Nine economic zones have been established so far in the country, under the Prime Minister’s decision and at least three more economic zones are likely to be set up soon. But whether these economic zones will actually become dynamic economic entities to boost the country’s socio-economic development remains to be seen.

The establishment of these economic zones started in June, 2003 with the setting up of Chu Lai open economic zone but it is too soon to evaluate the socio-economic efficiency of the economic development model. However, it is undeniable that the operations of economic zones such as Chu Lai, Dung Quat, Nhon Hoi and Chan May have made significant progress in attracting domestic and foreign investments.
By July, 2006, as many as 282 projects registered to operate in these economic zones, with total investment capital of more than US$10 billion, of which 60 projects valued at US$60 million were put into operation. Chu Lai open economic zone has 120 projects with total registered capital of US$1.4 billion; Nhon Hoi economic zone has 40 projects worth US$3.3 billion and Lang Co-Chan May has 25 projects valued at US$280 million.
Economic experts said that the established economic zones have met geographical advantages criteria as they are near sea ports and airports accessible to key national and international transport routes and capable of ensuring infrastructure facilities. Notably, incentive policies and open mechanisms for economic management offered by these economic zones are a real attraction for foreign investors.
All these economic zones enjoy the best investment incentives. An income tax rate of 10 percent is applied for the first 15 years of operation but enterprises are exempt from enterprise income tax in the first four years and they can enjoy a 50 percent reduction of income tax rates in the next nine years. Both Vietnamese and foreign high income earners working in the economic zones also enjoy a 50 percent reduction of their income tax rates.
In addition, projects focusing on high technology sectors and those of great significance to the country’s socio-economic development that have been approved by the Prime Minister can enjoy income tax rates of 10 percent during the implementation of the project. Investors in the economic zones including foreigners, overseas Vietnamese and their relatives are granted valid entry-exit visas during their period of working and living in Vietnam.
Building infrastructure in EZs also demands attention. The government has allowed localities to mobilise capital from all sources in addition to the State budget allocation. In 2004, the State budget allocated VND242 billion for infrastructure building in Dung Quat and Chu Lai Ezs.
Experts calculate that investment capital of between VND2,000 and VND3,000 billion is needed for infrastructure development in each EZ. Based on the existence of 10-12 EZs, the State needs VND24,000 – 26,000 billion. That is a heavy undertaking and that will require another five or 10 years to achieve. In the meantime, the chances of the EZ bringing in profits seem to fade away.
Experts believe that the economic zone is a new model. Vietnam has no experience in building such zones and implementation has been flawed.
The reality shows that there has been no master plan governing the development of EZs, and that no requirements have been set for their establishment.
In principle, EZs must be located in advantageous positions near airports and seaports. Each EZ must cover a minimum area of 10,000ha and have at least one key project that plays an important role in the national economy.
An expert from the Ministry of Planning and Investment says that many of the existing EZs have not meet all of these requirements. Only Dung Quat and Nghi Son EZs have national projects, namely the Dung Quat Oil Refinery and Oil Refinery No 2. Other EZs are unable to justify their existence.
He also says the success of EZs is measured by the level of socio-economic development in the area.
Experts say that Vietnamese EZs are still in their infancy, and it will take several years for the zones to take shape and turn a profit. From now till 2020, in addition to building approved EZs, it is also necessary to develop a network of economic zones across the country with modern infrastructure and to identify a key national project for each EZ. It is only through these means that EZs will become a driving force behind national development.

Source: www.vov.org.vn