Special Economic Zones Development in Vietnam SEZ rationales

Special Economic Zones Development in Vietnam

SEZ rationales in Vietnam Open door policy in 1986; first Law on Foreign Direct Investment in 1987 First Export Processing Zone: 1991 (Tan Thuan EPZ invested by Taiwanese investor) Objective: FDI attraction; export oriented strategy Improve the infrastructure condition Industrialize and modernize the national economy

SEZ types • Industrial Zone: specializes in producing industrial products and industrial supporting services with specific geographic boundary • Exporting Processing Zone: industrial zone specializes in producing export-oriented products, services supporting exported goods production and export activities with specific geographic boundary • High tech zone: specialize in high tech industries • Economic zones means zones having a separate economic space with a specially favourable investment and business environment for investors; fixed geographical boundaries; including: Bordergate Ezs and Costal EZs Special administrative – economic zones (expected to be established in 2018): established by the National Assembly; special administration entity and mechanism and special economic policies.

Economic Zones in Vietnam Since 2003, Vietnam has developed coastal EZs to create a strong momentum for regional economic development, accelerating industrialization. 17 coastal EZs have been selected to develop in coastal areas, mostly in the central region of Vietnam. Taking advantages: deep-sea harbors, airports, and strategic location. EZs have been developed in a synchronous way, in terms of industries, services, tourists, and urbanity to promote economic regions. Due to features of large area, and newly established, coastal EZs are under the phase of technical infrastructure development investment and construction. Some EZs have completed their vital works, such as: major transport routes, harbors, and airports.

Figures on IPs, EPZs and EZs 328 Ips; 4 EPZs; 17 EZs Area: 96. 3 thousand ha; Investment attraction: 7. 800 FDI projects (165. 9 billion USD); 8, 100 DDI projects (100 billion USD);

Advantages investing in IPs, EPZs and EZ § State-of-the-art infrastructure from outside to inside the fence; Well designed for environment protection and industrial production § Tariff free and custom clearance relaxation (EPZs and FTZs in EZ) § Investment incentives § IPs with difficult socio-economic conditions and EZs enjoy the financial support from State Budget for Waste water treatment plan and basic infrastructure construction

Simplified administrative procedure Provincial IP/EZ Management Authority performs “One-stop policy” Receive investment registration application; provide guidance to investors on investment process Line agency in implementing necessary procedures of IP/EZ planning, establishment and operation Line agency in IP/EZ management in the fields of investment, construction, trade, labor and environment Issue, amend and revoke investment registration certificate Administer difficulties and petitions by investors operating in IPs and EZs

Monitor mechanism Bottom up reporting system Supervision from central level Independent consultants International organization survey and research

CRITICAL CHALLENGES • Environmental protection • Living environment of workers in EZs • Human resources • Competition between neighboring countries new model: Special administrative – economic zones