of the SEZs is difficult,” an official with the Lao Ministry of Industry and Trade said. “The current division of responsibility is not right. If Chinese [residents] make trouble, the Chinese authorities should take care of that trouble, not the Lao side. We should discuss this issue further.”

Several Lao residents said they were happy that the bill was rejected, particularly because it is perceived to grant unfair advantages to Chinese nationals.

“I agree with the members of the National Assembly who asked the Lao government to monitor and inspect the documents, activities and work of Chinese,” especially those who work in the Golden Triangle SEZ and Boten SEZ,” a resident of Luang Namtha province, who like all unnamed sources in this report requested anonymity for security reasons, told RFA Lao.

“The government must keep track of these Chinese,” he said. “Who allows them to come here and what kind of work do they do? In Luang Namtha Province, I see only Chinese written everywhere. The situation is chaotic. … We don’t know who is good or bad.”

The draft law also lacked provisions that describe what types of businesses can be developed in the SEZs, said Lone Soutsihapanya, a member of the Lao National Assembly from Xayaburi Province.

“I think that the businesses that should be promoted in the zones are, for example, modern technology; scientific research; innovative, clean and organic agriculture; commercial plantations; processing industries; health; education; and tourism,” he said.

Translated by Max Avary. Edited by Eugene Whong and Malcolm Foster. 

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