Pilot establishment of Da Nang Free Trade Zone: Great driving force to boost economy

On the morning of October 31, the Ministry of Industry and Trade held a Trade Promotion Conference with the Vietnamese Trade Office System Abroad in October 2024.

The conference was organized by the Trade Promotion Agency (Ministry of Industry and Trade) in person and online, with the theme "Discussion on the Project to establish Da Nang Free Trade Zone. The role of Vietnamese trade offices abroad".

The conference is an opportunity for leaders of Da Nang city and businesses to exchange and discuss specific solutions and tasks to promote the development of the logistics industry; orientation for the construction of Da Nang Free Trade Zone according to Resolution 136/2024/QH15 of the National Assembly on the organization of urban government and piloting a number of specific policies and mechanisms for the development of Da Nang city.

The conference with the theme "Discussion on the Project to establish Da Nang Free Trade Zone. The role of Vietnamese trade agencies abroad". Photo: Phuong Cuc

According to Resolution 136/2024/QH15, the National Assembly agreed to allow Da Nang to pilot a number of specific mechanisms and policies on financial management, state budget; investment management; planning, urban, natural resources and environment management; attracting strategic investors, including stipulating the List of priority industries and projects to attract strategic investors to the city.

Da Nang City is also piloting a number of specific mechanisms and policies on investment and development in the fields of semiconductor chip technology, manufacturing of components, integrated circuits (IC), flexible electronics (PE), new technology batteries, new materials and high-tech products, science and technology management and innovation... In particular, a notable lever mechanism is the establishment of the Da Nang Free Trade Zone associated with Lien Chieu seaport, aiming to attract investment, finance, trade, tourism and high-quality services to Da Nang.

Currently, Da Nang has selected 10 locations to develop a free trade zone with a total area of ​​nearly 1,500 hectares. The selected locations are all located next to convenient traffic routes and hubs, with favorable conditions for the construction of functional areas in the Free Trade Zone, including: Production areas, logistics centers; Trade - service areas and other types of functional areas according to the provisions of law.

At the conference, the Head of the Import-Export Management Department of the Department of Industry and Trade of Da Nang gave a detailed report on the process of building the city's free trade zone. Accordingly, the preliminary draft of the project to establish the Da Nang Free Trade Zone is only the initial outline, currently being continuously researched, updated and adjusted by experts and consulting teams.

The goal of establishing the Free Trade Zone is to help Da Nang become a location with superior institutions according to international practices, highly attractive to leading investors in a number of fields and pilot effective policies to attract investment resources.

In addition, Da Nang wishes to complete the green logistics service infrastructure, optimal cost, convenience and competitiveness to make Da Nang a competitive destination in the Pacific-Indian Ocean transport corridor. At the same time, it is a new growth engine for Da Nang city, contributing to GRDP growth, creating many high-income jobs in an international working environment.

According to the report of the Department of Industry and Trade of Da Nang City, the establishment of the Da Nang Free Trade Zone is in line with the major development policies of the country in general and Da Nang City in particular, so it has received attention, direction, supervision, coordination and support from central and local agencies to gradually build a model free trade zone in Vietnam. The development of the free trade zone model is in line with the development trend of the world.

Da Nang has its own advantages in terms of strategic location; natural conditions, natural resources; socio-economic conditions; human resources and the city has also positioned its brand for tourism development in the world, so promoting the Da Nang Free Trade Zone has many advantages, creating attraction right from the beginning.

Besides, Da Nang's investment and business environment is among the top in the country, thus creating trust and interest from investors.

Besides the advantages, the construction of a free trade zone also poses many challenges for Da Nang. Photo: Hoang Nhuong.

In addition to the existing advantages, Da Nang also frankly acknowledged the existing challenges such as limited land area; the ecosystem and natural environment are valuable assets of Da Nang, it is necessary to ensure the balance between exploitation and conservation; Da Nang free trade zone may face a lot of competition due to the similarity in development conditions (geographical location, tourism potential...) from centrally-run cities, economic zones in the country and Southeast Asia; Da Nang enterprises are mostly small and micro-sized, accounting for 99%, FDI capital flows are still modest (accounting for about 0.5% of the country); incentive mechanisms for Da Nang free trade zone according to Resolution 136 are still not competitive with international standards, especially incentive mechanisms by industry and attractive fields.

Regarding scale, the Department of Industry and Trade of Da Nang city said that by the time of completing infrastructure and synchronizing functional areas, Da Nang Free Trade Zone will reach about 2,000 hectares with a roadmap suitable to the need to attract production and business activities in functional sub-areas according to the time schedule.

It is expected that by 2030, the total area of ​​functional areas put into use will be about 300-500 hectares. By 2035, the total area of ​​functional areas put into use will be about 1,000 hectares. By 2040, the total area put into use will be about 1,700 hectares. By 2050, the total area put into use will be about 2,500 hectares.

Due to the specific characteristics of Da Nang city with limited area, it is not possible to ensure the conditions for arranging a free trade zone in a contiguous location, so the city proposes to form subdivisions arranged in different locations. This is also consistent with free trade zones according to international practice, specifically divided into 6 groups: production subdivision (area of ​​about 559 ha, accounting for 23.8%); Logistics subdivision (area of ​​about 180 ha, accounting for 7.7%); logistics & production subdivision (area of ​​about 579 ha, accounting for 24.7%); trade - service subdivision (area of ​​about 545 ha, accounting for 23%); trade - service and digital economy, innovation subdivision (area of ​​about 154 ha, accounting for 6.5%); reclaimed land location – MICE tourism, duty-free shopping, entertainment, sports and casino (reclaimed land area for Free Trade Zone is about 300-350 ha).

Speaking at the conference, Mr. Bui Ba Nghiem - representative of the Import-Export Department said: " Regarding the National Assembly's permission for Da Nang city to pilot the establishment of a Free Trade Zone in Da Nang, the Import-Export Department assesses this as a major and important policy, a great driving force to promote the development of Da Nang's economy in particular and the regional economy in general nationwide.

This is also the basis, research point, new mechanism and policy, the premise to codify regulations on free trade zones nationwide in the coming time. After the National Assembly gives permission, Da Nang city needs to deploy, research and apply clearly the boundaries of the free trade zone, specific sub-zones and functions to be able to plan and attract investment most effectively .

According to Mr. Nghiem, in addition to the advantage of being the first locality to be allowed by the National Assembly to establish a free trade zone, Da Nang also faces many challenges, as this is a competitive model. Therefore, Da Nang needs to urgently seize opportunities, mobilize resources, and seek investors with sufficient capacity to turn the project into reality as soon as possible. At the same time, the Import-Export Department will coordinate with relevant units to closely coordinate with other relevant units in activities so that the Da Nang free trade zone operates effectively.

At the conference, many representatives of Vietnamese trade offices abroad also discussed and focused on international experiences to contribute ideas, build and complete the project to build and operate a free trade zone with Da Nang city.

Source: https://congthuong.vn/thi-diem-thanh-lap-khu-thuong-mai-tu-do-da-nang-dong-luc-lon-thuc-day-kinh-te-355867.html