The Newsletter 76 Spring 2017

A Chinese Special Economic Zone in Northern Laos

Pinkaew Laungaramsri

<p>Laos has followed its Chinese neighbor in creating Special Economic Zones (SEZs) as part of the new economic engine that allows special economic policies and flexible governmental measures conducive to doing business that do not exist elsewhere in the country. Since 2000, SEZs have become the key strategy employed by the Lao government to turn the country’s economy towards market-based economic systems and a short cut towards urbanization and infrastructure development through foreign investment. Currently, thirteen SEZs have been granted to foreign investors, four of which are operated by Chinese firms. 19,499 hectares have already been allotted for SEZ development, and the government is planning as many as 40 SEZs in the next 10 years.</p>

But contrary to China’s Shenzhen model, the Lao SEZs have witnessed a retreat of the state’s role in the process of zone development; full planning and regulatory authority is granted to zone developers. As a result, most zones, especially those operated by Chinese investors, have become single firm zones that are badly designed and misplaced. Failing to create further business development or employment within the zone, many SEZs are unable to generate economic growth. Furthermore, special judicial autonomy given to zone developers has created a ‘state of exception’ where coercive transformation of local resources and economy has been normalized, and dispossession and displacement depoliticized. In several zones, deprivation of local livelihoods in the name of modernization has been striking, resulting in the relocation of vast numbers of lowland inhabitants and direct confrontations between local communities and government officials.

The Golden Triangle Special Economic Zone (GT SEZ) is a case in point. Located at the border between Laos and Thailand (Ton Phueng district, Bokeo province), the zone has been operated by a Chinese firm, Kings Romans company, since 2007. As a border SEZ with a 75 year contract (extendable to 99 years), the aim of the zone development, as put forth by the Chinese investor, is to turn the 3,000 hectares of agricultural land into a top international casino entertainment complex, and to create a new image of a green city at the ‘drug border’ of the Golden Triangle. Such a plan is, however, not necessarily appreciated by local people and heritage preservation experts, who view the area as part of the ancient archaeological area of Suvannakhomkam that stretches from Bo Keo in Laos to Chiang Rai’s Chiang Saen on the Thai side. While GT SEZ has been ranked by the Lao government as a successful model of SEZ, with its fast track development of infrastructure and tourist facilities, and shown off by the Chinese developer as a ‘merit making’ project to help civilize the poor Lao population, local people regard it as an excruciating process of dispossession. Resettlement of Ban Kwan village took almost four years to settle while 116 households were involuntarily forced to move to a new site. Abrupt de-peasantization has left most villagers jobless while less than 10% of the total population has been offered a job by the company, most of whom are just 15-25 years old. The majority of the working force is instead made up of Burmese migrant laborers, who are willing to endure exploitation under precarious working conditions.

The legal authority granted to the zone has allowed a network of shadow economies to flourish and operate through the euphemism of ‘entertainment complex’; they include sex and wildlife trade industries. Interestingly, the wealth generated from this type of economy is concentrated only in the hands of a few Chinese, including the investors, their cronies, and other Chinese entrepreneurs in the zone.

Pinkaew Laungaramsri, Associate Professor at the Department of Sociology and Anthropology, Faculty of Social Sciences, Chiang Mai University (