Contested Borderlands: Experimental Governance and Statecraft in the Laos Golden Triangle Special Economic Zone

Abstract

The Golden Triangle Special Economic Zone (GTSEZ) in northwest Laos exemplifies an experimental governance model, where sovereign powers are partially privatized to drive economic development. Established in 2007 through a 99-year concession with the Kings Romans Group (KRG), a Chinese gaming company, the GTSEZ is integral to Laos’s strategy of leveraging Special Economic Zones (SEZs) for modernization. This paper examines the complex dynamics between the Lao state and non-state actors within the GTSEZ, highlighting its fragmented yet pragmatic statecraft. Drawing on extensive fieldwork from 2014 to 2018, the study examines the GTSEZ’s historical connections to the opium trade and its contemporary socio-political and economic roles. The zone’s creation has generated both enthusiasm and criticism, particularly concerning sovereignty, local impacts, and controversial activities. The paper also discusses the broader implications of SEZs in Laos’s nation-building efforts, and the GTSEZ’s balance of economic openness with regulatory oversight, enhancing the understanding of experimental governance in Southeast Asia.

1. Locating the Golden Triangle Special Economic Zone

Initiated in 2007, the GTSEZ operates under a 99-year lease agreement with the Hong Kong-registered Kings Romans Group, led by Chinese investor Zhao Wei. The KRG paid a leasing fee of USD 850,000 and secured a territory of 100 square kilometers. With a mix of development area (30 percent) and conservation area (70 percent), the zone serves as a focal point in Laos’s strategy to leverage SEZs for national modernization. The GTSEZ presents a unique case of experimental governance, where sovereign powers are partially devolved to private investors in exchange for economic growth, creating a hybrid governance model that blends state authority with market-driven policies.

Since its inception, the GTSEZ has operated through ambiguous agreements between the Lao state and non-state actors, raising significant questions about the distribution of authority, sovereignty, and the management of border control, land rights, and the rights of SEZ dwellers and workers. These uncertainties exemplify the broader tensions that arise when traditional state functions are delegated to private investors in the pursuit of economic development. Despite the formal articulation of checks-and-balances system via the Lao government’s Decree n. 443/PM, promulgated in 2010 (Lao PDR 2010), the practical execution of governance within the GTSEZ remains fragmented and opaque.

My fieldwork, conducted in the GTSEZ between 2014 and 2018, provides critical insights into these complexities. I first visited the zone for a month in April 2014 as part of a documentary film-making project led by a Chinese documentarian. The initial plan was to document the development of the zone and establish a filmmaking school at the request of Mr. Zhao Wei, president of the Kings Romans Group (KRG) and chairman of the GTSEZ. After one month, however, the school was shut down and converted into a private clinic for medical tourism. I negotiated with the SEZ Chinese managers to remain in the SEZ and, after obtaining ethical clearance, I became involved in various capacities, including informally teaching English and Chinese to SEZ workers, and facilitating translations at the newly opened clinic, which also operated as informal hospital for SEZ dwellers. These roles provided me with privileged access to the zone’s social fabric, and I developed close relationships with key actors of the zone. I often shared meals with Lao government officials and casino managers, engaging in in-depth conversations that offered insights into the challenges they faced in their management roles. Over time, I also built strong connections with workers of different nationalities, participating in their cultural celebrations, religious events, and everyday life, which gave me first-hand insights into their daily struggles and aspirations. As a result, this paper combines ethnographic observations with documentary analysis, semi-structured interviews, and informal conversations with Lao officials, casino managers, and workers, to explore how governance in the GTSEZ is exercised through a mix of formal and informal practices.

These interactions informed the two case studies that serve as the foundation of this paper. The first examines the transformation of border-control mechanisms within the GTSEZ to highlight the strategic role of the state in managing mobility, security, and labor flows to meet the demands of private investors like the KRG. The second examines the management of the Burmese workforce—which makes up a large portion of the unskilled and semi-skilled labor pool in the GTSEZ—and shows how the Lao government balances economic openness with regulatory control. Through these case studies, this paper aims to contribute to the discourse on statecraft and sovereignty in Southeast Asia, by showing how this SEZ experiment blends hybrid forms of governance.

Conducting research in the GTSEZ was not without its challenges. Gaining clearance from local authorities was a critical step in my research process. The Lao vice chairman of the GTSEZ welcomed my interest in the zone and granted me access, but I also needed Mr. Zhao’s explicit permission to interview workers and access various casino facilities, as well as KRG management offices. These bureaucratic processes underscored the complex dynamics of authority in the zone, where private investors like Mr. Zhao wielded significant influence over who could dwell in the zone and for what reasons, raising questions about how authority and governance were negotiated in this space.

A key facet of this ambiguous governance revolves around the conceptualization of SEZs as “neoliberal enclaves,” as articulated by Aihwa Ong in her seminal work Neoliberalism as Exception. Ong argues that these SEZs are the product of “techniques of calculative choice institutionalized in mechanisms and procedures that mark out special spaces and labour markets, investment opportunities, and relative administrative freedom” (Ong 2006, p. 19). This definition helps framing the GTSEZ as a zone where the Lao government devolves significant regulatory authority to the KRG to attract foreign investment. The delegation of such powers, however, creates opacity in the division of authority between state and private actors. This leads to tensions between market-driven objectives and state sovereignty.

Mr. Zhao Wei holds sway over the zone’s economic and financial strategies.1 The KRG has authority to sublease or transfer land rights, set transaction prices, and review business applications. The company’s fiscal policies align with a broader market-oriented agenda, offering incentives for agribusiness ventures and reducing leasing tariffs to attract investment.2 By 2016, the GTSEZ had attracted approximately US$ 1 billion in investments across 3000 hectares, with 59 domestic and foreign enterprises subcontracted by the KRG (Lao PDR 2016, p. 28). These administrative privileges, exemplify a significant transition from state to private governance.

The KRG’s role in infrastructure development is critical to Laos’s modernization goals. The GTSEZ has seen extensive urban and infrastructure projects, including water supply systems and waste disposal, administrative buildings, road networks, housing for workers and local villagers, and the construction of an international airport (RFA 2023b). The KRG’s plans to transform the GTSEZ into a vibrant urban and tourist hub were modeled after the Overseas Chinese City in Shenzhen, a project associated with symbols of urban modernity in 1990s China (Nyíri 2012, p. 541). This transformation showcases how private capital drives modernization efforts in Laos, reshaping the state’s governance structures.

Additionally, the KRS manages the zone’s human capital. The GTSEZ attracts a diverse workforce from China, Myanmar, Thailand, Laos, Vietnam, the Philippines, Indonesia, Ukraine, Russia, and Malaysia. While the KRG sets general employment conditions, individual enterprises have the autonomy to tailor their workforce management practices. The KRG funds salaries, bonuses, and pension allowances for Lao government officials and staff, adjusting these provisions based on the zone’s economic performance.3 A private security force, operating under the KRG, is responsible for maintaining public order and handling minor disputes. However, these security units defer to Lao police for unresolved issues, highlighting the complex division of authority in the GTSEZ.

This decentralized approach to human resources and security, while aimed at efficiency and order, engenders an environment ripe for unequal and discriminatory management practices, particularly for segments of the population such as the Burmese workers. Despite the KRG’s extensive control, the Lao government retains formal sovereignty over the zone. The state continues to oversee legal matters, infrastructure approvals, and tax collection. Investment in the zone is incentivized through customs exemptions and tax breaks, contributing to state revenues. Government officials also provide foreign workers with legal residency documents, grant licenses to enterprises, and approve major infrastructural projects, ensuring that increased business activity in the GTSEZ benefits the state.4

Security in the GTSEZ is jointly managed by Lao military and police forces and the KRG’s private security units. The Lao state’s military presence complements the KRGS’s security apparatus, patrolling the zone and handling issues beyond the KRG’s capabilities. According to the Decree no 443/PM,5 state police intervene for the settlement of issues that the KRG is unable to mitigate. The KRG’s substantial control over economic and security aspects within the GTSEZ, juxtaposed with the Lao government’s retained sovereignty and regulatory oversight, illustrates a nuanced balance between private enterprise and state governance. Despite the KRG’s dominance over economic and security matters, the Lao government remains a key player in the GTSEZ’s governance.

I argue that the Lao government leverages the GTSEZ as part of its nation-building strategy, using the zone not only to facilitate foreign capital, but also as a tool to modernize the country’s borderlands. Various forces, including local and foreign actors, international market dynamics, and regional political influences, interact with the Lao state’s objectives, contributing to the framing and execution of the project. The state role is not diminished but reimagined through flexible, pragmatic governance mechanisms that enable collaboration with private investors and accommodate market forces. At the same time, these forces are integrated into the state’s strategic oversight and development goals. Consequently, in the GTSEZ, state sovereignty is reconfigured in response to these diverse influences, balancing the pursuit of economic development with the management of external market pressures.

2. The GTSEZ and the Opium Legacy

The GTSEZ’s inception and operational agenda cannot be fully comprehended without acknowledging its geographical and historical significance within the opium legacy of the Golden Triangle. This region, notorious as one of the world’s most prolific opium-producing areas, has been at the center of significant geopolitical shifts and policies aimed at eradicating drug trade and cultivation. The transition from this legacy into a narrative of modernization is central to the GTSEZ’s establishment, as the zone is framed not only as a mechanism for economic growth, but also as a means to distance the region from its past and align with global development discourses.

The establishment of the GTSEZ rests on the premise of an IR discourse focused on eradicating the widespread drug economy. The rhetoric of modernization is woven into these efforts. The Golden Triangle, spanning parts of Thailand, Laos, and Myanmar, became notorious in the 1970s as one of the largest opium-producing regions, contributing to around two thirds of global production (Paoli et al. 2009, p. 38). In Laos, particularly among the Haka highlanders, opium was integrated into daily life and economic practices, deeply embedded in trade, employment, and ceremonial activities (Cohen 2013). Throughout the 1960s–1970s, the opium trade supported the emergence of quasi-state authorities and rebel groups, creating a complex web of economic dependencies and regional instability (Lintner 2003; Paoli et al. 2009, p. 218). For instance, following the collapse of the Communist Party of Burma in 1989, the central government granted 26 armed groups economic and political autonomy (Than 2016, p. 152), fueling further opium production (Rippa and Saxer n.d.).

International responses to this crisis varied, with the U.S. launching its infamous “war on drugs” in the 1970s and various UN-led efforts to counter the region’s illicit activities. The 1990s saw intensified anti-drug efforts, with the UN and the U.S. focusing on curbing heroin trafficking, which had surged to between 10 and 15 metric tons annually (McCoy 1999, p. 142), fueled by the increasing number of heroin users in the U.S (McCoy 1999, p. 142). As part of these efforts, the UN rolled out alternative development programs in Myanmar, Thailand, and Laos aimed at replacing the opium economy with more sustainable agricultural ventures. However, these efforts yielded mixed results, particularly in Myanmar and Thailand, where drug lords shifted from opium to methamphetamine production (Chouvy 2010; Gillogly 2004; Lintner 2009). Laos saw a significant legal and operational transformation through the United Nations Drug Control Programme (UNDCP) between 1994 and 2000. The government passed a 1996 amendment to the Lao drug control law, bunning the production and possession of opium.6 With UN support, USD 80 million was allocated in 2000 to eliminate opium crops (Cohen 2009, p. 425). Opium production decreased dramatically, from 42,130 ha in 1989 to 1500 ha in 2007 (Cohen 2009, p. 425).

However, these successes came at a significant social cost. In areas like Luang Namtha province, highlanders endured loss of income, decapitalization, and rice shortages, leading to migration to lowland areas with scarce arable land (Cohen 2013). By 2005, UNODC and the Lao National Commission for Drug Control & Supervision foreshadowed recidivism (UNODC 2008, p. 4), prompting the World Food Programme’s 2007 relief operation to address severe food insecurity (WFP 2008).

Scholars have suggested that the UN-promoted anti-opium programs’ failure induced the Lao government to explore alternative strategies for economic recovery, particularly with China’s support (Lu 2017; Cohen 2009; Stuart-Fox 2009; Tan 2015). Both nations shared common interests in eradicating opium, which was viewed as a symbol of weak borderland control (Lu 2017, p. 726). For China, the opium trade held historical and ideological significance, particularly in relation to the 19th-century Opium Wars. Since the 1950s, the Chinese Communist Party had linked opium eradication to national security, closing its borders with Laos and Myanmar to prevent drug trafficking and investing heavily in rehabilitation programs (Lu 2017, p. 730).

Opium eradication in northern Laos formed part of broader land reform, replacing shifting cultivation among highlanders with new crops to improve livelihoods and tighten state control (Ducourtieux et al. 2005; Rigg 2005). When Chinese frontiers reopened in the 1980s, drug trafficking surged, prompting the Chinese government to invest in rubber plantations in Yunnan and opium substitution programs in the Golden Triangle.

In Laos, rubber was associated with modernity and development (Diana 2007), and rubber plantations along the Chinese border grew significantly after 2004, following deeper cooperation between Laos and China (Lu 2017, p. 726). China’s “Going out” policy of the early 2000s facilitated this expansion, encouraging Chinese enterprises to invest abroad and bolstering economic ties between the two nations (Tan 2014). China’s broader role in the region also extended to infrastructure projects through the Greater Mekong Subregion (GMS) program and the Belt and Road Initiative (BRI). Launched officially by Chinese President Xi Jinping in 2014, the BRI aimed to reinvigorate the ancient “Silk Road” trade routes, positioning Yunnan province as a gateway to Southeast Asia (Wang and Miao 2016). Infrastructure projects, such as the North–South Economic Corridor linking Kunming to Bangkok, further solidified China’s presence in Laos (Tan 2014).

The GTSEZ emerged at the nexus of these geopolitical and economic transformations, and it is anchored to efforts of rebranding the region from a notorious drug-production zone to a beacon of modernization and development. This transformation is reflected in the bright-red and blue slogans adorning the zone, written in both Chinese and Laotiaon, promoting themes such as “Peace”, “Cooperation”, “reciprocal support”, “Innovation”, and “Craftmanship”. These signs echo key themes from Chinese Communist propaganda: “Seek Truth” (qiushi 求实) from Deng Xiaoping’s era; “Harmoniousness” (hexie 和谐), from Hu Jintao’s period; and “Innovation” (chuangxin 创新), which is central to Xi Jinping’s rule; signaling an attempt to legitimize the SEZ’s operations by aligning them with Chinese state power. A prominent monument, bearing the inscription “Long live the friendship between Laos and China”, further underscores the cooperation between the two countries.

This cultural and political rebranding of the region extends to how its history is framed. A giant billboard visible from the Mekong River markets the region as the “Mysterious Golden Triangle,” emphasizing its newfound allure for tourists. An introductory note for an exhibition hall at the zone’s heart states,

The seductive opium and the sound of the gunshots have long gone. Instead, what remains are its unforgettable nature and cultures.7

This narrative casts the drug economy to a distant memory, weaving an explicit IR discourse into the urban fabric of the GTSEZ. Simultaneously, it legitimizes the developer as a modernizer, while also reframing the Golden Triangle’s history via a more positive image.

The Kapok Flower Festival, an annual celebration held at the end of January in the GTSEZ, exemplifies this cultural rebranding. Since the SEZ’s establishment, the KRG has sponsored the event, which blends culture and commerce to attract tourists and promote the region’s new image. Each year, thousands of visitors from nearby villages attend the festival to watch performances featuring artists from Laos, China, Myanmar, and Thailand. In 2018, during my fieldwork, the festival featured ethnic minority dance troupes from China, Burmese singers, and Thai performers, culminating with a Lao national female beauty contest.

Under the patronage of the KRG, the festival serves as platform to enhance Mr. Zhao’s public image, aligning his role in the zone’s development with the Lao government’s broader modernization goals. The 2018 edition of the festival coincided with national “Visit Laos 2018” tourism campaign, further emphasizing the partnership between state and non-state actors in promoting the region’s visibility. Broadcasted on national television, the event was attended by high-ranking Lao officials, including Madam Pani Yathotou, President of the National Assembly of Laos, and Somdy Duangdy, Deputy Prime Minister. On 27 January 2018, Deputy Prime Minister Somdi Duangdy awarded Mr Zhao an important development prize in recognition of his contributions to the GTSEZ, cementing the government’s endorsement of the zone as a critical component of national development.

The cooperation between state and non-state actors in the GTSEZ represents an experimental governance model that blends Lao state-driven capitalism with neoliberal market principles, yet fully aligns with neither. In the following sections, I will first examine the broader institutionalization of SEZs in Laos as part of the state-building process. While this institutionalization does not necessarily reflect efficient or unproblematic governance, it underscores the Lao government’s gradual efforts to integrate these zones into its broader state-building agenda. Following this, I will delve into two case studies, about border control and labor management, respectively. I will demonstrate how these governance mechanisms are essential to the Lao state’s ability to maintain sovereignty, reinforce control, and promote development in this historically volatile border region.

3. Institutionalization and Development of SEZs in Laos

In a 2011 promotional video for SEZs in Laos, H.E. Somsavat Lengsavad, Deputy Prime Minister and Chair of the Lao National Committee for Special Economic Zones, affirmed,

Special Economic Zones are one of the economic development approaches that the Government of the Lao PDR has been valuing, aiming to attract domestic and foreign investment toward building production base with latest technology as well as building new developed cities. SEZs also promote national economic growth by creating more employments for Lao people in order to create necessary condition for the country to graduate from the Least Developed Country status by 2020, and to bring the country to a prosperous future.8

The opening of SEZs in Laos reflects the government’s pursuit of a dynamic form of liberalization, yet their institutionalization does not necessarily guarantee smooth or uncontested governance, as I will discuss later in the paper. Looking at their gradual integration into the national agenda, however, is indicative of the government’s efforts to navigate a complex terrain of sovereignty, regional instability, and private sector demands. In the case of the GTSEZ, this further adds to the gradual formalization of borderlands, and, thus, deserves our attention to observe the incorporation of private interests into a broader state-building framework.

Since the early 2000s, the Lao government opened 13 SEZs and has gradually formulated a rhetoric of validation to incorporate their economic model within the larger scope of national economic agenda. Laos’s sixth national assembly in 2006 acknowledged SEZs as part of a broader strategy to enhance “regional and international environmental cooperation, especially with neighbouring countries, ASEAN members, Mekong region countries and international organisations” (Lao PDR 2006, p. 122). The seventh five-year plan (2011–2015) emphasized the importance of expanding SEZs as part of a “special development strategy” and foster a more “favourable business environment” (Lao PDR 2011, p. 104). By the eighth five-year economic plan (2016–2020), SEZs were commended for their achievements. Presently, seven SEZs are under joint management by the government and private developers, and six are entirely managed by private contractors (Lao PDR 2016, pp. 27–31).

These optimistic representation of SEZs on official documents does not come without its tolls. Boonpen Munphosai, Minister of Government Office and Vice Chair of the National Committee for Special Economic Zones (NCSEZ), noted that SEZs might generate short-term economic imbalances, clarifying, though, that these areas “will be the key engine to accelerate development, connecting [Laos] with regional and international economy, creating employments, and bring poverty eradication into a wider scope” (Laungaramsri 2015, p. 215). The official economic data on the specific output of each zone seems to support the government’s enthusiasm. According to the implementation report of the seventh five-year plan NSEDP, during the 2011–2015 period alone, the total investment in the SEZs amounted to USD 1.27 billion.9 Even though these numbers are difficult to verify, they justify the underlying optimism that motivates the government to balance the risks with the envisioned outcomes.

To mitigate the drawbacks of these experiments, the Lao government created a robust legislative framework. Initial government decrees in 2002–2003 guided the establishment of the Savan-Seno SEZ (Decree no 148/PM) (Lao PDR 2003). Further legal reforms from 2009–2011 sought to strengthen SEZs’ institutional foundation. The 2009 Law on Investment and Promotion defined SEZs as “Area(s) that the Government has determined to be developed into a new and all-round modernized town, a place to induce domestic and foreign investments”,10 outlining operations, tax benefits, inspections, and investor rights.

Subsequent regulations, such as the 2010 Decree on SEZs, clarified relationships between central and local government and developers. These regulations granted SEZs autonomy in business operations, addressing developer and investors’ advantages, benefits for local administration, land boundary issues, and internal management and inspection of SEZs. It also expanded the definition of SEZs, portraying them as areas with the potential to “facilities and autonomy in undertaking business operations more than other areas countrywide, through comprehensive building of social and economic infrastructures,”11 fostering economic competitiveness.

In 2010, the establishment of the Lao National Committee for Special Economic Zone (NCSEZ) further formalized the government’s effort to manage SEZs. This body oversees SEZs across the country, approving relevant legal acts, promoting investment, and addressing economic, social, and security issues within the zones.12

The coordinated efforts to harmonize SEZs with the national legal framework illustrate Laos’ commitment to using these zones as tools for state-building and modernization. Yet, while SEZ operations are intended to function with a sense of autonomy and self-determination, the devolution of Lao sovereignty within these zones remains a delicate balancing act. The creation of the SEZ Administration Committee and the Economic Executive Board reflects the government’s ongoing efforts to govern this complexity.13 These bodies, while managed by government-appointed officials, operate under the continuous scrutiny of various state agencies, including the central government, the NCSEZ, the Secretariat to National committee for SEZs, relevant ministries, and state organs. This illustrates the tension between private sector independence and the need for state control.14

The institutionalization of SEZs is closely tied to the Lao government’s broader effort to assert control over historically unstable regions. While official government documents predictably reflect optimism about the success of these zones, this rhetoric often overstates their actual impact, glossing over the problematic effects that come with their implementation. Nonetheless, the inclusion of SEZs in the national plan aligns with the government’s long-term agenda and indicates that the state is actively involved in their development. The increased formalization of GTSEZ borders and the regulation of Burmese workforce illustrate how governance is negotiated to reaffirm state authority while accommodating market demands.

4. Hybrid Border Statecraft

The transformation of borders in the GTSEZ, reflects a gradual shift from a porous, unregulated space to one characterized by increasingly formalized controls of mobility. This shift is evident in the experience of a Burmese worker who moved to the zone in 2010,

When I first got here just got here, it was very easy to cross the border. Every month, since at that time there was no supermarket in the SEZ, we would cross over to Thailand to get whatever we needed. The Immigration building became an international crossing point only over the past two years, and since the beginning Chinese and Lao were working together. At the beginning, the office was only minding the passports of the Chinese people. But now they are very strict, and all the workers must have the working permit and the residence permit.15

The shift toward increasingly regulated borders has significant implications for people’s mobility, which becomes conditional on their economic values and employment status. As borders are reimagined as tools for selection and exclusion, different groups of people are subject to varying levels of control. Casino customers from China, a key demographic for the zone’s economic model, are granted special treatment. They receive a 10-day pass, allowing them to move freely within the SEZ without frequent passport checks. Their passports are held by the KRG office on the Thai side of the border, and upon crossing into Laos, they are transported to the casino facilities on KGR taxis. VIP and “Super VIP” customers bypass border checks altogether, driven directly to their destination in luxury vehicles.

In contrast, workers, particularly Burmese migrant workers, face stricter controls. They are required to have valid work and residence permits, which must be renewed periodically. As one Burmese worker explained:

Sometimes, those who have just moved here don’t have any residence permit, but they have no job yet so they cannot pay for it. Even for those who have a job like me it can be very complicated because applying for documents requires to go 3–4 times to the office and our work shifts change every 10 days.16

This testimony underscores the stratified nature of border management within the GTSEZ, where individuals’ mobility and access to opportunities are determined by their perceived economic utility. High-value customers and investors enjoy privileges, while low-wage workers must navigate a more complex, costly bureaucratic system.

A key feature of border management in the GTSEZ is the collaboration between the Lao government and private developer. During my visit to the SEZ in 2018, I observed how groups of Chinese workers were processed by Lao immigration officials with the assistance of KRG employees. Group leaders wearing casino uniforms handled batches of passports, moving with ease from one counter to the other of the customs building, organizing the groups, and shouting directions. Behind the counters, the Lao officials processed piles of passports, registering names, stamping temporary visas, and addressing group leaders in Chinese when needed. Each passport was accompanied by a CHY 100 banknote slipped in between the passport pages, an additional informal fee to expedite the processing of immigration cards.

While, upon my first visit to the zone in 2014, these practices were completely managed by the Lao custom officers with the informal support of KRG representatives, by 2018, the customs office had a waiting room and several front desks with both Lao and Chinese employees that jointly managed these operations. Long lists of names were affixed on a billboard in front of the immigration building, indicating when employees could retrieve their passport after the new working visa was issued in Vientiane. These desks managed the migration documents of both Chinese and non-Chinese workers—Ukrainians, Russians, Filipinos, Indonesians, and Malaysians—employed in the zone. This joint administrative model reflects the Lao state’s response to the increased cross-border mobility of people. By combining formal and informal practices, the arrangement facilitates the efficient movement of customers and workers into the GTSEZ while generating revenue for the state from through formal visa processing and informal fees.

This system underscores what Balibar (Balibar 2002, p. 83) describes as the polysemic and heterogeneous nature of borders, where borders serve simultaneously multiple functions “of demarcation and territorialization—between distinct social exchanges or flows, between distinct rights, and so forth” (Balibar 2002, p. 79). Seen from the perspective of this regulatory function, the border becomes a generative force; it plays a strategic role in shaping the social and economic landscape (Mezzadra and Neilson 2013, p. vii). The GT borderlands, through experimental governance, have become centers of articulation of mobility, as the Lao government negotiates regulations and scrutinizes operations to maintain authority.

The formalization of borders and selective regulation of mobility extend to the internal governance of the zone. The enforcement of traffic rules exemplifies this process. Article 62 of the Decree no 443/PM outlines special conditions vehicle registration, with different colored plates indicating varying degrees of mobility: green plates are restricted to the SEZ, yellow plates allow for limited movement outside the SEZ, and blue plates, typically for government or privileged vehicles allow for greater mobility. This parallels external border controls, where selected individuals, like VIPs, enjoy greater mobility while others face more restrictions.

Nevertheless, much like border management, traffic control operates through a combination of formal rules and informal, discretionary practices. For instance, Wei Yuan, a Chinese worker, faced an arbitrary demand for extra payment when registering his motorbike:

The higher is the value of your motorbike, the higher will be the price for the plate number. I had to pay USD 82.50, but the policeman asked for USD 137.50. He did not say why, he just asked for the money. I think it is because he saw I am Chinese, and he thinks I have money. But I had only USD 82.50 with me, so I told him ‘I only have USD 82.50, I don’t have any more.’ They did not want to give me the plate. Only when I took out USD 5.50, and I said, ‘this is really all I have’, they finally signed the papers and gave me the plate. On the receipt they wrote I paid USD 82.50.17

This incident highlights how formal rules are open to negotiation and manipulation. The policeman’s demand for extra money mirrors the discretionary power seen at border crossings, where officials can choose how strictly to enforce regulations based on perceived economic value. In this case, the police officer becomes an entrepreneur, exploiting the flexibility of the system for self-advantage.

In Neoliberalism as exception (Ong 2006), Ong argues that in Southeast Asia, the states’ market-driven pursuit of development conflates state policies with corporate interests, leading to fragmented governance. This suggests that the notion of national homogeneity is no longer central to governance (Ong 2006, p. 77). Some see this blending of neoliberal market regimes and state policies as “a kind of shadow or para-state” that erodes national sovereignty” (Walsh 2009). Thai scholar Pinkaew Laungaramsri describes Chinese investments in the GTSEZ as examples of economic imperialism, suggesting that the Lao state acts as a “broker state”, relinquishing power to foreign investors (Laungaramsri 2015; Laungaramsri and Sengchanh 2018).

In contrast, alternative perspectives, such as those offered by Andrew Walker (Walker 2008) and Antonella Diana (Diana 2017), recognize the centrality of the Lao government in implementing governance on the borderlands. Walker, in his research on the Lao–Thai border, noted that while globalization has strengthened border regulations, state control over commerce remains fluid, often exploited by non-state actors for entrepreneurial gains (Walker 1999). He criticized the overemphasis on flexible territorial governance as exceptional, arguing that state agendas always still prioritize managing people–territory relationships (Walker 2008). In Boten, for example, Diana shows how the Lao government had granted “exceptional” conditions to a Chinese private investor to establish a casino, but later withdrew its support due to concerns over public morality (Diana 2009). This underscores the state’s ongoing scrutiny of such governing experiments, indicating a more active role than some theories of neoliberalism suggest (Diana 2009, pp. 13–14). For Diana, in the GTSEZ, like in Boten, the state intervenes through “ad-hoc experimentation” (Diana 2017).

Danielle Tan also challenges the view that opening the Lao state to foreign investments signifies a loss of sovereign power. Instead, she argues that SEZs serve as tools for the Lao government to exert greater control over marginal territories while reducing development costs (Nyíri et al. 2017).

These latter perspectives align with my observations of the GTSEZ, where the state collaborates with corporate actors like the KRG to manage mobility and regulate activities. This hybrid governance allows the state to balance its desire for economic growth with its need to assert control over its borderlands. Formal regulations coexist with informal, discretionary practices, where state actors, like the police officer in Wei Yuan’s case, leverage their authority for personal profit.

Anita’s experience within the SEZ further illustrates this dual role of the state. Anita, a Ukrainian casino worker, was involved in a serious motorbike accident while driving in the SEZ without a helmet and under the influence of alcohol. Her passenger, a Chinese national, was severely injured, went into a coma, and required a lengthy rehabilitation period. Despite the gravity of the incident, it was not resolved through legal channels. Instead, the KRG took control, initially confiscating Anita’s passport and salary card, preventing her from leaving the SEZ. However, unlike typical cases of private management, the passport was subsequently handed over to the Lao police, who acted as a guarantor of the arrangement. This involvement of state authorities ensured that Anita’s mobility was restricted until private settlement could be negotiated with the injured passenger’s family.

While Anita had technically violated existing traffic laws, the Lao police played only a minimal role in the formal legal proceedings, highlighting the dual role of the state. The Lao government acted as a formal guarantor of the private settlement arranged by the KRG, ensuring Anita’s compliance and preventing her from evading responsibility. This reflects how the state reinforces its presence in the SEZ by integrating it into the national legal framework, while also allowing for flexible, ad hoc governance arrangements.

Both Wei Yuan’s and Anita’s experiences highlight how, despite the formalization of borders and traffic regulations, significant pockets of governance within the SEZ are still managed informally. Discretionary enforcement allows those with economic power to navigate the system more easily, while others face inconsistent treatment.

The tension between state vigilance and negotiation permeates several other facts of life within the zone. In the SEZ territory, the presence of the state manifests—to use Ong’s expression—with “graduated” intensity and flexibility, in response to a differentiated human capital and different circumstances (Ong 2006, p. 7). Authorities’ control over the Burmese fringe of the SEZ population illustrates this point.

5. The Burmese Workforce: A Case of Pragmatic Governance

The governance of Burmese labor in the GTSEZ reflects how the Lao state’s broader project of state building intersects with capital accumulation. The very mechanisms employed to establish control—such as documentation system, selective enforcement, and the reliance on social networks—also create an environment of profound insecurity for the workers. This precarity is not only tolerated, but actively exploited by both the state and the private developer, maintaining a fungible, low-cost labor pool that serves their respective interests.

The Burmese community, which forms the largest pool of cheap, unskilled, or semi-skilled labor in the zone, is central to this strategy. These workers come from various parts of Myanmar, including the Wa region, the town of Tachileik, and the bigger city of Mandalay, and primarily occupy unskilled or semi-skilled positions in hospitality, construction, and maintenance. Burmese of Chinese descendance, fluent in Mandarin, can access slightly better roles in administration, while a minority have set small businesses. However, most live in precarious conditions, either in dormitories provided by the KRG or in the informal Burmese Village, an agglomerate of shacks at the margins of the zone. This village, home to approximately 40,000 regular and irregular workers during my fieldwork, is emblematic of the broader dynamics of control and insecurity.

The Lao state, in partnership with the KRG, experiments with a complex system of governance for these workers, mixing formal regulatory structures with flexible, often informal practices. Workers like Dai Min experience firsthand the insecurities that stem from this hybrid system. Dai Min arrived in the SEZ in 2010 from Myanmar’s Irrawaddy region, initially finding work in construction through a friend’s recommendation. When his employer abandoned the zone and never returned, Dai Min’s survival depended on informal networks. “I started as construction worker,” he explained, “but then my boss left and said he would be back. I waited for months, but he never returned. Without a contract or any family support, I had to rely on my friend to survive.”18

This precarity, created by the absence of formal employment protection, forced Dai Min to continuously seek stability through informal means. Eventually he secured a job at the casino, once again through his social network. “I heard through my friend that the casino was recruiting workers, so I applied,” he recounted. Then, his friend lost his life from a drug overdose, further marking Dai Min’s experience with the harsh realities and dangers of life in the SEZ, deepening his sense of isolation and instability. Short of alternatives, Dai Min chose to stay. During one of his rare visits to Myanmar, he married and returned to the SEZ with his wife. A few months later, their son was born. “I was at work when he was born,” Dai Min recalled. “When I got back to the village, everyone told me, ‘Your son is born!’ I felt like crying! I immediately went to the Lao hospital in the nearby town and spent the night there with my wife and my son.”

Raising a child in the zone proved difficult and after a year, Dai Min’s wife took their son back to her parents in Myanmar so she could continue working. “I am not sure how long we will be here for,” he admitted, voicing the persistent uncertainty faced by workers in the zone.

This insecurity is not accidental; it is built into the governance structure of the zone. Unlike other communities, whose documentation is processed directly by the KRG, Burmese workers must navigate bureaucracy on their own. The formal mechanisms of control, such as residency permits and visa renewals, are designed in ways that create constant bureaucratic hurdles and financial burdens. A Wei, another Burmese worker, described this in detail,

The document used to cost USD 19 per year. Now the maximum length of validity is six months, and it costs USD 76 each time we renew it. For Chinese workers everything is easier because the company [KRG] pays for it.19

These high costs and logistical barriers keep Burmese workers in a state of constant vulnerability. While Chinese workers receive employer support, Burmese workers must navigate the system independently, making their situation significantly more precarious. By capping the length of residence permits at six months—half the duration allowed for other nationalities—the state exerts control over their mobility, ensuring they remain dependent on the system. At the same time, the frequent renewals generate a steady stream of revenue for the Lao state through visa-processing fees, making the process both a mechanism of control and a source of profit.

The flexible governance system, which allows the Lao state to selectively enforce its regulation, is central to the management of the Burmese labor force. As in the case of border management, the collaboration between state and non-state actors is crucial to this process. This partnership is formalized through joint institutions that process work permits and manage labor mobility allowing the state to maintain control while accommodating the economic needs of the private developer. One such institutions is the “Golden Triangle Special Labour Service, Co Ltd.,” established in 2016 at the entrance of the Burmese village to process work permits for undocumented workers. Operated by Lao officers, the office employs Burmese huaqiao (Burmese nationals with Chinese backgrounds) to assist in translating application instructions, which are only provided in Chinese. This arrangement smooths the bureaucratic process and serves as example of hybrid and pragmatic governance model that characterizes the SEZ.

The Lao state also relies on the KRG administrative offices to issue official communiqués (通知 tongzhi) posted across the SEZ in public spaces such as canteens, supermarkets, and billboards. These official documents seek to integrate migrant workers into formal employment structures. One such communiqué, n. 2391, released on 29 December 2017, emphasized the need to strengthen the management of laborers in the SEZ:

All the Burmese citizens who are using a temporary transit permit, must be recruited in a working unit, and can apply for a 6-months working permit and residence permit.20

By mandating that all Burmese citizens be absorbed into formal work units, the Lao state ties their legal status to their employment. The document, translated into both Mandarin Chinese and Burmese, and bearing the stamp of the Lao central government, highlighted the concerted effort of state and developer in ensuring that every worker in the zone was properly accounted for.

The system of work units, while appearing as a formal mechanism, also played a crucial role in reinforcing the workers’ vulnerability, making workers like A Wei and Dai Min dependent on their employment to keep their legal status. At the same time, these workers were forced into precarious work arrangements, with the constant threat of losing their jobs—and, thus, their residency—hanging over them.

The exploitation of the cross-border movements of vulnerable migrants to the advantage of both state and businesses is not a new phenomenon in the region. Nicholas Farrelly (2012) has shown how the Thai government capitalizes on Burmese migration on the Thai–Burmese border to maintain an inflow of cheap labor despite the existence of a legal framework designed to curb the exploitation of human mobility. By examining the shortcomings of the Thai legislation regarding human trafficking in all its nuanced facets, Farrelly highlights a convenient misalignment between the Thai state’s policies for managing Burmese cross-border mobility and its professed anti-trafficking rhetoric. A similar pattern emerges in the GTSEZ, where regulatory mechanisms are manipulated to maintain a low-cost labor force that benefits both the KRG and Lao authorities alike.

The second part of the Communiqué mentioned above evidences this point. By acknowledging the presence of foreign individuals without legal documents, it offers an ad hoc solution:

All foreign individuals who do not possess any legal documents and entered the SEZ illegally […] can apply for a […] six-month working permit and residence permit (and pay the relative fees to avoid incurring in fines)21

This regulation, which effectively normalizes the illegal entry and residence of migrant workers within the SEZ, illustrates how the Lao state transforms legal problems into economic opportunities. Instead of strictly enforcing national immigration laws, the government creates a commercial pathway that allows “illegal” residents to regularize their status for free. The SEZ’s Regulatory framework thus co-opts undocumented workers into a formal labor pool, ensuring a steady supply of cheap, exploitable labor that fuels both the Lao state-building project and the developer’s profit-driven objectives.

The precarity and insecurity that workers like Dai Min and A Wei face, as byproducts of the formal governance system, are further solidified by the employment conditions, which exploit informal means to consolidate the situation of precarity. The wage system and the organization of workers’ accommodation illustrate this point. The KR casino’s wage system is closely tied to ethnicity. A Burmese casino worker of Chinese descent described:

I came to the zone in 2009 and worked at the casino ever since. Every year the company [KRG] adds USD 13.50 to our salary, but the maximum increase has been capped to USD 68.50. If you don’t rest for the whole month, then the company adds four days of salary. Every month, to get a normal basic salary you can rest for four days. But this is a new rule, until 2016 it used to be only two days of rest, and at the very beginning it was even worse, because we did not have any rest at all. If you worked for 30 days without days off, you could get 32 days-worth salary; but if you took two days off, the company would withdraw three days of your salary […] Now Chinese table-supervisors get USD 548, while Chinese dealers get USD 479.50. For the same roles Burmese Huaqiao as myself get respectively USD 300 and USD 340. Other Burmese croupiers get USD 300, while Lao nationals can work only as croupiers and each month get USD 260.

This ethnically stratified wage system highlights how ethnic identity is used as a tool for economic discrimination. Although the working hours comply with the 2016 Lao Labour Law, which sets a maximum of 48 h per week (Article 51), the disparities in pay between ethnic groups are stark and entrenched, confirming the system’s coercive and discriminatory nature.

Alongside formal regulatory structures, informal networks play an equally important role in shaping workers’ experience. For instance, Stella, a Burmese casino senior employee, explained that she was required to vouch for any new friend or contact she facilitated into a casino position and held responsible for their conduct at work. “If they make mistakes, we both could have our wages docked, or even be fired,” she explained. This reliance on social ties for employment turns individual responsibilities into collective accountability, ensuring that workers police each other’s behavior.

Despite the inequities in the system, some workers have managed to navigate the complex web of formal and informal governance. A Burmese card dealer, recounted, “I wanted to reunite with my mother and bring her to the zone, but she had no documents and no employment. So, I came up with a story to secure the necessary paperwork and told the casino management that I needed support with my newborn baby.” This kind of informal negotiation exemplifies how workers use the flexibility within the system to their advantage, though such strategies do not mitigate the broader environment of insecurity they face.

Similarly, the accommodation system within the SEZ also serves as a means of control and reinforces ethnic divisions. The KRG offers different types of housing, primarily dormitory-style rooms that accommodate 4–6 workers per room. Workers with families or couples can apply for family units, but access to these units is limited and often favors certain ethnic groups. A Burmese worker expressed frustration after waiting for a family unit for four years, while Chinese couples were approved ahead of him. “If you don’t know the right people, it is hard to get anything here,” he lamented, “I am still on the waiting list but after two years I have stopped asking.”

Yet, KRG-provided accommodations are appealing to many Burmese workers because they are free and because Lao state authorities exercise less scrutiny in these spaces. In contrast, in the Burmese village where most of the Burmese population resides, local authorities periodically conduct raids, detaining undocumented workers, imposing fines, and repatriating individuals. One Burmese informant recounted:

If you don’t have the residence permit, you cannot work. When they [the Lao police] catch you without documents, you are forced to pay. They apprehended about 250 people today! They keep everyone in jail, 25–30 people in one room. A few years ago, the fee to liberate each person was USD 30. Now it is USD 90, and someone must act as guarantor for them. If no one volunteers to vouch for them, then they [the undocumented individuals] are repatriated to Myanmar. However, they typically come back later.22

This targeted policing, combined with the rapid rising of fines, serves as a means of establishing order but also as a way for the Lao government to profit from the vulnerabilities of migrant workers. In this sense, the informal mechanisms of governance—the social networks and the accommodation system—function alongside formal structures to maintain control and exploit the precariousness of Burmese workers.

This dual system of governance, blending formal and informal mechanisms, ensures that both the Lao state and the private developer benefit from a low-cost, compliant labor force. By enforcing flexible regulations and leveraging social networks to impose collective accountability, the state consolidates its authority while the developer maximizes profits. The Lao state’s project of state-building and the KRG’s economic objectives thus converge, perpetuating the insecurities of Burmese workers for mutual gain. This reflects what Mezzadra and Neilson (Mezzadra and Neilson 2013) call “differential inclusion” to describe a policy model which rests on uneven workers’ mobility to exert social discipline and control, maintaining inclusion that is intentionally incomplete. The filtering power of border management, Mezzadra argues, fosters subordination, discrimination, and fragmentation (Balibar et al. 2012, p. 191). Similarly, the Laotian government adopts a regulatory system that filters mobility and leverages ethnic differences to support the state’s economic goals within the SEZ. For Burmese workers like Dai Min and A Wei, this insecurity is both a byproduct and a tool of governance, keeping them highly exploitable. The state ad hoc management reinforces its presence in a key borderland while ensuring a steady supply of low-cost labor for the developer. In this way, insecurity is institutionalized as a means of control, serving the interests of both the state and private capital.

6. Contested Legitimacy, Controversies, and Dilemmas

The legitimacy of the GTSEZ has been fraught with scrutiny since its establishment, with critics questioning the nature of its casino-driven economy and its broader impact on regional governance, sovereignty, and social order. As early as 2011, Mr. Pattana Sittisombat, president of the Committee for the Economic Quadrangle had reportedly voiced his worries to South Morning China Post (SMCP), arguing that a casino-centric economy was unlikely to mitigate the long-standing problem of narco-trafficking in the Golden Triangle. Rather than standing as a bulwark against the illicit economy, he feared that it would fuel money laundering and create a hub for other illegal activities (RFA 2017). These concerns have been echoed in regional and international media, which labeled the GTSEZ with epithets such as “Laos Vegas” (GOOD 2012), “The ‘lawless’ playground of Laos” (Chicago Tribune et al. 2015), and “Jungle Vegas” (SCMP 2015). Such framing emphasizes the blurred lines between legality and illegality within the zone, highlighting the governance challenges posed by its unique structure.

Journalist Sebastian Strangio (2016), in a report for Al Jazeera, described the GTSEZ as a “Chinese enclave transplanted in the tropical hills,” underscoring its role as a symbol of China’s growing economic footprint in Southeast Asia. Strangio’s portrayal aligns with broader fears of Chinese imperialism, where projects like the GTSEZ—particularly under the Belt and Road Initiative—are viewed as mechanisms through which China extends its influence into neighboring countries. Similarly, The Economist critiqued SEZs in Laos, linking them to China’s “go abroad” policy, suggesting that the GTSEZ is less about local economic development and more about the projection of Chinese hegemony under the guise of modernization and international cooperation (The Economist 2020).

The GTSEZ’s casino operations further complicate matters. While gambling is illegal in Laos under national law (Vientiane Times n.d.), the government made an exception for the zone, framing the casino as a necessary concession to promote modernization. The situation escalated in January 2018, when the U.S. Treasury department labelled Mr. Zhao Wei’s network as a “Transnational Criminal Organization,” accusing it of involvement in money laundering and human- and narco-trafficking through its casino operations. This episode challenged the legitimacy of the development project. It intensified international scrutiny on the GTSEZ, raising serious concerns about the zone’s role in criminal enterprises, and putting pressure on the Lao government to address the U.S. allegations. However, as previously mentioned, just days before these accusations came to light, the Lao government had publicly awarded Zhao Wei a development prize at the Kapok Flower Festival, signaling its support for his activities despite growing criticism.

Laungaramsri (2019) provides a pointed critique of the Lao government’s silence on the U.S. allegations, arguing that its support for Zhao Wei reflects a tacit alignment with Chinese economic interests at the expense of Laos’ own sovereignty. Laungaramsri frames this as “commodified sovereignty”, where the state leverages its sovereign rights to attract investment (Laungaramsri 2015, p. 119). Anchoring this analysis to postcolonial discourse, she argues that these relationships endorse neo-imperial governance, with the GTSEZ representing a modern extension of China’s imperial legacy (Laungaramsri 2019, p. 204).

Laungaramsri’s analysis delves into the controversial practices of authoritarian dispossession disguised within the development rhetoric. While initial plans included relocation of multiple villages, only one—Ban Khuan—was relocated between 2011 and 2012 to the New Golden Triangle Village 新金三角村 xin jinsanjiao cun. The government justified the dispossession as progress, while Mr. Zhao promoted the new village as a form of Lao authentic lifestyle and as a commodity to be displayed for the tourist gaze and consumption. Mr. Zhao’s narrative framed the relocation as result of his leadership, claiming perseverance had won over the villagers. “If you put your heart to it,” he declared, “you can break up metal and rocks […] After two years of hardship, we have moved the God of these people.”23 This paternalistic rhetoric positions the state and developers as benevolent leaders guiding the “child-like” villagers towards progress, an outlook that veils the contentious dispossession process (China Talk 中国访谈 2011).

The New Golden Triangle Village, touted as “a model village in Laos”, reflecting “the relationship between China and Laos” (GTSEZ Investment Guide n.d.), faced immediate structural issues. Poor construction quality, evident in cracked walks and leaky roofs after the first rainy season, disrupted the lives of the relocated villagers (Laungaramsri and Sengchanh 2018). The promised alternative jobs, such as a taxi company and three-wheeled motorcycles, did not absorb the labor force as anticipated. Villagers received insufficient compensation. They also resisted Mr. Zhao’s paternalism, viewing themselves not as “backward,” but rather as proud heirs of Souvannakhomkham’s ancient civilization (Laungaramsri 2019). By uncovering these criticalities, Laungaramsri provides a counter-narrative to the dominant development discourse around the GTSEZ.

Yet, Laungaramsri’s critique does not fully account for the complexities of local resistance and adaptation within the GTSEZ. Scholars like Chamberlain (2007), High (2008), Petit (2008), Rigg (2012), and Singh (2012) have examined government resettlement strategies, highlighting how relocation processes often involve a complex interplay of coercion and consent (High 2008, p. 534). My own fieldwork demonstrates that, while the zone has undoubtedly exacerbated inequalities, it has also provided local communities with new opportunities for economic engagement. Villagers have found ways to participate in the zone’s economy, whether by opening small businesses or leveraging the influx of Chinese workers and tourists to create new revenue streams. Emblematic of this complex tapestry of engagement was the story of Mia, a Lao woman in her 40s who had lived for 20 years in Thailand and worked as a pad Thai seller. Recently returned to her home village next to the SEZ, she refused to sell her property to Chinese investors. Instead, she studied Chinese and started her own food business, while also fantasizing about developing a tourist business to bring foreign visitors to nearby Lao villages where her friends and family lived.

Similarly, Laungaramasri’s depiction of Laos as a “broker state”, (Laungaramsri and Sengchanh 2018) minimizes the state’s role, portraying it as mainly subservient to Chinese power and reducing its sovereignty to a mere commodity traded for economic gain. This characterization downplays the government’s efforts to balance state agenda while managing both internal and external pressures. However, the Lao government’s continued support of Zhao Wei can be interpreted through a pragmatic lens. As explored earlier, the GTSEZ is an integral part of the government’s nation-building strategy, particularly in the borderlands, where state control has historically been weak. This endorsement was further confirmed on 1 October 2022, when the government awarded Mr. Zhao a medal of courage (RFA 2022). Hence, the government’s reluctance to address the U.S allegations directly can be seen as a strategic decision to safeguard its broader modernization goals and protect the zone’s reputation as a key site of economic growth. Once more, this dynamic reflects the complex balance that the Lao government maintains between appeasing foreign investors and asserting sovereignty over the zone.

Despite U.S. sanctions, during my fieldwork, I observed Lao police interventions to tackle illicit activities. There were reports by Radio Free Asia on substantial drug seizures in Bokeo province, where the SEZ is located (RFA 2023a). While this reflects the fact the region has not yet been sanitized, as the official narrative claims, it also underscores the state’s continued commitment. Additionally, infrastructure projects such a port on the Mekong River and an airport have proceeded (RFA 2020), reflecting the government’s commitment to using the SEZ as a tool for modernization, despite the legal and moral ambiguities surrounding its operations.

To portray the GTSEZ principally as an extension of what McNally (2012) defines as “Sino-capitalism” would also be reductive. McNally’s concept highlights a state-driven capitalist model where informal networks and private investment serve China’s interest. While Mr. Zhao’s rhetoric is anchored in China’s symbolic and economic power, as the slogans mentioned earlier suggest, the discussion on borders’ formalization and workforce management shows how the GTSEZ reflects a hybrid space where Lao sovereignty and Chinese capital intersect, negotiating power and governance rather than simply ceding it to Chinese interests. Nor does the significant capital outflow from China, estimated at CNY 1 trillion (USD 144 billion) annually (The Economist 2022), automatically link to the financial influx into the Golden Triangle as an expression of Chinese expansion in the region. The complexity is heightened by the fact that the GTSEZ’s casino operations contravene Chinese antigambling laws (Banks 2017, p. 17), which ban gambling activities both within China and abroad. Despite China’s global economic ambitions through initiatives like the BRI, gambling remains a clear red line for Chinese authorities. In 2003, China even deployed troops to shut down casinos in Mong La, Myanmar, after a high-ranking official’s daughter lost CNY 1 million there (Xia 2003). In 2022 alone, Chinese police handled over 37,000 cross-border gambling cases (Xinhua News 2022) and worked with neighboring countries to combat drug-related crimes (China Daily 2023a), leading to the extradition of hundreds of fraud suspects from Laos, the Philippines, Indonesia, and Myanmar (China Daily 2023b). The GTSEZ has not been exempt from these enforcement efforts, with some KRG managers detained upon their return to China due to their casino involvement.24

In 2015, Chinese authorities, in cooperation with local Lao officials, shut down one of the GTSEZ’s online casinos after scams affected Chinese citizens. These anti-gambling measures are complemented by increased regional security efforts, including joint patrols along the Mekong River by Laos, China, and Myanmar. In September 2023, China further solidified its commitment to regional security by entering an agreement with ASEAN to combat transnational crime, focusing on forced labor and online scams (UNODC 2023). This reflects the balancing act between the Chinese official anti-gambling stance and the economic realities in the region and within the GTSEZ.

In short, despite the legal and moral ambiguities, the Lao government remains committed to the SEZ as a tool for national development, while simultaneously navigating international scrutiny. While the new system engenders uneven power relationships between the state, private developers, and local actors, the experiences like those of A Wei, Dai Min, and Mia challenge the narrative of disempowerment, showing how individuals navigate the imperfections of the system to their own advantage.

The region’s intricate dynamics, involving both Lao sovereignty and Chinese capital, reveal that the GTSEZ is more than a case of Chinese expansionism. It is a space where power is negotiated, and the state retains a measure of agency even as it seeks to attract foreign investment.

7. Rethinking State Governance in GTSEZ

The GTSEZ presents a distinct case of governance where sovereignty and capitalism are hybridized to create an experimental project which rests on both formal and informal management practices. Ong’s definition of SEZs as “neoliberal enclaves” offers a starting point to think about these spaces as characterized by a unique blend of administrative freedom, investment incentives, and distinct labor markets that operate with significant autonomy from the host state (Ong 2006). In these zones, Ong suggests, market mechanisms begin to replace state authority as the primary mode of governance. The GTSEZ, however, does not entirely fit into this model. In the GTSEZ, state sovereignty is not fully relinquished but shared and reconfigured. The Lao government retains symbolic and regulatory control over the zone, while outsourcing some decision-making power to private actors. This sharing sovereignty disrupts the neat binaries of state versus market, public versus private, and local versus global, making the GTSEZ an experimental space where traditional forms of governance and capitalist expansion intersect in unpredictable ways.

This blending of public and private governance has been critiqued by scholars like Kearrin Sims (Sims 2017) and Alessandro Rippa (2019). Sims decries the casino economy as “predatory” and detrimental to wider societal interests (Sims 2017, p. 678) Meanwhile, Rippa interprets the GTSEZ as a strategic ‘evasion of state power’, a mechanism to circumvent traditional governance in favor of economic elites (Rippa 2019, p. 267). These perspectives challenge the GTSEZ’s operational norms that disrupt the normative functioning of the Lao state, highlighting the divergence from the intended equitable modernization to a reality marked by stark power imbalances. These critiques expand on Ong’s theory of neoliberal enclaves, highlighting the ways in which SEZs can exacerbate socio-economic disparities by privileging the interests of investors over those of local communities.

However, this paper complicates these views by highlighting how the Lao state remains actively involved in governance within the GTSEZ, even while collaborating with private actors like the KRG. Unlike the “predatory” or “state-evading” characterization, the state continues to exert control through both formal and informal means, balancing its own interests with those of private investors. The accounts of Wei Yuan and Anita reveals how state mechanisms, such as selective enforcement and ad hoc governance, persist in shaping the power dynamics and labor conditions within the zone, thus complicating the notion that the GTSEZ operates solely in the interests of economic elites.

Similarly, the management of the Burmese workforce shows how the Lao state is actively involved in a complex system of governance that blends regulations with informal mechanisms, such as selective enforcement and leveraging social networks, to maintain control over the labor force. While this system exploits workers’ vulnerabilities and remains morally questionable, it demonstrates a nuanced interaction between state power and private capital. It shows how the state’s project of nation building is intertwined with economic objectives, challenging narratives of state power being circumvented entirely.

Pal Nyíri’s concept of “post-national sovereignty” is more suitable in analyzing this dynamic. Exploring two SEZs on the Lao northwestern borderlands—Boten and the GTSEZ—Nyíri suggests that they represent a form of sovereignty that is vested not solely in the state but in private corporations, creating an environment where corporate actors wield significant authority. Nyíri’s analysis of the GTSEZ highlights the ideological paradox at play: While Mr. Zhao mimics symbols of Chinese state power to legitimize his authority, the GTSEZ simultaneously promotes individual economic freedom that exists outside of state control (Nyíri et al. 2017). Through cultural events like the Kapok Flower Festival and the use of Chinese Communist Party slogans, the GTSEZ projects an image of modernization and progress. At the same time, by endorsing investors like Mr. Zhao, then, the Lao government leverages the development initiatives to rebrand the Golden Triangle, making this experimental governance a core part of its state-building strategy. This tension between state-led symbolism and capitalist experimentation disrupts the notion that the GTSEZ can be neatly categorized as either a neoliberal enclave or a state-driven development project.

This paradox is never fully reconciled, and it translates in the social and economic asymmetries of the zone. Rather than being entirely disempowered, however, local actors, such as workers and villagers, navigate the inconsistencies of this hybrid system to their own advantage. As I have demonstrated, while the state and developers exploit social networks to secure their respective interests, these same networks represent, for workers, a repository of information, social support, and even strategic resistance to the limitations of the zone. Similarly, Mia’s story, like the experiences of many other local villagers, complicates the narrative of local disempowerment, showing how local actors can strategically engage with the zone’s economic opportunities while resisting its more exploitative elements. This local agency further characterizes the GTSEZ as a site of negotiation, where state actors, private investors, and local communities constantly reconfigure power dynamics.

8. Conclusions

The GTSEZ epitomizes a unique experiment in governance in Laos, where traditional notions of sovereignty and governance are reconfigured to accommodate the needs of modern economic development. This paper has explored the multifaced interactions between the Lao government and non-state actors, recentralizing the Lao state’s pivotal role in its nation-building process. Through the GTSEZ, Laos transforms its borderlands into gateways for international cooperation and economic innovation, leveraging the zone as a critical component of its national development strategy.

This view adds nuances to the perspectives that cast the GTSEZ as a domain of Chinese imperialism, by emphasizing the instability of Chinese investment projects and highlighting the proactive measures taken by the Lao government to address the zone’s complexities. The government’s flexible and pragmatic approach to integrating SEZs into the national development plan, managing borders, and regulating labor flows illustrates its commitment to navigating the intricate dynamics of power, authority, and economic interests.

Although governance within the GTSEZ appears inexact, fragmented, and incomplete, the zone emerges as a paradigmatic example of how relationships between the state, sovereignty, and territoriality are being reimagined to respond flexibly to both challenges and opportunities. Through this analysis, therefore, I hope to contribute to expanding the narratives of statecraft and nation-building in Southeast Asia, highlighting the GTSEZ’s role in shaping modern governance strategies.