The Ministry of Planning and Investment's (MPI) draft law on developing special economic zones (EZs) will provide EZ investors with major incentives, and in particular, investors of innovative startup projects will receive the most benefits.
|MPI officials in the meeting with the press on the draft Law on Special Administrative-Economic Zones on September 19
Specific incentive policies for three EZs
One of the most noticeable content mentioned in the draft Law on Special Administrative-Economic Zones is the particular incentive policies for three special EZs. Based on specific geographical and advantages of the three EZs, MPI proposed several preferential industries to focus on and develop for each zone.
Van Don EZ in Quang Ninh province will focus on hi-technology or projects supporting hi-tech development, tourism, airport and airport logistics, and commercial and shopping services. Quang Ninh will support Van Don EZ with VND1.5 trillion ($66 million) per annum for five consecutive years after its establishment. This zone received approval for establishment from the prime minister and it is expected that Van Don EZ will be launched in the last months of 2017.
As a beautiful island remote from land, Phu Quoc has all the necessary conditions to become an island of tourism. However, asset management and health services are also fields that local authorities wish to develop here. A notable policy for is that foreign investors who invested at least VND110 billion ($4.8 million) and have been residents for at least five years in Phu Quoc EZ are granted a permanent resident status on the island.
North Van Phong EZ will give preferential treatment to projects in the fields of information and technology, mechanics, seaports, seaport logistics, and commercial and financial centres. Previously this zone gained little public attention, so this will be a great chance for enterprises that want to develop their business and enjoy governmental incentives.
“Building mechanisms and policies for special EZs carry great impact as it is one of the core strategies to spur national economic growth. A successful policy will bring about three breakthroughs in infrastructure, institutional reforms, and human resources and create spill-over effects throughout Vietnam. Then we can attract both international and domestic investors to invest and contribute to Vietnam’s development,” Hoang Thi Tu, a representative of the Government Office’s Department of General Economics, emphasised the importance of the Law on Special Administrative-Economic Zones.
At a September 19 press meeting on the draft Law on Special Administrative-Economic Zones, Tran Duy Dong, director of MPI’s Department for Economic Zones Management, revealed that if enacted, this law will largely benefit international investors in the three special EZs as they will be able to negotiate on applying foreign regulations to contracts involving foreign stakeholders. Besides, they will have the right to choose the competent foreign court to settle disputes.
Highest incentives for innovative startups
The development of innovative startups seems to be an upward trend in many countries, as mentioned by APEC economies at several meetings recently and was once again emphasised by MPI’s draft law.
Accordingly, maximum incentives may be given to domestic and international investors in the fields of innovative startups, R&D, healthcare, education, as well as specific preferential fields in each special EZ.
However, the draft only specifies the maximum preferential period for which investors in the aforementioned fields are exempted from land lease, water surface lease fees and land use fees. The specific incentives for each project will be finalised by the head of the management authority of each EZ based on transparently published criteria.
Article 18 of the draft Law on Special Administrative-Economic Zones indicates that the maximum period for land use is 99 years for incentivised projects instead of the 70 years for others.
It is hoped that the draft will be completed soon and approved to be officially enacted, so that Vietnam can find a new way to flourish and catch up with regional countries which have been conducting numerous incentive policies for investment in special EZ for a long time.