Govt urged to revise special economic zone investment policy
Govt urged to revise special economic zone investment policy
The government may revise the incentives offered to investors in Special Economic Zones amid concerns over growing gaps in policy within the same province.
The Ministry of Planning and Investment has asked the government to review its investment promotion policies both within and outside Special Economic Zones, to ensure that businesses receive similar incentives to invest in the same province.
A prime ministerial decree states that Special and Specific Economic Zones are independent economic autonomous regions, and operate under their own fiscal policy.
The management of a zone has the right to impose its own tax rates so long as they are not higher than that specified in the Law on Tax. The government also allows Special Economic Zones to import fuel tax-free.
These special privileges are now causing concern among policymakers. They worry that more businesses will want to operate exclusively in these zones, which would reduce the amount of revenue received by the government.
Zone managers would not hand over all of the taxes they collect as they are only required to pay concession fees to the government.
Policymakers also fear that businesses will use the tax exemption policy to import goods and then resell them outside of the zone, to avoid paying import taxes.
The Ministry of Planning and Investment also wants the government to review operations in Special Economic Zones over the past decade, saying this will help the government to see the strengths and weaknesses of policy implementation.
The ministry also says the government should issue a clear regulation on the granting of investment permission. There should also be a clear indication of which industries the government wants to encourage in these zones.
Laos introduced Special Economic Zones in 2003, aiming to boost foreign investment and create jobs. At present, there are three such zones, in Savannakhet, Bokeo and Luang Namtha provinces.
The government encourages businesses to invest in these zones to bolster its coffers. The government also wants to set up Special Economic Zones in former revolutionary strongholds as part of efforts to develop poorer parts of the country.
vientiane times
