And as such is exempt from certain laws prohibiting development. It is surrounded by uninhabited islands of the Butong Archipelago.
The island is home to about 500 Chao Ley, or Sea Gypsies, who were given a grant to half of the island and live in small villages, predominantly around the far east side of the island near Sunrise Beach.
The name "Koh Lipe" means "Paper Island" in the local Chao Ley language.
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