Professional Documents
Culture Documents
NO. 15
Note (2015-05-29): Things are moving fast, and the website given below for the National
Committee for Special Economic Zone seems to be inactive and is apparently replaced by the
Ministry of Planning and Investment / Investment Promotion Department. The most data-
rich site I know of at this time is:
http://www.investlaos.gov.la/index.php/special-economic-zone
Richard Noonan
Vientiane
Revised
2015-05-29
Education in Lao PDR, 2015-05-29 lao wps 15 - special economic zones in lao pdr - education and training implications 09.docx
CONTENTS
CONTENTS ............................................................................................................................... II
List of Tables .................................................................................................................................. ii
List of Figures ................................................................................................................................ ii
1. INTRODUCTION .................................................................................................................... 1
1.1. Aim and Scope of this Paper................................................................................................. 1
1.2 Development Context ............................................................................................................. 2
2. SSEZ INVESTMENT DATA ................................................................................................... 2
2.1 Available Data......................................................................................................................... 2
2.2 Quality and Limitations of the SSEZ Investment Data ...................................................... 3
2.3 Findings from the SSEZ Data ............................................................................................... 5
3. CURRENT TVET SUPPLY DATA .......................................................................................... 6
3.1 Available Data......................................................................................................................... 6
3.2 Mismatch between Supply and Demand ................................................................................. 7
3.3 Quality and Limitations of the TVET Enrollment Data ..................................................... 8
3.4 Findings from SSEZ Investment and TVET Enrollment Data .......................................... 8
4. CONCLUSIONS ...................................................................................................................... 9
4.1 The Findings ........................................................................................................................... 9
4.2 Recommendations................................................................................................................. 10
REFERENCES ........................................................................................................................... 11
GLOSSARY .............................................................................................................................. 12
ANNEX 1: SAMPLE DATE PAGE FROM NCSEZ ..................................................................... 13
LIST OF TABLES
Table 1: Basic Data on Lao Special and Specific Economic Zones (August 2014)........................ 4
Table 2: Reported Investments in Special and Specific Economic Zones (August 2014) ............. 5
Table 3: Public TVET Enrolment, 2011/12, by Specialization and Gender .................................. 6
LIST OF FIGURES
Figure 1: Public TVET Enrolment, 2011/12, by Specialization and Gender.................................. 7
Education in Lao PDR, 2015-05-29 lao wps 15 - special economic zones in lao pdr - education and training implications 09.docx
1. INTRODUCTION
1.1. AIM AND SCOPE OF THIS PAPER
1. Aim. The aim of this brief paper is: (a) To share evidence on the investment projects
in the Special and Specific Economic Zones (SSEZ) in Lao PDR; (b) To share some evidence
on enrollments in public technical and vocational education and training (TVET) institutions;
(c) To compare these two sets of evidence as reflections of demand for and supply of human
resources (HR); (d) To comment the quality and utility of this evidence for the purpose used in
this study; and (e) To suggest some implications for education and training. This study is “in
progress”, and this paper represents some preliminary reflections.1
2. The theoretical basis for this study is very simple: Balanced economic development
(and an acceptable rate of return on investment) requires that physical capital investment be
linked with human capital investment. Physical capital by itself does not create income – not
even in the age of advanced robotics. Human capital – the knowledge, attitudes, and skills
embedded in educated and trained humans – is also needed. Thus it is of interest to ask:
What tentative conclusions can be drawn about the labor market demand implicit in the
planned investments in the SSEZs in Laos?
What tentative conclusions can be drawn about the supply of human capital suggested
by enrollments in public TVET institutions?
What tentative conclusions can be drawn about the education and training needed to
assure that the employment positions resulting from these investments can be filled by
Lao personnel, if not from the beginning then at least “within a few years”?
How can such education and training needs be met?
3. In this paper I try to identify some directions for education and training suggested by
the reported investments in the available evidence related to the SSEZs in Laos.
4. Scope and Data Source. This brief study is based solely on data provided by the Lao
National Committee for Special Economic Zone (NCSEZ). Their web site (see References,
page 11 below) provides a considerable amount of key data on the Special and Specific
Economic Zones (abbreviated collectively as SSEZ). No other data source on the SSEZs has
been accessed for the key data used in this study.
5. The NCSEZ is a very modern and forward-looking organization with a well-developed
and very useful website. Links are provided for access to the Law on Investment Promotion
(National Assembly 2009) and other legal acts on development of special and specific
economic zones in English, Chinese, Japanese, Thai, and Vietnamese, as well as Lao.
6. One web page of investment information is provided for each zone. We refer below to
these pages for the SSEZs as “data pages”. These pages provide the following information:
A map and information on location;
Establishment year;
1
Criticism, comments, and suggestions are welcomed and can be sent to the author at:
richard.noonan@yahoo.com.
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Duration of land tenure agreement;
Planned investment amount (USD);
Developer or developers, with percentage breakdown in some cases;
Land area (hectares);
Location advantage; and
Planned investment projects.
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ranges from 50 to 99 years, with a mean of 77 years. A further understanding can be tempered
by the discussion in Section 2.2 Quality and Limitations of the SSEZ Investment Data below.
12. Of more direct interest in the present study are the data shown in Table 2. In total 160
investment projects are reported on the NCSEZ website. The evidence seen in Table 2
represents some minor simplification of the complete data set by collapsing the 160 reported
investment projects to eleven summary categories. These categories emerged fairly clearly
from the original data.
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Table 1: Basic Data on Lao Special and Specific Economic Zones (August 2014)
Land Investment
Location: (District, Established Tenure Amount
Name Abbrev. Province) Year (Yrs.) (Million USD) Developer(s)
Vientiane Industrial and Trade Area VITA Park Xaythany District, Vientiane 2009 75 43 GOL + Private
Capital
Boten Beautiful Land Specific BLSEZ Louangnamtha District, 2003 50 500 Private (China)
Economic Zone Louangnamtha
Golden Triangle Special Economic GTSEZ Tonpheung District, Bokeo 2007 99 86.6 GOL + Private (China)
Zone
Saysetha Development Zone SDZ Xaythany District, Vientiane 2010 50 128 GOL + Private (Laos & China)
Capital
Phoukyo Specific Economic Zone PSEZ Thakhek District, Khammuane 2011 99 100 Private (Lao)
Thatluang Lake Specific Economic TLSEZ Xaysettha District, Vientiane 2011 99 1,600 Private (China)
Zone Capital
LongThanh Vientiane Specific LVSEZ Vientiane Capital 2008 99 1,000 Private (Vietnam)
Economic Zone
Dongphosy Specific Economic Zone DSEZ Hadxaifong District, Vientiane 2012 50 50 Private (Malaysia)
Capital
Thakhek Specific Economic Zone TSEZ Thakhek District, Khammuane 2012 75 80 GOL
GOL. Government of Lao PDR.
Source: National Committee for Special Economic Zone. Home page, accessed August 20, 2014. http://www.sncsez.gov.la/index.php/en/
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Table 2: Reported Investments in Special and Specific Economic Zones (August 2014)
Branch of Investment Object Number of Projects Percent
Manufacturing & Construction (Secondary Sector) 98 61
Commercial Storage and Sales Facilities 22 14
Manufacturing & Assembly 22 14
Entertainment & Sports Facilities 21 13
Education Facilities 18 11
Residential, Office, & Conference Facilities 15 9
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3. CURRENT TVET SUPPLY DATA
3.1 AVAILABLE DATA
21. The distribution of reported SSEZ investments shown in Table 2 above (the demand
side) can be compared with enrolment in technical and vocational education and training
(TVET) program (the supply side). Table 3 below displays enrolment in the 2011/12 school
year in public TVET institutions under the Ministry of Education and Sports (MOES), broken
down by specialization and gender.2
2
It should be noted here that there are also many private post-secondary, non-tertiary education and training
institutions. The programs offered by these institutions most commonly cover English, business courses, and
computer applications, but some offer traditional “vocational” programs. There could be substantial overlap
between these programs and those listed in Table 3, but no corresponding data are available.
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22. Table 3 displays the totals, the percent distribution, and the Gender Ratio (GR), which
is the ratio of the number of females to the number of males in the given field of study:
GR = Nf/Nm
23. The data in Table 3 are displayed in Figure 1. The figures to the right of each bar in
Figure 1 are the associated GRs for the respective field of specialization.
3
It should be understood that there is no general “optimal ratio” between skill levels. The optimal balance varies
from field to field and depends in part on technological and organizational factors.
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business has been found to be the inadequately educated and trained workforce (Schwab and
Sala-i-Martín 2013: 244).
30. Restaurant, Hotel, and Tourism programs account for just over 5 percent of enrollment,
but it may be assumed that many of the students enrolled in the three business-related fields
mentioned above will find employment in the hospitality and tourism field.
31. Construction Industry. Construction represents less than 3 percent of total TVET
enrollment in public TVET institutions. The dimensioning of enrollments in this field (the
supply side) would appear to be seriously out of line with the large number of SSEZ projects
involving construction of facilities. Similarly although Electrical Engineering accounts for 17
percent of total enrollment, the enrollment in Electrician programs is less than 3 percent of total
4
For comparison, dropout rates for upper secondary general education programs are some 5-10 percent and
falling.
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enrollments. This appears to suggest two distinct imbalances in the HR supply and demand
relationship.
32. First, it may be assumed that many of the electrical engineering graduates5 will find
employment related to the several hydroelectric projects outside the SSEZ framework and the
expansion of the electrical grid nationwide. Although we do not access higher education
enrollment data in this study, we may assume that the number of degree electrical engineers
(bachelor and masters degree) each year is substantially smaller than the number of diploma
graduates.
33. The implied balance between degree electrical engineers and diploma electrical
engineers would correspond to the usual employment pyramid, with a small number of highly
educated and trained degree engineers at the top and a larger number of technicians in the
middle range. It may be assumed that in most cases the diploma level electrical engineers
(technicians) will work under degree electrical engineers.
34. By contrast, the much smaller enrollment in the certificate-level Electrician (skilled
worker level) programs compared with the much larger enrollment in the diploma Electrical
Engineering (technician level) programs suggests a serious imbalance – the base of the
employment pyramid is much too small.
35. Second, to the relatively small number of TVET enrollments in the Electricians
programs can be added the relatively small number of TVET students enrolled in the
Construction programs. Facilities construction and electrical installation of these facilities are
complementary activities.
36. Although the evidence presented here is weak, there is a clear suggestion that labor
market demand in the construction industry (including electrical installation) will not be met
by a domestic supply of skilled workers. If that is the case, the supply of skilled workers will
have to be met either by foreign supply of skilled workers (with a corresponding risk for return
on investment) or a domestic supply of unskilled workers (with a corresponding risk for quality
and subsequently for return on investment).
4. CONCLUSIONS
4.1 THE FINDINGS
37. The present analysis is largely impressionistic, based on a small and uncertain data set
on planned SSEZ investment projects and enrollment data for public TVET institutions. The
SSEZ data set is taken to represent the demand side of the labor market, and the TVET
enrollment data set is taken to represent the supply side.
38. A comparison of these two data sets suggests that in at least one area – the construction
industry – there is a serious imbalance between demand implicit in the SSEZ projects and
supply provided by TVET institutions under MOES.
39. This problem is not unknown to GOL. Indeed in an evaluation of SSEZ development
from year 2000 to 2010 the NCSEZ reported that (NCSEZ 2012: 17):
5
Note that graduates of these TVET programs will be at the diploma or higher diploma level, not at the bachelor
or masters degree level, which would require a university program.
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Special Economic Zones countrywide could provide 3 thousand jobs, especially in
services and entertainment sectors. Most of staffs are foreign citizen. The develop-
ment of labor skill could not respond to quantitative and qualitative demand of special
economic zones sector. … [This is because of] Lack of human resources, with respect
to quantity and quality, to fill in each positions with in the existing SEZ … .
40. The report noted with optimism that this situation was expected to improve in the future.
The present brief study suggests that the domestic supply of skilled labor in the construction
industry (including electrical installation) would also need to be improved. There may well
also be other areas in which demand is not matched by domestic supply.
41. Finally, another word of caution: The SSEZs do not represent the total national labor
market demand, any more than enrollments in the public TVET institutions represent the total
labor market supply. Nevertheless the SSEZs are important sites for domestic and foreign
investment to support economic growth and transforming Laos into a modern industrialized
economy. The public TVET institutions are major GOL instruments for providing the HRD
needed for this transformation.
4.2 RECOMMENDATIONS
42. It may be suggested that if the evidence presented in the present brief study is at all
representative of the real situation, then there is an urgent need to include an HR needs analysis
in the investment plans submitted to GOL. These HR needs analyses should then be included
by GOL (MOES and/or MOLSW) in a larger HR development plan for implementation at the
local, provincial, and national levels. The HR needs analyses should be reviewed annually as
the investment plans evolve and the labor market situation changes.
43. The resulting HR needs analyses, consolidated at the district, provincial, and national
level, should then be used as input into the TVET and SD plans at district, provincial, and
national levels.
44. Who Should Bear the Cost of Training? Employment is a shared responsibility. It is
in the interest of government to maintain high levels of employment; it is interest of the firm
to assure that the workforce has adequate skills to assure suitable quality of performance. This
shared responsibility is recognized in the SSEZ enabling legislation. The Decree on Special
Economic Zone and Specific Economic Zone in the Lao PDR (PMO 2010) makes numerous
references to the matter of human resource development (HRD) (emphasis added):
Article 24, Rights and Obligations of SEZ Developers: Perform the obligation of
making the contribution to the human resource development fund [according] to the
concession agreement between the Government and the Developers.
Article 41, Deduction of Expenditure: Developers and investors in the SEZ are able to
deduct the amount of expenditure for personnel training from the taxable annual
profits.
Article 85, Rights and Duties of Ministries and Agencies Concerned: Concerning the
works of the SEZ, the Ministries and Agencies concerned have the main rights and
duties [to] …:
o 3. Organize the training, [and] upgrade technical skill for the SEZ personnel to
allow them to achieve the required standard of their job description based on the
request of the SEZ.
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Article 87, Rights and Duties of the Districts where the SEZ is Located: The districts
where the SEZ is located have the main rights and duties [to] … :
o 3. Make the arrangement and organize the vocational training; provide jobs for
the people as required in the SEZ;
o 4. Undertake the allocating and providing vocational training, providing jobs
for people as required within the zone;
45. The SSEZs are envisaged and planned as modern towns and areas of modern economic
activity. There is no shortage of traditional and unskilled labor in Laos, but modern towns and
modern economic activity require modern human resources with modern knowledge, attitudes,
and skills. With the establishment of the AEC in December 2015, Laos will face stronger
competition than ever before. If the education and training system, together with the SSEZs,
can deliver the right HR mix, the SSEZs can make a very significant contribution to the future
social and economic development of Laos and make Laos an attractive country in which to
invest. There is risk involved, and this is a matter of urgency.
REFERENCES
Abbreviations Used in Reference List
CPI. Committee for Planning and Investment.
MPI. Ministry of Planning and Investment.
NA. National assembly.
NCSEZ. National Committee for Special [and Specific] Economic Zone.
PMO. Prime Minister’s Office.
CPI. (2006). “National Socio-Economic Development Plan (2006-2010)”. (6th Five-Year Plan).
Vientiane: CPI. October 2006.
MPI. (2011). “Seventh National Socio-Economic Development Plan (2011-2015)”. (7th Five-Year
Plan). Vientiane: MPI. October 7, 2011.
NA (2009). “Law on Investment Promotion”. No. 02 /NA. Vientiane Capital, July 08, 2009.
Accessed August 20, 2014.
http://www.sncsez.gov.la/images/LegalDocuments/investment_promotion_law_english.pdf
NCSEZ. (2012). “Development Strategy for Special and Specific Economic Zone (SEZ) in the Lao
PDR, 2011 – 2020”. Vientiane: NCSEZ. Accessed August 23, 2014.
http://www.sncsez.gov.la/images/LegalDocuments/sez_development_strategy_eng.pdf
PMO. (2010). “Decree on Special Economic Zone and Specific Economic Zone in the Lao PDR”,
Prime Minister’s Office No. 443 /PM. Vientiane: PMO, 26/10/2010.
Schwab, Klaus and Xavier Sala-i-Martín. (Eds.). ‘The Global Competitiveness Report 2013-2014’.
Geneva: World Economic Forum. p. 244.
http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf, accessed 22
June, 2014.
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GLOSSARY
AEC. ASEAN Economic Community.
APT. ASEAN Plus Three. (ASEAN plus China, Japan, and the Republic of Korea).
ASEAN. Association of Southeast Asian Nations (Brunei Darussalam, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam).
Note: These ten countries are referred to as “Core ASEAN”.
ASEAN plus 1. ASEAN plus China.
ASEAN plus 3. ASEAN plus China, Japan, Republic of Korea. (Also APT).
ASEAN plus 6. ASEAN plus Australia, China, India, Japan, Republic of Korea, New Zealand.
GOL. Government of Lao PDR.
GR. Gender Ratio.
HR. Human resources.
MOES. Ministry of Education and Training.
MOLSW. Ministry of Labor and Social Welfare.
NCSEZ. [Lao] National Committee for Special [and Specific] Economic Zone.
NSEDP. National Socio-Economic Development Plan. (Also known as the Five-Year Plan or
FYP). Note that the abbreviations often include the Plan number, e.g. NSEDP7 or 7NSEDP for
the 7th Plan.
SD. Skill development.
SEZ. 1. Special Economic Zone. 2. Specific Economic Zone. (See also NCSEZ, SSEZ).
SSEZ. Special and Specific Economic Zones. (See also SEZ).
TVET. Technical and Vocational Education and Training.
USD. United states Dollar.
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ANNEX 1: SAMPLE DATE PAGE FROM NCSEZ
Source: National Committee for Special Economic Zone. Home page, accessed August 20, 2014.
http://www.sncsez.gov.la/index.php/en/
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