Tax and other incentives in the zones are expected to bring ‘unimaginable’ breakthroughs. Economists are looking at Vietnam’s plan for special economic zones as a smart idea with tax incentives that will benefit both foreign investors and local employees.
Vietnam is preparing to develop special economic zones in the northern province of Quang Ninh, the central province of Khanh Hoa and the southern resort island of Phu Quoc.
The Law on Special Economic and Administrative Units is being discussed at an ongoing meeting of the legislative National Assembly and is expected to be passed at the next session in May.
|Fishers on Phu Quoc Island, which has been planned for one of three new special economic zones in Vietnam. Photo by VnExpress/Duong Thanh
Tran Huy Dong, director of the Economic Zone Management Department at the investment ministry, said the new zones are expected to offer “outstanding” incentives such as 99-year property leaseholds for foreign investors, almost twice the 50-year terms granted elsewhere in Vietnam, and a five-year exemption from income tax.
Thanks to these policies, Dong said the zones could generate salaries of $13,000 per year for local workers. The average income in Vietnam last year was $2,200.
The government should still be able to make around $9.5 billion from land use fees, he added.
Vietnam’s economy is falling behind the rest of the world, where around 4,500 special economic zones have been developed in 140 countries, Dong explained.
The country has 43 “normal” economic zones in border and coastal areas as well as 328 industrial zones, which have drawn a combined $153 billion in investment, or more than half of the foreign investment pledged to Vietnam.
These zones employ around three million people and account half of the country's export turnover, Dong said, calling the numbers “modest” given the economy’s potential.
“We started conducting research into special economic zones in 2003. We have been moving too slowly,” he said.
Nguyen Van Phuc, former vice chairman of the Economics Committee at the National Assembly, also said that thousands of special economic zones are doing successfully around the world and Vietnam just needs a “special” law to run its own.
“The law will offer unimaginable breakthroughs,” he said.VnExpress