Danang Hi-Tech Park
Dinh Vu

Economic Sector

Last updated: Thursday, August 16, 2018


Shaping New Development Models

Posted: Friday, September 22, 2017

Concretising policies that have been piloted in three special economic zones, namely Van Don (Quang Ninh province), Bac Van Phong (Khanh Hoa province) and Phu Quoc (Kien Giang province), and creating new development models to meet development requirements are remarkable contents of the Law on Special Administrative-Economic Units currently being drafted by the Ministry of Planning and Investment.

Mr Tran Duy Dong, Director of the ministry’s Economic Zones Management Department, said at the meeting in Hanoi on September 19 that tasks of the Law on Special Administrative - Economic Units are to build and create new development paradigms for regions with groundbreaking and superior institutions and policies to the nation and to enable them to compete with the world, create attractive, open and transparent investment environments for development. According to the plan, the draft law will be discussed at the Fourth Meeting of the 14th National Assembly in October 2017 and passed at the Fifth Meeting in May 2018.
The Law on Special Administrative - Economic Units aims to institutionalise socioeconomic development viewpoints, strategies and plans for construction and development of special economic zones adopted at the National Party Meetings (8th, 10th 11th and 12th terms). In particular, the Resolution of the 12th National Party Congress defined the task of “Building some special economic zones to create growth engines and experiment regional groundbreaking development institutions.”

Adapting development goals
In addition to building administration models and decentralising special administrative-economic units, the law will specify regulations with the aim of shaping a favourable investment and business climate, opening up the market in special economic - administrative units to a higher extent than other regions and ensure international competition for both foreign investors and domestic investors in industries in need of attracting investment capital into special economic - administrative units.

At the same time, the Law will reform and simplify the order and procedures of business and business in special economic - administrative units like not implementing investment procedures and decisions on investment policies of the Prime Minister and Provincial People's Committees as per the Law on Investment; not implementing procedures of granting investment registration certificates for public - private partnership (PPP) projects and offshore investment projects.

One of groundbreaking contents drafted is expanding and creating favourable conditions for domestic and foreign investors to access land and allowing foreign organisations and individuals to own houses in special economic - administrative units. The land-use duration will be at most 99 years for projects in innovative start-up areas, research and development, healthcare, education and investment projects prioritised by special economic - administrative units and projects of strategic investors. Domestic economic entities and foreign-invested enterprises are allowed to mortgage their assets on land to foreign credit institutions with commercial presence in Vietnam.

The name of special administrative - economic unit is coined by Vietnamese lawmakers, as compared to the world. It is a administrative - economic unit clearly demarcated by geographical and administrative divisions and guaranteed security. It has separate economic and administrative mechanisms, outstanding tax and customs preferences, and specific land and immigration privileges to attract investment for economic and social development.

Mr Tran Duy Dong said that major differences of these models are the application extent of special policies on political system, economic institutions, administrative institutions and population management policies. Depending on development history and characteristics of each type of model, the extent of opening may vary. The degree of priorities of economic and administrative objectives also varies.

As many as 13 countries and territories in the world have been successful with special economic zones, free zones, free trade zones and special administrative zones. The most successful are Japan, Singapore, the United Arab Emirates, China, South Korea, the Virgin Islands and the Cayman Islands. Japan, China, Thailand and Myanmar have developed this model since 2013. Developed countries such as the United States and Germany focus on developing smart high-tech industrial city model for the forthcoming fourth industrial revolution.

In 2012 and 2013, the Politburo of the Communist Party of Vietnam agreed on schemes to study on construction of Van Don, Bac Van Phong and Phu Quoc special zones. Mr Nguyen Chi Dung, Minister of Planning and Investment, said, the government collected billions of US dollars from these pilot sites until 2010. Specifically, Van Don Special Zone collected about US$1.9 billion from taxes and fees and US$2.1 billion from land revenue. Van Don is expected to contribute up to 5.2 per cent of the gross domestic product (GPP) of Quang Ninh province by 2020, and 7.7 per cent by 2030, when enterprises are estimated to create US$9.7 billion of added value in the 2021 - 2030 period. Per capita income here will also increase to US$5,000 by 2020 and US$12,500 by 2030.

Van Phong Special Zone was estimated to collect US$1.2 billion of taxes and fees and US$1 billion of land revenue. Local companies are forecast to create US$10 billion of added value between 2017 and 2030. Per capita income here will be raised to US$4,000 by 2020 and US$9,500 by 2030.

As for Phu Quoc Special Zone, the government was projected to collect US$$3.3 billion from taxes, fees and land revenues. Local businesses are hoped to create US$19 billion of added value between 2017 and 2030. Per capita income will be increased to US$5,300 by 2020 and US$13,000 by 2030.

Besides, employment opportunities and per capita incomes in these special zones also go up. By 2030, Van Don will create 132,000 new jobs with an average yearly salary of US$9,500; Bac Van Phong will provide new jobs for about 65,000 people each of whom is estimated to be paid US$9,000 a year; and Phu Quoc will employ 57,600 workers.

Nguyen Thanh

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