After flooding in Thailand the Savan-Seno Special Economic Zone in Laos is gaining attention as a new choice for businesses looking for a low-cost, low-risk location
[GBP Note: The floods in various industrial parks in Thailand must have spooked many of the companies invested there. Laos might be able to pick up some of the slack as an up-and-comer.]
Opportunity Next Door
Source: Bangkok Post
Published: 23 Sept 2013 at 13.45
Newspaper section: Asia focus.
Interest picks up in Savannakhet industrial zone in Laos as a sound low-cost location with the arrival of Nikon and a major Toyota supplier
Before Thailand experienced its crippling floods in 2011 and the minimum wage hike in 2012, the Savan-Seno Special Economic Zone (SEZ), the first of its kind in Laos, was struggling to attract foreign companies. But now the location is gaining notice as a new choice for businesses looking for a low-cost, low-risk location.
Two of the pioneers at the site in Savannakhet have been Toyota Boshoku Asia, a major supplier of seats and interior parts for Toyota, and Nikon, the Japanese camera maker. Their presence is expected to draw other suppliers in the value chain as well.
However, much remains to be done in the second-largest province of landlocked Laos as it continues its slow transformation from an agriculture-based country to attract more industry. Developing skilled workers may be the priority at this stage; however, a well-planned policy to foster inclusive growth will be critical for the local government in the longer term.
Savan Park, or zone C of the SEZ, had 33 licensed investors as of May this year, including 11 Laotian companies. Most of them are the export-oriented businesses, said Tee Chee Seng, general manager of Savan Pacifica Development, the investor and operator of the industrial zone. The only company to have started operations so far is Aeroworks Co Ltd, a manufacturer of aircraft components, which also has a facility in Thailand.
Among the foreign companies building factories at Savan Park is Essilor, the French optical group that also has a manufacturing site in Thailand. Its Lao plant will make polycarbonate eyeglass lenses. Toyota Boshoku broke ground in mid-August and will start production in the second quarter of 2014.
Nikon, which is built its plant in zone B of the SEZ, is to start manufacturing parts for digital single-lens reflex cameras this month.
“There are many foreign companies, which have existing plants in Thailand, that want to set up new operations in other countries,Â” said Mr Tee. “Laos will be the location for their satellite manufacturing sites. Parts will be made here and sent back to Thailand for making finished products.”
Savan Pacifica Development is a 30:70 joint venture between the Laotian government and the Malaysia-based contractor Pacifica Streams Development, which is making its first foray into industrial estate operation.
Executives of the Malaysian company first visited Savannakhet in 2008 and liked the potential they saw. As the East-West Economic Corridor takes shape, products made at the site can be transported to Danang in Vietnam and via Thailand to Mawlamyine port in Myanmar.
Among the selling points of Savan Park are incentives that it says are better than those offered by Thailand’s Board of Investment (BoI). Companies can enjoy corporate tax holidays of two to 10 years from the first year they record profits. After that the profit tax will be just 8-10% depending on the industrial category. The personal income tax rate is just 5% for both local and foreign employees. All profits can repatriated to the companiesÂ’ home countries or third countries without any restriction. Export and import duties are also exempted.
In Thailand, the corporate income tax holiday is eight years. After that the tax rate is 23%. The personal income taxes ranges from 5% to 35%. Imported raw materials are free from tax from one to five years depending on the investment zone.
Click here for full article and photos in the Bangkok Post
Flooding Closes Thailand’s Saha Rattana Nakorn Industrial Park and Hi-Tech Industrial Estate October 7-16, 2011
To search for business parks in South-East Asia visit Global Business Parks at:
South-East Asia Business Parks Industrial Parks and SEZs
Click here for a list of Business Parks and Industrial Parks in Thailand:
List of Thailand Business Parks
Click here for a list of Business Parks and Industrial Parks in Vietnam:
Vietnam Business Parks and Industrial Estates