New industrial park in Savannakhet Laos | Bangkok Post: learning

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New industrial park in Savannakhet Laos

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After 2011 floods & 2012 minimum wage hike, more foreign companies build factories in nearby countries. Savannakhet, Laos on border attracting many of them. 

MANUFACTURING & FOREIGN INVESTMENT 

Savannakhet industrial zone in Laos  

23/09/2013

Nalin Viboonchart

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.

There are many foreign companies, which have existing plants in Thailand, that want to set up new operations in other countries. Laos will be the location for their satellite manufacturing sites. Parts will be made in Laos and sent back to Thailand for making finished products.

Among the foreign companies building factories at the SEZ is Essilor, the French optical group that also has a manufacturing site in Thailand. Its Lao plant will make eyeglass lenses. From Japan there are two major companies, Toyota Boshoku Asia, a major supplier of seats and interior parts for Toyota, and Nikon, the Japanese camera maker which will start manufacturing parts this month. The presence of these two large companies is expected to draw other suppliers to the SEZ as well.

Essilor, the French optical group, is building a plant at Savan Park and will start production in the second quarter next year.

An industrial park named 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 export-oriented businesses. 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. The company that owns and operates the industrial zone is a 30:70 joint venture between the Laotian government and a Malaysian company... 

...Among the selling points of industrial 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 companies’ 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 range from 5% to 35%. Imported raw materials are free from tax from one to five years depending on the investment zone.

Even with the incentives, ....investors initially were wary about setting up operations in the industrial park because industrial development and infrastructure in Laos were limited. But the floods of 2011 and the increase in the minimum wage in Thailand in 2012 gave companies new reasons to look for alternative locations. The minimum wage in Savannakhet is around 600,000 kip per month, which is equivalent to roughly 2,400 baht. The comparable figure in Thailand is 300 baht per day or 9,000 baht per month. Despite the very attractive wage cost, Laos has a limited number of workers to supply the industrial sector. The country has only 6.6 million people and skill levels are low... Champhon, the city where the plant is located, has ... 62,000 people of working age. Among these workers, around 10,000 had migrated to work in Thailand, leaving a pool of about 52,000 people available.

...The development of the SEZ has spurred the economy of Savannakhet, which has recorded average GDP growth of 12.5% over the past five years compared with around 8.3% for Laos as a whole.

http://www.bangkokpost.com/business/news/371059/opportunity-next-door

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Vocabulary:

aircraft: an airplane or helicopter or other vehicle that travels through the air from place to place - เครื่องบิน

alternative: something that is different from something else, especially from what is usual, and offering the possibility of choice - ทางเลือก

attract: to cause someone to be interested in something - ดึงดูดความสนใจ

attractive: having features or qualities that make something seem interesting and worth having - น่าดึงดูด

average: an amount calculated by adding several amounts together, finding a total, and dividing the total by the number of amounts - เฉลี่ย, ค่าเฉลี่ย

Board of Investment (BOI): an agency of the Government of Thailand to promote investment in the country - สำนักงานคณะกรรมการส่งเสริมการลงทุน

comparable: similar to somebody/something else and able to be compared - ที่สามารถเปรียบเทียบกันได้

component: a part which combines with other parts to form something bigger - ส่วนประกอบ,ส่วนเสริม

corporate: involving large companies - บริษัทใหญ่

development: the gradual growth of something so that it becomes more advanced, stronger, etc - การพัฒนา

draw: to attract or interest somebody, often to cause them to go somewhere - ดึงดูดความสนใจ

equivalent: the same as   - เท่าเทียมกันกับ

exist: to be real; to be present in a place or situation - มีอยู่

facility: a building, equipment, etc., used for a particular purpose - โรงงาน, สถานบริการ, สิ่งก่อสร้าง, สิ่งอำนวยความสะดวก

figure: a number representing a particular amount, especially one given in official information - ตัวเลข, จำนวนเลข

foreign direct investment: FDI, money that people or companies of one country invest in another country by buying property, building factories, buying businesses, etc -

growth: economic growth, an increase in economic activity - การเติบโต

hike: an increase - การเพิ่มสูงขึ้น

incentive: something that makes you want to do something or work harder, because you know that you will benefit by doing this - สิ่งกระตุ้น

income tax: the percentage of the money that a person or corporation earns that they pay to the government as tax - ภาษีเงินได้, ภาษีรายได้

industrial: relating to industry - เกี่ยวกับอุตสาหกรรม

industrial estate: an area of land where industrial companies have their buildings - นิคมอุตสาหกรรม

industrial park: an area of land where industrial companies have their buildings - นิคมอุตสาหกรรม

industrial sector: the part of the country’s economic activity that involves industry - ภาคอุตสาหกรรม

infrastructure: a set of systems within a place or organisation that affect how well it operates, e.g., the telephone and transport systems in a country or the system of train tracks that a railway uses - สาธารณูปโภค

initially: at the beginning - ในเบื้องต้น

interior: the inside of something - ภายใน

investment: the act of investing money in something - การลงทุน

investor: a person or organization that invests money, i.e., uses money with the aim of making a profit from it, for example by buying property or buying shares in a company - นักลงทุน

joint venture: a business activity carried out by two or more companies or groups - การลงทุนร่วม

licensed: having an official document that gives someone permission to do or use something - มีใบอนุญาต

limited: not much or enough; not very great in amount or extent - จำกัด

location: where someone or something is - ที่ตั้ง,ทำเล

major: very large or important - สำคัญมาก

manufacture: to make and produce a product - ผลิต

manufacturer: a person or company that manufactures a product - ผู้ผลิต

migrate: if people migrate, they travel in large numbers to a new place to live temporarily - อพยพ

minimum wage: the lowest wage, daily or hourly, allowed by law - ค่าจ้างขั้นต่ำ

notice: to see or hear somebody/something; to become aware of somebody/something - สังเกต

operations: the activity or work done in an area of business or industry - ปฎิบัติการ

oriented: mainly concerned with or directed towards -

personal: your own; not belonging to or connected with anyone else - เป็นส่วนตัว

pool: a group of people available for work - สมาคม กลุ่มสถาบัน

presence: when someone or something is in a place - การอยู่ในสถานที่หนึ่ง (ของบุคคล)

range: to have an upper and a lower limit in amount, number, etc - ผันแปรภายในขอบเขตหนึ่ง

raw material: a basic material that is used to make a product - วัตถุดิบ

reason: why something happened or exists - เหตุผล

risk: the possibility that something dangerous or unpleasant might happen - ความเสี่ยง

roughly: approximately but not exactly - โดยประมาณ, อย่างคร่าวๆ

satellite: something that is controlled by a larger thing or that depends on a larger thing but is separate from it - บริวาร

sector: a part of a country’s economy or business activity - ภาคเศรษฐกิจของประเทศ

selling points: good things about a product or service that can be used to sell it -

spur: to cause something to happen - ก่อให้เกิด 

struggle: a very difficult task that you can do only by making a great effort - ความพยายาม

supplier: a person or company that supplies goods - ผู้จัดหาสิ่งของให้, ผู้ผลิตสินค้าและวัตถุดิบ

supply: to provide somebody/something with something that they need or want, especially in large quantities - จัดหาให้, จัดส่งให้

tax holiday: a period of time that a company does not need to pay taxes -

wary: careful or nervous about someone or something because you think they might cause a problem - ระมัดระวัง

zone: an area that has an important or typical feature; an area where a particular activity is allowed or not allowed - พื้นที่, บริเวณ, เขต

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