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Dinh Vu


Last updated: Tuesday, June 19, 2018


Bo Y International Border Gate Economic Zone: Mechanisms and Policies Needed for Development

Posted: Monday, June 19, 2017

With the support of the Government and central agencies and the guidance of the Kon Tum Provincial Party Committee, the Kon Tum Provincial People’s Committee and the Kon Tum Economic Zones Authority, the picture of investment attraction in the Bo Y International Border Gate Economic Zone has turned positive in recent years. Despite many challenges in the way ahead, with its strategic role and position, Bo Y International Border Gate Economic Zone will continue to affirm itself as a place that deserves the trust and expectations of central and provincial authorities.

As the only economic zone in Vietnam to be bounded by Laos and Cambodia, defined as the heart of Cambodia-Laos-Vietnam Development Triangle (CLV), Bo Y International Border Gate Economic Zone has favourable conditions for economic and commercial development cooperation and cultural exchange with Laos, Cambodia, Thailand and Myanmar. Needless to say, this is a very convenient gateway to ASEAN countries, particularly international shipping routes via the central seaports of Vietnam.

With its special position, Bo Y International Border Gate Economic Zone has received valuable support from central and local authorities with many resources, especially the participation of investors and enterprises which result in the considerable development of the economic zone. Infrastructure investment in its central regions, and trade and service activities have actively boosted the development of the economic zone and the economic growth region of Ngoc Hoi district. The economic structure in the region has rapidly shifted towards the trade, service and border gate economy. Ngoc Hoi district has been recognised as a fourth-grade urban zone and proposed for establishing Ngoc Hoi Town in the first half of the 2015-2020 term. Economic, cultural and social development contributes to improving people’s living quality. International exchange, security, defence and social order have been strengthened in the Vietnam-Laos-Cambodia Development Triangle.

Vietnam’s investment and trade between southern Laotian provinces via Bo Y International Border Gate have developed strongly. In 2005 and 2016, the export and import value via the border gate reached US$1.217 billion; entry and exit passengers exceeded 2.7 million; entry and exit transport means surpassed 300,000; and State budget revenue reached VND1,385 billion. Overseas investment (to Laos, Myanmar and other countries) by local companies like Hoang Anh Gia Lai Group and Dac Hung Group tend to increase.

However, due to insufficient investment, the Bo Y International Border Gate Economic Zone has yet to affect its development, based on its huge potential and advantageous geographic position, on the development of Kon Tum province, the Central Highlands and the CLV Triangle Area. Mr Pham Thanh Ha, Director of the Kon Tum Economic Zones Authority, said that developing Bo Y International Border Gate Economic Zone is still difficult and challenging, especially in infrastructure investment and investment attraction.

For example, Laos’ import and export policies applied to Vietnam have been changed to request Bo Y International Border Gate Economic Zone to pay attention to infrastructure investment and improve the quality of competitive services. The land fund planned for developing centralised industrial parks, trade centres and services in the economic zone is vast, but State policies on infrastructure investment support are not strong enough to attract corporate capital. Meanwhile, in the medium-term public investment plan in 2016-2020, the entire advance State budget for Bo Y International Border Gate Economic Zone for this period was revoked. As a result, it does not have investment capital for continued infrastructure development.

In addition to funding difficulty, Mr Pham Thanh Ha added that although cooperation programmes on construction and development of the Vietnam-Laos-Cambodia Triangle are underscored by the three countries' governments, specific development policies are too slow to be issued, executed and enforced. Transport infrastructure investment resources in the triangle area are limited. Socioeconomic infrastructure in southern Lao provinces and northeast Cambodian provinces remain poor. Dak Coi (Vietnam)-Kontuynias (Cambodia) Border Gate has not been cleared. Furthermore, according to Resolution 06/NQ-CP dated March 7, 2012, the Government's Action Plan for 2011-2016 defined three pairs of border gates to be prioritised for investment, namely Lao Bao-(Quang Tri)-Densavan (Savanakhet) Border Gate, Tay Trang (Dien Bien Phu)-Pang Hoc (Phongsaly) Border Gate, and Bo Y (Kon Tum)-Phu Cua (Attapeu) Border Gate but no specific development policies have been launched.

In fact, Bo Y International Border Gate Economic Zone has shown its great potential of becoming an important transit point on international trade routes from Myanmar to Northeast Thailand, South Laos and to other countries through Vietnam’s ports. However, to unlock the potential and advantages of this economic zone, it is necessary to have engagement and cooperation of the Governments, ministries and central branches of the three countries to launch and execute cooperation programmes, mechanisms and policies on investment attraction into economic zones and create cooperation momentum for the CLV Triangle Area. Specifically, the Governments of the three countries should notice and support each other to invest in border gate infrastructure and transport systems connecting these border gates with other provinces in the CLV Triangle Area. Dak Coi (Vietnam)-Kontuynias (Cambodia) Border Gate needs to be cleared by the two governments to expand investment cooperation, develop trade and create similar development in the triangle. The Prime Minister's conclusions on traffic investment linking Bo Y International Border Gate with other economic zones in the development triangle of the three countries such the investment support for upgrading National Highway 18B from Attapeu province of Laos to Bo Y International Border Gate and Bo Y-Ngoc Hoi-Pleiku Highway need to be promoted for economic zone development. While balancing budget for infrastructure development (Vietnam-Laos, Vietnam-Cambodia cooperation support capital, ODA loan, government bonds, government-guaranteed bonds, local budget, and other capital sources), State-funded budget is essential to work as a seed capital to draw other sources of investment capital into the economic zone.

With its strategic and peculiar position in CLV development, Bo Y International Border Gate Economic Zone needs to be treated as a key border gate economic zone to be developed with the State budget in 2016-2020. In the near future, it is necessary to reschedule the recovery of advance State budget to facilitate the economic zone to continue its infrastructure investment. There is also a need for a proper mechanism for allocating more State budget revenue sourced from export and import activities via Bo Y International Border Gate, including taxes and fees, for infrastructure development investment. Beside specific State mechanisms and above-mentioned policies, the economic zone’s efforts to promote its internal resources are also very important, with such specific tasks as creating investment capital from leased land in the economic zone, speeding up investment in the form of public-private partnership (PPP); regularly improving the investment environment in a uniform manner at all levels and branches so as to strongly attract domestic and foreign investors into the economic zone; effectively carrying out investment support and promotion; applying information technology to addressing administrative procedures for investors and supporting them when they carry out their projects. “With the right development strategy and the support of the Government, central agencies and Kon Tum province, Bo Y International Border Gate Economic Zone will have many prospects to become a driving force for the development of CLV Triangle and an important trade hub on the international trade corridor of the region,” said Mr Pham Thanh Ha.

Thanh Tung

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