An illustration of the proposed business, entertainment and educational centre in Laos.

Thai Airports Ground Services (TAGS) is diversifying into property development, with a first contract from Laos to develop a business, entertainment and educational centre.

Managing director Anupong Rojanakarin said the company signed a memorandum of understanding on Tuesday with the Lao government. Under the agreement, TAGS will be in charge of turning a 2,680-rai area into a special economic zone called Sawan City.

"Sawan City is in a good location, located near the Thai-Lao Friendship Bridge that links Mukdahan province with Laos," Anupong said.

"On one side is the Mekong River and the other side faces Road No 9 - the strategic route of the East-West Economic Corridor that is linking four countries: Burma, Thailand, Laos and Vietnam."

For the project, TAGS will invest a total of US$38 million (Bt1.37 billion) throughout the 10-year development period, which will start from next year.

The development is split into three phases. The first will cover an area of 1,200 rai, which will accommodate an integrated entertainment complex, a hotel, a duty-free shop, shophouses, a shopping arcade and lakes for leisure activities.

In the second phase covering 780 rai, TAGS will build housing, parks, health centres, shophouses and office buildings.

The third phase, covering the remaining 700 rai, will develop additional accommodation, a world-class golf course, health centre, shophouses and an office building. 

Upon completion, the city expects to employ at least 50,000 and plans to draw tourists to Laos. It is estimated that five years from now, the tourism business in Laos will generate $700 million, compared with $90 million at present, Anupong said.

The number of tourist arrivals is expected to grow to two million in 2010 from one million in 2006.

"On completion, Sawan City will be a major business centre in Indochina.

Meanwhile, it will also be an international educational centre, as the city will encompass an education park to accommodate the education of students from Laos, Thailand, Burma, Cambodia and Vietnam," Anupong said.

The development marks a major business diversification for TAGS, the provider of ground services at Don Muang International Airport. The company earlier failed to win the ground-services contract at Suvarnabhumi Airport.