Lao Bao-Densavan Cross-border Economic Zone: Outstanding vision required

Associate Prof. Dr. Tran Dinh Thien, economist at the Vietnam Institute of Economics

Associate Prof. Dr. Tran Dinh Thien, famous economist at the Vietnam Institute of Economics, has said that there needs to be outstanding vision, unusual solutions, and extraordinary determination to develop the Lao Bao-Densavan Cross-border Economic Zone.

Conference on the Lao Bao-Densavan Economic Zone held in Quang Tri. Photo: Tran Tuyen

Vietnam’s cross-border economic zones have so far mostly carried out “border trade” activities. Most of them have not met set targets, such as the Lao Bao Special Economic Zone (in Quang Tri Province) and the Moc Bai Border Economic Zone (in Tay Ninh Province).

The models imply that the operations of the Lao Bao-Densavan Crossborder Economic Zone will not be limited to facilities and regulations to make it similar to other zones. It’s important to build this zone as a role model of a border economic zone operating on the basis of updating to changes required for operations, structure, and global economic relations.

Being a special economic organization, the Lao Bao-Densavan Crossborder Economic Zone is not limited to function and range of operations and sticks to the model of the Lao Bao Special Economic Zone, which poses a number of challenges and ineffectiveness.

The old model of the Lao Bao Special Economic Zone proves improper and ineffective operations, unlike the strong growth of Vietnam’s economy, the Northern Central region, and Quang Tri. The rise of the Lao economy in working with China has put pressure on the operations of the Lao Bao Border Gate of Vietnam and Lao’s Densavan Border Gate, requiring more effective connections.

The same changes in the economy have been seen in Thailand, which has somewhat caused a strong impact on the Lao Bao-Densavan Crossborder area on the East-West Economic Corridor, which is affected by the strong Indian economy and unpredicted Myanmar economy.

Wide connections in border gates between Vietnam and Laos, Thailand and China have put pressure on Vietnam-Lao border economic zones and shaped their operations. The trends have undoubtedly shaped the operations of border economic zones along the Vietnam-Cambodia borderline and digest the flow of goods in connecting with other countries (Thailand, Myanmar, and India in the future) in China’s “One Corridor-One Road” initiative.

Therefore, outdated market approaches that are limited in products and geographic scale have been unsuccessful. The situation will continue if new approaches stick to “adjusting and improving old policies and mechanisms” in maintaining ways of thinking and operations of border economic zones in Vietnam’s Western region.

Economist Tran Dinh Thien. Photo: T.Nguyen

It is imperative to have favorable conditions, incentives, and special support to generate attraction (investment/resource convergence) and provide sufficient capacity for the formation of “linkage centers.”

The actuality of the Lao Bao zone’s development thus far demonstrates that no amount of proactive support in the form of laws, regulations, and resources has advanced to the point where it would be necessary to establish “linking coordinates” that would facilitate the flow of goods, converge resources, and disperse development. It is also not competitive enough to draw exceptional investment, create an “economic center,” serve as a growth pole, make significant breakthroughs, and change the course of a challenging and underdeveloped region (difficult due to challenging circumstances, lack in qualifications and capacity).

Some challenges to the building and development of the Lao Bao Border Economic Zone include:

Direct funding for the construction and development of infrastructure (particularly that which links traffic to headquarters and yards) and favorable tax and procedural laws are not “reachable” in the border gate range.

The simultaneous growth of economic regions to connect development and foster synergy has received no attention. Despite its “special” designation, the Lao Bao Special Economic Zone has grown independently for a long time. Other economic zones and industrial parks, Quang Tri Airport, My Thuy Seaport, Dong Ha Urban Area, and other neighboring areas all directly influence the development of the area and contribute to its exceptional overall strength. Hardly any proper development has occurred in the province. This accounts for a significant portion of the Lao Bao Key Economic Zone’s recent slow growth and maturation challenges.

The investment-business climate is improving gradually as a result of inconsistent mechanisms, priority policies, and support for border-gate economic zones. The government must provide more resources, favorable conditions, and policies—particularly viewpoints and knowledge of the function of border-gate economic zones, as well as the strategic planning and implementation methods needed for them to develop.

It is also challenging to establish harmony because there is a loose, irregular, and synchronized connection between the economic zones on both sides of the border. To draw in investment, it must significantly enhance the business investment climate throughout the cross-border area.

Theoretically, a comprehensive program encompassing the construction and development of cross-border economic and trade zones is required. This program should include projects aimed at developing strategic priority coordinates, such as Quang Tri airport, My Thuy seaport, Dong Ha urban area, and connecting traffic routes. Ensuring the true success of the cross-border economic and trade zone is difficult without these factors. Additionally, the mechanism and foundation for “cross-border” continuity between the two sections of the economic zone that are managed and run by the two nations must be similar in terms of level, structure, and connection.

Regarding the operating mechanism of the Lao Bao-Densavan Crossborder Economic Zone, it is necessary to orient towards a new model of “Free Trade Zone” to determine specific tasks.

This orientation states that the Joint Cross-Border Economic and Trade Zone will be more than just a modernized or upgraded trade hub in terms of structure. A cutting-edge international logistics center that complies with “green development” guidelines and is connected to contemporary metropolitan areas must also be a part of it. Determining the prospects of the “new life” Border Economic Zone is the most crucial task.

Linh Pham