When will Vietnam have a free trade zone?

On the afternoon of May 31, the National Assembly discussed in groups the draft resolution on specific policies for the development of Da Nang City, including a new policy proposing the establishment of a Da Nang Free Trade Zone (FTA). According to the draft, the Da Nang Free Trade Zone will be linked to Lien Chieu Port and Da Nang International Airport.

Danang Port

Nguyen Tu

Specifically, this is a functional area, established to carry out the goals of attracting investment, developing production activities, port logistics services, logistics, trade - services, and duty-free business. The Da Nang Free Trade Zone will have a defined geographical boundary, separated from the outside area by a hard fence, ensuring inspection, supervision, and customs control activities of the customs agency and relevant agencies. This will be an investment incentive area, enjoying incentives applied to economic zones according to regulations as well as a number of specific mechanisms and policies. For example, the Chairman of the Da Nang People's Committee is the person who decides on the investment policy and establishment of the Free Trade Zone. The Da Nang People's Committee has the authority to approve and adjust the general planning according to the approved city planning. This agency is also the unit that carries out land and water surface recovery, compensation, site clearance, resettlement, and resettlement. According to the draft resolution, the Government also proposed preferential policies for the development of semiconductor microchips and artificial intelligence; building shopping centers to boost tourism in Da Nang...

Sunshine aerospace components factory of UAC Group (USA) in Da Nang

Nguyen Tu

Da Nang is not the first locality that wants to become a pioneer in developing a free trade zone. Last year, when submitting the project to build Can Gio International Transit Port, the Ho Chi Minh City Institute for Development Studies also proposed that Can Gio port should be oriented to become a free trade zone connecting many regions. Dr. Truong Minh Huy Vu, Deputy Director of the Ho Chi Minh City Institute for Development Studies, affirmed that Can Gio should not become a duty-free zone (export processing zone model) because it would be fragmented and small, but should become a free trade zone (FTZ). This would help connect parts of Dong Nai , Long An, Tien Giang, and goods would be more diverse. However, speaking with Thanh Nien, Mr. Truong Minh Huy Vu said that this idea is temporarily put on hold because the barriers of mechanisms and policies for free trade zones in Vietnam still have many unclear issues. Therefore, Ho Chi Minh City is prioritizing the plan to build Can Gio port. This model will continue to be studied in the coming period.

Can Gio

Hoang Quan

Right next to Ho Chi Minh City, Ba Ria-Vung Tau province is also implementing the idea of ​​completing the project to form a trade zone associated with a seaport in Cai Mep Ha area. Provincial leaders consider this one of the key tasks to promote the province's socio-economic development. The trade zone connected to Cai Mep port is considered an important lever contributing to increasingly deep international integration, attracting investment capital, creating resonance to unleash existing potentials. At the same time, it is an important piece in the picture of economic development in the Southeast region. If talking about the concept of a trade zone, this is a model that has not existed in any locality in Vietnam. However, since 2000, Quang Tri province has piloted the construction of the Lao Bao Special Economic - Trade Zone; then Hai Phong has a seaport duty-free zone in Lach Huyen; Quang Ninh has built the Van Don coastal economic zone... and many border gate economic zones and high-tech zones across the country. Special economic models have been researched and implemented since more than two decades ago with preferential policies and superior mechanisms to attract capital flows from domestic and foreign investors. However, up to now, no locality has been able to build a trade zone - a model that is considered superior. Therefore, large cities with strategic locations, airports, seaports, etc. are all trying to speed up to take the lead in the race to develop a trade zone.

Import and export at Hai Phong Port - container

Ngoc Thang

Explaining the pilot implementation of the trade center model, Secretary of the Da Nang Party Committee Nguyen Van Quang emphasized that one of the areas in which the city has strengths is tourism and services. However, Da Nang cannot rely solely on its existing resources. To improve quality, there must be breakthroughs. "If a trade center is established, there will be breakthroughs for the service and tourism industries. Like in China, trade centers are becoming a great attraction for investors," Mr. Quang informed.

As the head of Da Nang City cited, there are currently more than 3,500 free trade zones in 130 countries and territories in the world. China is not the leading economy in this model but is mentioned as the most successful example in the rapid development of free trade zones. From the first pilot free trade zone in Shanghai (SHFTZ) established in September 2013, China now has 22 similar zones. After more than 10 years of establishment and development, SHFTZ has become a typical innovative economic model, contributing to the expansion of Shanghai's economic scale and attracting large foreign investment capital. By the end of 2022, a total of 84,000 new enterprises had been established in SHFTZ. The Pudong New Area alone has attracted 18,691 new foreign investment projects, with a cumulative registered capital of 217.2 billion USD. The scale of trade in goods increased from 207.6 billion USD in 2013 to 340.5 billion USD in 2022. An overwhelming number! Following Shanghai, Hainan Island is continuing to receive the Chinese government's efforts with the expectation of becoming a "breakthrough doping dose" for the economy after the shock of the Covid-19 pandemic. With policies approved by the Chinese government, duty-free commercial zones are distributed almost throughout the tourist destinations on the island. This place owns the world's largest duty-free shopping centers with about 800 brands. To make a breakthrough in tourism, the Chinese government issued a series of special policies, allowing visa exemption for citizens from 59 countries to Hainan for 30 days; Promote duty-free retail by providing incentives to investors on commercial activities, not limiting the duty-free shopping limit for international visitors, and especially allowing domestic Chinese tourists to shop duty-free with a limit of up to 14,700 USD/year. For health tourism, they allow the import and use of foreign drugs that have not been licensed by Chinese authorities but have been certified by reputable international medical associations. In addition, when investing in medical and health research, they will enjoy maximum incentives on land, taxes, foreign experts, etc.

Sanya International Duty Free Shopping Complex, Hainan, China

REUTERS

With these policies, prices here are almost competitive worldwide . During the pandemic, although with the Zero Covid policy, almost no international tourists came to Hainan Island, the number of domestic tourists decreased from 81.6 million to 64.3 million, but tourism revenue and duty-free revenue still increased by 30% compared to the year before the pandemic. At the same time, Hainan's GDP increased by 4.2%, nearly double China's growth rate of 2.3%. Another bright spot of success in applying specific mechanisms and policies to attract investment is the Incheon Free Economic Zone of Korea (IFEZ). Established in 2003, IFEZ was designed to become a global economic center, attracting foreign investment and promoting economic development in Korea. IFEZ has invested heavily in infrastructure such as building a large port second only to Busan port, a subway network conveniently connecting to Seoul and building urban services such as hospitals, international trade centers, logistics complexes... Enterprises in IFEZ enjoy incentives on corporate income tax, value-added tax and import tax, allowing foreign ownership in many fields, being provided with financial support, administrative procedures and one-stop services... As of the end of July 2023, IFEZ has attracted 14.8 billion USD in FDI capital, accounting for more than 70% of the total FDI capital attracted by 9 free economic zones in Korea. The number of foreign-invested companies has also increased from 3 to 206. In particular, IFEZ is striving to nurture talent to transform into a solid innovation city, attracting prestigious universities in the US...

Economist, Dr. Phung Duc Tung - Director of the Mekong Development Research Institute, said that free trade zones or duty-free zones are development models, attracting investment with great appeal and have been successfully implemented in many countries and territories. Free trade zones are often established near major seaports, international airports and land border gates - areas with many trade advantages. With the incentives that a free trade zone brings, that locality will receive benefits from trade and investment development. Enterprises can access a larger market at lower costs, attracting foreign direct investment will also increase better. Thereby, creating jobs, increasing local competitiveness, connecting regional support and especially creating opportunities for consumers to access diverse goods at more competitive prices.

Sharing the same view, Dr. Tran Dinh Thien, former Director of the Vietnam Economic Institute, said that the EZ appeared in the world nearly 70 years ago, meaning that other countries have gone a long way ahead of Vietnam. Until now, we have just started, if we only copy the theoretical framework of other countries, copy the model from other cities, it will not have much meaning in creating competition and breakthroughs. "We want to have an EZ to attract foreign investment, but other countries have had outstanding policies to attract foreign capital for a long time. What is the scale of the EZ that localities plan to build? What is the outstanding policy? What kind of EZ is proposed in Da Nang or Can Gio? If we come later, we have to surpass, if we just follow the world, it will not be effective", Dr. Tran Dinh Thien commented. Economic expert Phung Duc Tung emphasized: Wherever tourism is developed, there should be an EZ. Tax barriers are largely eliminated, goods, services, capital and labor are freely moved across borders. Thereby, helping to reduce the price of goods. Moreover, economic cooperation with member countries will create momentum for infrastructure development, science ... helping the local economy develop. The Pudong area (China) or the unknown fishing village in Singapore used to be unknown, but with the policy of attracting the development of the commercial center, they have created a miracle that makes the world admire.

Thanhnien.vn

Source: https://thanhnien.vn/bao-gio-viet-nam-co-khu-thuong-mai-tu-do-185240601220111493.htm