The Thai government’s ambitious plan, announced about seven years ago, to transform some north-eastern provinces bordering the Lao PDR, into economic development zones has not been realised.
So far, not a single investor has shown keen interest in the projects in Nong Khai, Mukdahan, Nakhon Phanom or Bueng Kan provinces.
For the project in Nong Khai, for example, the Treasury Department has substantially cut the original rental fee for land, from 24,000 baht per 0.16 hectares to 2,100 baht, andstill no potential investors have shown interest.
The Treasury Department has scheduled a new bid for November and it is unknown whether there will be any bidders, given the prevailing unfavourable economic conditions at home and globally.
Some businessmen and government officials have complained that areas designated for the 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 at about 30km from the first Thai-Lao Friendship Bridge, the main border crossing between Thailand and the Lao PDR, noting that the area is too far away.
The situation in the Lao PDR, especially in the capital Vientiane, contrasts with that in Thailand. The Chinese-funded real estate business is booming, with high-rise condominiums and other buildings under construction, and the China-Lao PDR high-speed train, which has been operational since late last year.
One of the incentives which 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 the Lao PDR, China and Thailand, to take advantage of the tax free zone, especially for light industries in the project area. The project is estimated to worth about US$500 million.
The VLP project covers 480 hectares and is located opposite Thanaleng train station in Vientiane. It will encompass a logistics centre, commercial banks and other financial institutions, trade and investment centres and an oil depot.
Strong points for the VLP are its light industries, such as agricultural processing and packaging, which enjoy tax 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.
