Beyond industrial zones, special economic zones (SEZs) have become a topic of interest Although still quite new in Vietnam, the positive results from these economic zones according to annual records cannot be denied. So what exactly is a special economic zone? Which areas in Vietnam are currently considered special economic zones? Let’s find out the details with KTG Industrial in the content below!
What is a special economic zone? Special economic zone (SEZ)
A special economic zone (SEZ, short for Special Economic Zone), or often called a special economic zone, is an area specifically designed to create certain growth for that province/city in particular and the country in general. Normally, SEZs will be owned by foreign investors.
Here, businesses have all the necessary conditions to operate production facilities and distribute products to domestic and international consumers smoothly such as roads, electricity systems, waste treatment systems, etc. In addition, businesses present in SEZs receive many special policies and incentives to help increase revenue quickly.
Special economic zones are the foundation for outstanding economic development for a country
Overview of the situation of special economic zones in Vietnam
Inspired by the outstanding success of Shenzhen in applying the special economic zone model, recently, Vietnam has also made constant efforts to operate SEZs in key provinces/cities.
Initially, Vietnam had 6 models of economic zones and industrial parks operating stably such as export processing zones, industrial parks, high-tech parks, border economic zones, open economic zones and coastal economic zones. Although it has brought about remarkable economic progress, in general, there are still some limitations such as not being competitive enough in the international market, low quality of human resources, etc.
For that reason, the Government considered implementing the first SEZ trial in Chu Lai (Quang Nam) in 2002 and has now expanded the scale to 18 coastal economic zones, with a total area of 54,000 hectares [2].
In May 2018, the National Assembly received a draft of incentives for 3 important economic zones of our country including Van Don, Bac Van Phong and Phu Quoc with countless unprecedented preferential policies. Typically, such as low tax payment, full authority to decide on important issues, no requirement on charter capital ownership ratio, etc. When this draft was approved, the estimated investment capital was 1.57 million billion VND [2].
To make the three locations above become prominent SEZs as they are today, we can mention some factors of our country’s “favorable weather, favorable terrain and favorable people” such as having a long coastline (3,260 km), more than 50 seaports, 40 bays and gulfs, more than 3,000 large and small islands,… [3].
Vietnam has enough human resources, quality infrastructure, natural conditions,… to operate SEZs
3 Special Economic Zones in Vietnam
Here are the highlights of famous SEZs in Vietnam:
Van Don – Quang Ninh Special Economic Zone
Van Don is a key district of Quang Ninh province in particular, located in the prominent economic zone in the Northern region in general. Currently, there are many foreign enterprises, typically from China, willing to invest large capital. They commented that the district has better weather conditions, roads, land, etc. than Shenzhen, so this is a place worth considering for long-term economic development.
Specifically, the location has a total area of 2,171.33 km2 (of which the mainland is 581.83 km2), gathering more than 600 islands. Moreover, from Van Don, businesses can conveniently connect with many large countries in the world such as China, India, Japan, etc.
According to the latest statistics (end of 2024), Quang Ninh has attracted 2,877.7 million USD of FDI capital. Most of the capital is used for high-end tourism – culture, modern services (such as airports, seaports, etc.), high technology (such as nanotechnology, energy and environmental technology, etc.). At the same time, the Government’s general goal by 2030 is to “transform” Van Don into the greenest, most modern and smartest coastal city with a total production value of 5.6 billion USD.
Bac Van Phong – Khanh Hoa Special Economic Zone
About 30 km north of Nha Trang city center, in 2006, the Prime Minister officially decided to establish Van Phong economic zone with a total area of over 150,000 hectares [4].
With convenient road conditions (only 65 km from Cam Ranh International Airport; along National Highway 1, 26B, North – South railway, …), all enterprises in Van Phong SEZ can easily transport raw materials, goods, … In addition, this area also has a complete water supply system, electricity supply, hospitals, schools, tourist areas, human resources, … necessary for production and distribution activities.
Sharing the same orientation with Van Don, Bac Van Phong will focus on developing the location to become one of the most high-class tourism and entertainment centers in our country. We can review some impressive projects such as Hon Lon Island Eco-tourism Area (area of 10,000 hectares), Khai Luong Mountain Tourist Area (area of 4,000 hectares), Co Ma – Tu Bong Tourist Urban Area (area of 6,600 hectares),…
Northern Van Phong SEZ aims to become a key tourist area of our country
Phu Quoc – Kien Giang Special Economic Zone
Located in the Southwest sea of our country, Phu Quoc has long been a prominent tourist destination, attracting the attention of domestic and foreign tourists thanks to its favorable geographical location and unique natural beauty. This can be explained simply, not only because of its favorable geographical location (120 km from Rach Gia, 50 km from Ha Tien town,…) but also because it is “endowed” with captivating scenery and abundant marine mineral resources.
By 2018, the Government decided to develop the “pearl island” in the direction of a special economic zone with a mobilized capital of 400,000 billion VND. Thanks to the remarkable growth in the tourism – resort industry, Phu Quoc received 271 investment projects on a total area of 10,426 hectares, including 28 FDI projects (total capital of 292 million USD) [5].
Realizing the outstanding potential of Phu Quoc, the People’s Committee of Kien Giang province planned to build the island district by 2030 to become a special urban area of sea tourism – a center of high-quality eco-tourism and resorts. Of course, all infrastructure, roads, … here are of international standards to improve the country’s economy to the maximum.
Benefits of investing in special economic zones in Vietnam
Although “born later” than other countries, the number of SEZs in Vietnam is constantly increasing and each area has achieved an ideal growth rate, according to plan. This is the reason why Vietnam attracts continuously increasing foreign and domestic investment capital.
This can be explained simply with the potential that Vietnam brings to them below:
Incentives from the Government
In order to create the best conditions for domestic and international investors in the SEZs, the Vietnamese Government constantly changes incentives on tax rates, simplifies procedures, etc. Specifically:
- Allowing investors to receive all revenues from the special zones within a certain period of time.
- Allocating support budgets for local business owners to build infrastructure at the initial stage.
- Diversifying types of transactions in accordance with international practices.
- It is possible to establish a separate financial center to facilitate payment when needed, but under strict supervision of the state.
- Apply a stable tax rate of 10% for 30 years, then exempt tax for 4 years and reduce tax by 50% for the next 9 years.
Vietnam always creates the most favorable conditions for all businesses to invest
Competitive costs
Comparing Vietnam with other Southeast Asian countries, our country has extremely competitive prices for hiring labor, factories, machinery, etc. This has been assessed by some reports as the market with the lowest average operating costs in the region, only higher than Cambodia and Myanmar. Thereby creating great conditions for foreign enterprises to recover capital early and grow much faster.
Infrastructure
In addition to scientifically utilizing available resources, Vietnam always has policies to upgrade infrastructure including inside and outside SEZs. Thanks to that, the process of transporting raw materials and distributing finished products in all industrial parks in general becomes easier. According to the latest information, Vietnam has officially exploited 1,729 km of highways and strives to reach 3,000 km by 2025. Along with that, our country actively improves the quality of infrastructure to meet international standards, but still ensures green – safe criteria.
Integrated Ecosystem
Based on the national strategy 2021 – 2030, local authorities in areas with operating SEZs always prioritize the implementation of architectural construction according to a model that puts ecological balance first. Therefore, all investors must strictly comply with regulations on land, environmental protection, raw material exploitation processes (if any), etc.
Conclusion
At this point, we hope that readers have a better understanding of the concept of special economic zones. Currently, Vietnam is operating 3 special economic zones with impressive growth rates. This can prove that our country is a potential market for both industrial investment and tourism-related industries.
