Free Trade Zones

Investors reject Thai government’s plan for development zones in northeastern provinces

The Thai government’s ambitious plan, announced some seven years ago, to turn some northeastern provinces bordering Lao PDR into economic development zones has not been realized.

So far, no investors have shown strong interest in projects in Nong Khai, Mukdahan, Nakhon Phanom or Bueng Kan provinces.

For the Nong Khai project, for example, the Treasury Department dramatically reduced the initial land rent, from 24,000 baht for 0.16 hectares to 2,100 baht, and no potential investors showed interest.

The Treasury Department has scheduled a new bid for November and it’s unclear if there will be any bidders, given the unfavorable economic conditions prevailing at home and around the world.

Some businessmen and government officials have complained that areas designated for economic zones lack basic infrastructure, such as running water, electricity and road access.

They cited the case of the proposed project in Nong Khai province which is located about 30 km from the First Thai-Lao Friendship Bridge, the main border crossing between Thailand and Lao PDR, noting that the area is too distant.

The situation in Lao PDR, particularly in the capital Vientiane, contrasts with that of Thailand. The Chinese-funded real estate sector is booming, with high-rise condominiums and other buildings under construction, as well as the China-Lao PDR high-speed train, which has been operational since the end of the year. last.

One of the incentives that has attracted Chinese investors is the Lao PDR government’s decision to lease the land for development for up to 99 years.

The Vientiane Logistics Park (VLP) project is an example of joint investment by businessmen from Lao PDR, China and Thailand, to take advantage of the free zone, especially for light industries in the project area. . The project is estimated at around 500 million US dollars.

The VLP project covers 480 hectares and is located opposite Thanaleng Railway Station in Vientiane. It will include a logistics center, commercial banks and other financial institutions, trade and investment centers and an oil depot.

VLP’s strengths are its light industries, such as agricultural processing and packaging, which benefit from duty-free imports and exports to ASEAN member countries.

It is reported that investors from Japan, South Korea and Singapore have also shown interest in investing in the VLP project.