Mr Xiong Jun explains about tax and tariff holidays provided to investors.

Vientiane Saysettha Development Zone ‘a boon for investors’

The Vientiane Saysettha Development Zone offers great opportunities for investors, thanks to lucrative incentives ranging from tax holidays to privileged access to major markets, the Zone’s operator has said.
Companies doing business in the Laos-China joint venture project, located in the Lao capital Vientiane, will enjoy a profit tax exemption for periods ranging from 5-10 years, under the Lao government’s Decree No. 177.
In an exclusive interview with the Vientiane Times last week, Xiong Jun, General Manager of the Lao-China Joint Venture Investment Co., Ltd. – the developer of the specific economic zone - said the level of tax exemption would depend on the volume of goods exported.
“The higher the export volume, the longer the exemption will be extended,” he said through an interpreter.
When the profit tax exemption period ends, a tax reduction policy will be offered, Mr Xiong Jun added. In addition, tariffs will be waived on imported construction and raw materials, while finished products that are exported will also enjoy tariff exemptions as well as zero value-added tax (VAT).
Goods manufactured and sold within the Zone will be subject to just 5 percent VAT, while goods sold outside the Zone will incur 7 percent VAT.
In addition to tax and tariff holidays provided by the Lao government, manufacturers in Laos will enjoy privileged access to major markets in countries whose governments offer exemptions or reductions of import tariffs on made-in-Laos goods with an unlimited quota, the manager said.
Some 42 countries and territories extend such special treatment for Laos. They include Australia, Canada, members of the European Union (EU 28), Japan, New Zealand, Norway, Russia, Switzerland and Turkiye as well as members of the Association of Southeast Asian Nations (Asean), of which Laos is a member.
The Laos-China Railway has transformed landlocked Laos into a land link country, and the Lao government plans to extend the rail network to other neighbouring counties to offer cost-effective transport, which is an added boon for investors, Mr Xiong Jun said.
Being developed on 1,149 hectares of land in Saysettha district since 2010, Phase I of the Zone is now complete and the necessary infrastructure for industrial development is in place.
So far, the developer has signed agreements with 127 companies from countries such as China, Thailand, Japan, Malaysia, Singapore, Laos, the United States of America and Switzerland to do business in the Zone.
Of these, 64 companies now have production lines up and running, generating as much as 6,000 jobs, including more than 4,000 for Lao nationals.
Dozens of other companies are in the process of building manufacturing plants in the Zone, which is part of the global infrastructure project, the Belt and Road Initiative, instigated by China.
Once all the 127 companies have production lines in operation, they are expected to generate a combined production value of US$1.8 billion and create more than 10,000 jobs including more than 8,000 for Lao nationals.
Products already being and planned for manufacture in the Zone include electronic appliances, electrical equipment, medicines, and clothing. Transport and service businesses also plan to set up bases in the Zone.
Currently, the developer is working on Phase II, focusing on trade and service areas, before continuing with Phase III - the last phase, which will see the development of a new urban area that will offer more investment opportunities.
Construction of all three phases is scheduled for completion by 2035. Once they are all operational, it is expected that the Zone will generate a total production value of US$5 billion as well as create a huge number of jobs.
To supply skilled workers for companies operating in the Zone, Mr Xiong Jun said his company is working with technical schools to train up the necessary workforce. In the long run, the developer in collaboration with the Lao Ministry of Education and Sports, has asked for assistance from the Chinese government to build a vocational school in the Zone itself to train workers.
Pledging to be an environmentally responsible project, the manager said his company requires investors to strictly follow environmentally-friendly guidance given by Lao authorities, which will be given key consideration when it comes to scrutinising investors.
Mr Xiong Jun said he envisioned developing the Zone like the industrial park jointly developed by Chinese and Singaporean investors in Suzhou, a major city in Jiangsu Province, which has made a great contribution to the Chinese city’s development.
 “We will establish a standardised and model economic zone in Laos,” he concluded.

By Souksakhone Vaenkeo
 (Latest Update June 29, 2023)