The Government plans to develop three special economic zones, which it hopes will spearhead the country’s growth. They will be located in the coastal district of Van Don in the northern province of Quang Ninh, Bac Van Phong in the central province of Khanh Hoa and Phu Quoc Island.
|A view of the coastal district of Vân Đồn in the northern province of Quảng Ninh. - Photo zing.vn |
Currently there are no special economic zones in the country though it has 18 coastal economic zones, 27 border economic zones and 325 industrial zones.
Vietnam had established the Vung Tau–Con Dao Special Economic Zone in 1979 but shut it down in 1991.
The Ministry of Planning and Investment expects the three special economic zones to contribute billions of dollars to the economy each year from 2020 onwards.
The Government has agreed in principle that the special economic zones will enjoy special regulations and fewer limitations to enable them to woo investors.
The draft Law on Special Economic Zones (or Law on Special Administrative-Economic Units) reflects this strategy.
The draft Law on Special Administrative – Economic Units aims to create a legal basis for the establishment, development, management, and operation of the three zones and ensure the best use is made of their regional potential and advantages.
The zones will be geared to attract investment, technology and management capabilities from abroad, and form high-growth areas with a new management model and modern living environment.
They will focus on research and development activities, start-ups, new technologies, high-quality health and education services, quality resorts, and tourism services.
To achieve these they will enjoy preferential policies related to taxation, land lease, water and other tariffs.
The bill originally proposed many incentives for Van Don, Van Phong and Phu Quoc like income tax waiver for 10 years for managers, scientists and specialists working there.
For other individuals who live and work there, the zones were to be tax-free.
Investors will enjoy value-added tax (VAT) incentives for import of equipment and machinery that are not manufactured domestically or fail to meet required standards.
The bill has been placed in the public domain for getting feedback and discussed at the ongoing 14th National Assembly session.
However, in the latest draft submitted to the NA several incentives have been watered down. For instance, the period of income tax waiver for managers, scientists and specialists has been halved from earlier drafts to just five years now.
The tax exemption for individuals has also been taken out as has the VAT waiver for imported equipment and rental incentives.
The changes were possibly made at the instance of experts and NA deputies who had said there were too many incentives and those related to tax were likely be misused.
They said all preferential policies should be considered carefully to ensure they serve the purpose of attracting investment and avoid squander of the country’s natural resources.
But analysts disagreed saying the special economic zones are a new concept in Vietnam and the Government needs to pull out all stops and roll out the red carpet if it hopes to attract investment.