A Chinese businessman’s gambling and tourism enclave in northwest Laos is the “worst special economic zone” in the world, a business intelligence firm said this week. In an article published on March 28, Thibault Serlet, the director of research at the Adrianople Group, a corporate intelligence consultancy that focuses on special economic zones and master-planned cities, marshals the large catalogue of “scandal and criminality” that now clings to the Golden Triangle Special Economic Zone (GTSEZ).
“For years, the Golden Triangle SEZ has been home to numerous illegal industries including human trafficking, wildlife smuggling, and drugs production,” Serlet writes. “Despite this, the zone has announced significant expansion plans.”
The GTSEZ is run by the sanctioned Chinese-born gangster-tycoon Zhao Wei, originally from China’s Heilongjiang province, whom the Lao government in 2007 granted a 99-year lease over a stretch of prime paddy land fronting the Mekong River, at the point where the borders of Laos, Myanmar, and Thailand converge.
The zone, which exists under the de facto sovereignty of Zhao’s Kings Romans Group, has since grown into a palm-fringed casino zone designed to attract tourists from China, where gambling is banned outside Macao. From the Thai side of the Mekong River, the GTSEZ announces itself with its soaring apartment towers and the giant golden crown of the Kings Romans Casino.
Serlet’s designation of the GTSEZ as “the world’s worst special economic zone” follows a steady trickle of harrowing news from the secretive fief. In early February, Lao police raided the GTSEZ and rescued six local women who were attracted to the zone by the promise of lucrative jobs as telemarketers in the Kings Romans Casino. This followed the daring escape on January 20 of another eight women from the zone through a fence that surrounds the GTSEZ. In both cases, when the women were unable to meet performance benchmarks their employers declared them in debt and pressed them into servitude, either in brothels or in the casino’s laundry service.
Earlier this month, Radio Free Asia (RFA), possibly the best source of information about happenings within the secretive zone, reported that “hundreds” of Lao women were trapped within the GTSEZ. “Many of our women and girls are exploited, abused and victimized by human trafficking,” it quoted a member of the Lao Women’s Union of Nomo district in neighboring Udomxai province as saying. “They’re from poor families, uneducated, unaware of the risk, and sold.” Last year, Lao authorities say they rescued around 50 Lao women from the zone.
Human trafficking is only the beginning of it. Zhao’s casino zone has also been credibly accused of involvement in the flourishing Golden Triangle drug trade, and has also been connected to the trafficking of endangered wildlife through and within the zone. (I witnessed this for myself during a trip to the zone in 2016, when I saw a casino brochure advertising liquor made from tiger bones, and live wild animals for sale outside a restaurant.)
Moreover, as Serlet’s article details, “The zone was built on stolen indigenous land, workers are routinely unpaid and forced to work against their will, and the zone regularly dumps toxic waste into local streams.” In January 2018, the U.S. Treasury Department imposed sanctions on Zhao and three associates for engaging in “drug trafficking, human trafficking, money laundering, bribery and wildlife trafficking, much of which is facilitated through the Kings Romans Casino.”
Despite this, expansion of the GTSEZ has continued apace. In October 2020, Zhao broke ground on the $50 million port development on a loosely-policed stretch of the Mekong just upstream of the GTSEZ. One expert said that the new port “will mostly facilitate commerce, legal and illicit, of goods from China that will benefit Chinese commercial interests, legal and illicit, in Laos,” he said. Last year brought the news that Zhao is also seeking to develop tourism projects and business ventures in other parts of Laos, and that the zone is planning to expand into the surrounding countryside.
Serlet’s article points out that the Lao authorities are largely powerless to act, and that “local authorities are barred from entering and international inspectors are routinely turned away.” Kings Romans Group is in de fact control of the GTSEZ, maintaining its own security forces, and SEZ rules prevent the Lao authorities from entering the region without a formal complaint. For their own part, the GTSEZ authorities say that they will pass new labor rules designed to protect workings in the zone, but there are few good reasons to believe this will halt the abuses.
Indeed, its willing indulgence of Zhao’s business interests suggests that the Lao state enjoys a symbiotic relationship of sorts with the GTSEZ. As a result, even if it is willing to curb some of the symptoms it is unlikely to tackle their cause. As the anthropologist Danielle Tan noted in a 2015 article, SEZs have helped the Lao government consolidate its control of far-flung parts of its territory. In these situations, “much of Lao sovereignty is vested in private corporations in order for the state to have access to modernity and development,” especially in remote regions of the country. She adds, apropos of the GTSEZ, that such zones offer the Lao government “an ideal framework to cover all sorts of illicit and illegal activities that are at the same time highly profitable.”
The GTSEZ thus represents a distortion of the theoretic benefits of SEZs, which typically grant private companies from national-level economic regulations in order to foam the runways of economic growth. In his article, the Adrianople Group’s Serlet rightly describes the rapid growth of the GTSEZ “as an embarrassment to the global SEZ industry,” pointing out that none of the major international SEZ trade associations – the World Free Zones Organisation, the Africa Economic Zones Organisation, or the Free Zone Association of the Americas – has publicly condemned Zhao’s illegality.
“Failure to properly address zones such as the Golden Triangle actively damages the credibility of the SEZ trade associations,” he writes. “It creates a false perception that these groups stand to gain by enforcing the status quo.”