Thương mại đặc biệt Lao Bảo Economic Zone - Quang Tri

LAO BAO SPECIAL ECONOMIC - TRADE ZONE - QUANG TRI PROVINCE

I. General information about the Economic Zone - Thương mại đặc biệt Lao Bảo - Quang Tri Province

On November 12, 1998, the Prime Minister at the time, Mr. Phan Van Khai, signed Decision No. 219/1998/QD-TTg on promulgating the regulations on the area encouraging economic and trade development of Lao Bao, Quang Tri province (collectively known as the Lao Bao Trade Zone). This project was born based on the policy of enhancing friendly relations and cooperation between Vietnam and Laos, consolidating the alliance relationship on the basis of establishing a common economic development area, which is allowed to apply special preferential policies such as import tax policies, preferential corporate income tax policies, etc. Lao Bao Trade Zone is considered to be the predecessor of the Economic Zone - Thương mại đặc biệt Lao Bảo later. Based on the Prime Minister's Decision, the Quang Tri Provincial People's Committee established the Lao Bao Trade Zone Management Board according to Decision No. 1528/QD-UB on December 15, 1998

On January 12, 2005, Prime Minister Phan Van Khai continued to issue Decision No. 11/2005/QD-TTg on the Regulations of the Economic Zone - Thương mại đặc biệt Lao Bảo replacing Decision No. 219/1998/QD-TTg, which is the first complete regulation of the Economic Zone - Thương mại đặc biệt Lao Bảo. After that, the Management Board of the Economic Zone - Thương mại đặc biệt Lao Bảo was established under Decision No. 130/2005/QD-TTg of the Prime Minister, marking the first complete management mechanism of the Lao Bao Economic Zone. 

(Image of Prime Minister Phan Van Khai during the survey with leaders of Ministries and Central Branches to establish KTM Lao Bao)

II. About planning and preferential policies in the Economic Zone - Thương mại đặc biệt Lao Bảo 

On September 20, 1999, the Prime Minister approved the general plan for the construction of the Lao Bao trade area under Decision No. 189/1999/QD-TTg. Accordingly, the Lao Bao Trade Zone was approved for construction in the border area adjacent to Sa-va-na-khet province of Laos - the west of Quang Tri province, including the administrative territory of Lao Bao town, Khe Sanh town, Tan Thanh, Tan Long, Tan Lap, Tan Lien and Tan Hop communes (Hướng Hóa district), Quang Tri province with a natural area under the planning study of 15,804 ha, including residential areas, functional areas such as Border Gate, Industrial Park, Trade and Service Area, Administrative Center, Cultural Center, National Defense Security Area, Protective Forest. 

On April 7, 2011, the Economic Zone - Thương mại đặc biệt Lao Bảo was adjusted for planning under Decision No. 495/QD-TTg of the Prime Minister, the scope of the planning study was adjusted to:
+ North borders Huong Tan commune, Hướng Hóa district;
+ South borders Thuan commune, Hướng Hóa District;
+ East borders Dakrong commune, Dakrong district;
+ West and South borders Denssavẳn trade area, Savanakhet province of the Lao People's Democratic Republic; 
+ Expanded research area (Gate C area) in Huong Tan commune, Hướng Hóa district.

At the same time, the nature of the Economic Zone - Thương mại đặc biệt Lao Bảo was adjusted from serving the purpose of enhancing Vietnam - Laos cooperation and developing the economy in the West of Quang Tri province to promoting economic and trade cooperation between countries on the East-West economic corridor, which shows the purpose of expanding cooperation and enhancing Vietnam's position in the entire Southeast Asian region. 
Other detailed items such as civil works and functional sub-areas are also adjusted to suit the new plan and vision. 

(Map of planning for Economic Zones and Industrial Parks in Quang Tri province)

Preferential policies at the Economic Zone - Thương mại đặc biệt Lao Bảo
From the time of establishment to the coming year, the Economic Zone - Thương mại đặc biệt Lao Bảo has been applying special preferential policies that have not yet been applied to other places in the country in all aspects such as tax incentives in disadvantaged and remote areas; Corporate income tax incentives; Personal income tax incentives; Value added tax, special consumption tax incentives; Export tax and import tax incentives; Credit incentives; Loss carryforward in business; Incentives on land and housing. It can be said that the Economic Zone - Thương mại đặc biệt Lao Bảo is one of the first and only areas to fully enjoy the highest level of investment incentives in Vietnam. 

However, over time of application, the preferential policies at the Economic Zone - Thương mại đặc biệt Lao Bảo have gradually revealed their weaknesses, even when they have been adjusted successively by Decisions No. 33/2009/QD-TTg and 93/2009/QD-TTg of the Prime Minister, in which a typical limitation is that organizations and individuals take advantage of the Zone's special policies to carry out trade fraud activities to enjoy incentives, and at the same time some of the incentives applied are no longer suitable to the actual situation. 

Since the Law on Export Tax and Import Tax 2016 was promulgated, Lao Bao Economic Zone no longer meets the conditions for applying the policy with non-tariff areas but only meets the conditions for applying preferential tax policies for border gate economic zones. Specifically, regarding corporate income tax incentives, investment projects in industrial parks will enjoy a preferential tax rate of 10% for 15 years, of which tax is exempted for the first 04 years and 50% reduction of tax payable in the next 09 years.

III. Development status and typical projects in the Economic Zone - Thương mại đặc biệt Lao Bảo.

As of 2019, the Economic Zone - Thương mại đặc biệt Lao Bảo has attracted VND 1,663 billion of investment in infrastructure development projects. In which, the state budget investment capital is VND 863 billion for 135 projects. In addition, the economic zone has also attracted 425 businesses, 67 investment projects and over 4,000 small business households with a total investment capital of over VND 3,720 billion on a total leased land area of 1,756 ha. The population in the economic zone has also increased from 29,000 to 45,000 people. It can be said that the numbers are not too impressive for an economic zone that is considered to have a lot of potential like Lao Bao, however, the significance in terms of economic and political position that it brings is extremely great for Vietnam, forming an important economic route in the Southeast border corridor. 

Typical projects in the Economic Zone - Thương mại đặc biệt Lao Bảo:

(Image of Lao Bao Trade Center)

(Image of ENERGY FRINK energy drink factory)

(Image of Lao Bao Border Gate)