New airport, Mekong port in Laos could divert revenue to China, officials say

Murky 'Golden Triangle' Special Economic Zone is gambling and tourist hub catering to Chinese.
By RFA Lao
2023.08.18
New airport, Mekong port in Laos could divert revenue to China, officials say The Blue Shield casino operated by the Kings Romans Group stands in the Golden Triangle special economic zone on the banks of the Mekong River in 2016.
Jorge Silva/Reuters

Residents of Laos’ Bokeo province are concerned that an airport and Mekong River port due for completion early next year will divert customs revenue into Chinese hands and further open the area to smuggling and other crimes that authorities have proven unable – or unwilling – to control.

A new report by the International Crisis Group called for a “coordinated regional approach” – including through law enforcement and governance – to combat the outsized impact illicit businesses have in Bokeo’s Golden Triangle Special Economic Zone, or SEZ, and across the river in Myanmar’s Shan state.

The Lao government can expect to lose customs revenue, taxes and entry fees to Chinese investors who have a 99-year lease on the land in Bokeo where the airport and river port are being built, according to a Lao transportation official who, like others interviewed for this story, declined to be named because they were not authorized to speak with the media.

“The people are concerned about the ports as [they are located on land] sold to Chinese investors,” one official told RFA Lao. “The Lao people got nothing from the lease. The villagers will have to pay to use these ports in the future and Lao officials have no rights to inspect them.”

The murky SEZ is a gambling and tourism hub catering to Chinese citizens situated along the Mekong River where Laos, Myanmar and Thailand meet. 

Much like the adjacent Myanmar Yatai Shwe Kokko SEZ, the Golden Triangle SEZ has also become a haven for criminal activities including prostitution, scamming and drug trafficking.

Ceding control of ports

The Lao government will be missing out on revenue from millions of tourists visiting Laos via the new airport and Mekong port each year, a Bokeo official told RFA.

“Currently, tourists are still using the old port to cross the Mekong River, but Chinese investors are renovating it into a new port controlled by the Golden Triangle SEZ authority in terms of the transport of goods in and out of the zone and the associated fee collection,” he said.

The Mekong port alone will be upgraded to accommodate ships carrying 500 tons of cargo to Laos from China, as well as around 150,000 tourists annually – mostly Chinese nationals, he said.

ENG_LAO_BokeoAirport_08182023.2.jpg
A sign in Mandarin and English welcomes visitors to the Golden Triangle Special Economic Zone behind tourist boats docked along the Mekong River on the Laos side of the Golden Triangle in 2019. Credit: Lillian Suwanrumpha/AFP

A villager from Bokeo’s Ton Pheung district said he is worried about the amount of control Chinese investors will have over the region once the ports are complete. In addition to controlling customs tariffs, the investors will determine who and what can enter and exit the country via the ports, he said.

“If the Mekong port [and airport] becomes an international port, it will be the Chinese owners who will inspect people and merchandise coming in and out of those areas,” he said. “Sometimes there are Lao police present there but they have no rights to inspect. Mostly Chinese police will handle those ports.”

A resident of the capital Vientiane slammed the Lao government for allocating land to Chinese investors to build international ports at the SEZ, calling the move “a big mistake.”

“The Lao people get no benefit and will have lost more than they gained,” he said. “The Chinese investors do what they want without consulting the people.”

Fighting crime and its causes

The Golden Triangle SEZ, managed by the Chinese-owned Kings Romans Casino, is part of a 3,000-hectare (7,400-acre) concession on which investors have built hotels, restaurants, casinos, a hospital, markets and factories.

Described as a de facto Chinese colony, businesses in the SEZ, established in 2007, are exempt from most national-level economic regulations, and often receive tax breaks and are governed by different labor laws.

Many impoverished young Laotians from other provinces and foreigners who were promised lucrative jobs end up held against their will in places that include the Kings Romans Casino by trafficking rings that exploit them under threat of violence. In 2018, the U.S. government sanctioned the Chinese tycoon who is said to run the economic zone as head of a trafficking network.

On Friday, the Washington-based International Crisis Group called addressing criminality in the SEZ and across the Mekong in Myanmar’s Shan state “a top political priority.”

“The sheer size of illicit businesses, which dwarf the legal economies of both Shan state and northern Laos, means that they have an enormous local impact, entrenching corruption, weakening governance institutions and damaging community bonds in both these areas,” the group said in a report.

“The criminal networks involved have regional – in some cases, global – reach and can rapidly shift from one jurisdiction to another to minimize risks to their operations. A coordinated regional approach is thus vital for tackling them,” it said.

But the report acknowledged that geopolitical competition between China and the U.S. “complicates coordination,” while regional states “continue to rely heavily on unilateral criminal justice responses” to issues in the area.

While a typical security or police approach “treats immediate symptoms,” the Crisis Group called on authorities to also work to solve fundamental causes of crime in the zones, “including weak governance and rampant corruption, not to mention a willingness or desire of some jurisdictions to court illicit investments.”

Translated by Sidney Khotpanya. Edited by Joshua Lipes.

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