It’s hard to see any logic behind Vietnam’s choice for special economic zones, all of which are far from the biggest cities.
Vietnam is proposing the establishment of three special economic zones (SEZ),Van Don in Quang Ninh, Bac Van Phong in Khanh Hoa and Phu Quoc in Kien Giang. But I just can’t see any clear goal or vision behind these choices.
When we talk about competitive economies, we think of metropolises racing to attract foreign investment and multinational organizations. Just take a look at Beijing, Shanghai, Tokyo or Seoul. The backbone of development lies in urbanization going hand in hand with industrialization. It’s the big cities that make a country competitive.
Not for Vietnam, apparently. The government seems to think that our cities are overpopulated and need to be “toned down,” and that investment should be poured into rural development. Such approach goes against development trends.
In my eyes, Van Don currently stands the best chance as a SEZ. Phu Quoc might work as a SEZ to boost tourism. As for Bac Van Phong, however, I have yet to see any potential coming from this place.
With incoming investments, these three areas might bring something to the table. However, it would be difficult for them to deliver breakthrough results that would boost Vietnam’s economy.
The same principle applies to all countries. There need to be clear goals and vision when it comes to establishing SEZs. Those goals might be to boost growth by attracting foreign investment, developing infrastructure; to support an overarching economic strategy; it could be the place to test new frameworks and policies and a means to ease pressure on population growth and unemployment.
More specifically, a SEZ needs to be placed close to large markets. For example, Shenzhen in China’s Guangdong Province is a good place to establish a SEZ, as the city’s location makes it the gateway between Hong Kong and the huge market of mainland China. Or the Iskandar SEZ in Johor, Malaysia is particularly well-developed thanks its proximity to Singapore and international maritime trade routes.
As for Vietnam, if we want to attract multinational corporations to SEZs, my personal top choices would be the Hoa Lac Hi-tech Park in Hanoi and the Thu Thiem New Urban Area in HCMC. These two places entail all necessary factors to attract investors, such as proximity to a large pool of high skilled workers, international markets and developing infrastructure.
For instance, if someone invested in Van Don, they’d need thousands of engineers, and other high skilled workers. Will this area be able to meet that demand fast enough? It’d be very difficult. But it’d be easy if it was located near Hanoi, where there are plenty of talented workers. It’d be best to let Hanoi and HCMC act as the driving forces of Vietnam’s economy.
A good SEZ, in my opinion, should provide investors with maximum freedom to experiment with different frameworks, not just simply offering tax, land and financial incentives. For example, the SEZ in Pudong District, Shanghai is a huge success due to lax regulations. Instead of requiring businesses to register, they can just announce their opening; instead of listing legal business activities, only the illegal ones are specified.
As such, Vietnam’s SEZs should be part of a comprehensive development strategy, something I couldn’t find in the government’s draft law. At the same time, the top leader of each SEZ should be given more autonomy in decision making so that we don’t lose big investor due to prolonged waiting for approval from higher level authorities.
Regarding the cost of building the three SEZs, $44 billion, the state budget will only partially cover it, with the rest coming from other sources. During the initial phase, I believe the state budget will need to pay for infrastructure development but such a huge investment needs to be subject to careful cost-benefit analysis. If we pour millions of dollars in there without calculating return on investment, corruption will be inevitable.
*Dr. Huynh The Du is a lecturer at Fulbright University Vietnam, HCMC.
Source: e.vnexpress.net
Vietnam’s business environment and competitiveness have been improved significantly over the past three years thanks to a range of solutions, according to the Ministry of Planning and Investment (MoPI).
The country’s efforts have been reflected through the World Bank’s ease of doing business rankings in 2016, in which Vietnam climbed to the 82nd position from the 91st last year. This is the first time the country has made a big stride in the rankings since 2008.
Vietnam also claimed the 47th position among 127 economies surveyed in the 2017 global innovative index (GII) report, the highest ranking to date, up 12 places from last year’s report, according to the World Intellectual Property Organisation (WIPO).
The World Economic Forum (WEF)’s Global Competitiveness Report 2017-2018 released in September also ranked Vietnam 55th overall, up five places from 2016.
However, the MoPI said that the quality of regulations on business conditions remained low, showing a lack of a management system based on risk assessment.
Besides, the supervision system of regulations on business conditions has proven ineffective, the ministry said, pointing to inadequate acknowledgement of reforms of licences and business conditions.
The ministry, therefore, proposed abolishing about 3,000 unnecessary, irrational, ineffective business conditions and revamping State management over production and business activities on the basis of principles and practices set by the Organisation for Economic Cooperation and Development (OECD).
The ministry has called on the Prime Minister to request ministers and Chairpersons of municipal and provincial People’s Committees to closely supervise the implementation of Resolution No. 19 on tasks and solutions to improve the business environment and national competitiveness.
The ministries should promptly review and propose reducing investment and business conditions in the State management area and report to the PM before December 2017, the MoPI said.
At the same time, the MoPI will partner with the Government’s Office and relevant ministries to organise more dialogues with enterprises to clear up their concerns and petitions in a timely manner.
Source: VNA
On May 30/05/2018, the General Department of Customs issued the Plan No.3009/KH-TCHQ on the implementation plan of automatic customs management system at ports, warehouses and yards. This plan took effect from the date of its promulgation.
Accordingly, Plan No.3009/KH-TCHQ sets out the principles and roadmap for implementing the system as follows:
– Having high transaction frequency and volume of import and export goods;
– High availability of information technology systems;
– Deploying synchronously from ports to warehouses and yards to ensure the coherence between the professional operations in the supervision of goods transportation.
– Review and evaluate the current situation and determine the implementation of enterprises: Completed in June, 2018;
– Development of implementation plan: Completed in July 2018;
– Other contents such as sending staff to participate in training, organizing seminars, introducing, guiding and supporting departments and enterprises to study information exchange process: To be carried out in parallel during implementation process.
By providing a detailed roadmap with drastic measures, the General Department of Customs has shown the industry’s determination to deploy an automated customs management system at ports, warehouses and yards to speed up the implementation of the state management.
On May 22, 2018, the Government issued Decree No.82/2018/ND-CP regulating on management of industrial parks and economic zones. This Decree took effect since July 10, 2018.
Accordingly, Decree No.82/2018/ND-CP regulates investment preferences for industrial zones and economic zones as follows:
With specific and detailed regulations, Decree No.82/2018/ND-CP is expected to facilitate the development of industrial zones and economic zones, thereby encouraging and attracting invest in these areas.
On May 26, 2018, the Standing Committee of the National Assembly promulgated Resolution No.528/2018/UBTVQH14 on expenses for management of social insurance and unemployment insurance for the period of 2019 – 2021. This Resolution took effect since January 01, 2019.
Accordingly, Resolution No.528/2018/UBTVQH14 regulates the level of expenses for management of social insurance and unemployment insurance for the period of 2019 – 2021 as follows:
Thus, Resolution No.528/2018/UBTVQH14 has specified the expenses for management of social insurance and unemployment insurance for each period, which plays an important role in the management of the State, thereby contributing to the use of budget savings and efficiency.
On May 23, 2018, the Party Central Committee issued Resolution No.28-NQ/TW on reforming social insurance policy. This Resolution took effect from the date of its promulgation.
Accordingly, Resolution No.28-NQ/TW regulates the following important reforms:
Therefore, Resolution No.28-NQ/TW regulates the important reform of social insurance policy, thereby contributing to improving the quality and effectiveness of social insurance policies in Viet Nam.
On May 22, the Government issued Decree No.81/2018/ND-CP detailing the Commercial Law regarding trade promotion activities, including sales promotion, fairs and exhibitions. This Decree took effect since July 15, 2018.
Accordingly, Decree No.81/2018/ND-CP regulates the maximum discount rate for promoted goods and services as follows:
With specific regulations, Decree No.81/2018/ND-CP aims at minimizing unfair promotion programs and competition, thus causing negative impacts on the market economy recently.
On May 24, 2018, the Ministry of Industry and Trade issued Circular No.10/2018/TT-BCT detailing some articles of the Government’s Decree No.40/2018/ND-CP dated March 12,2018 on management of business activities by multi-level mode. This Circular took effect since July 15, 2018.
Accordingly, the Circular No.10/2018/TT-BCT regulates the framework for the training program on legal knowledge on multi-level mode and the procedure for organizing the examination of legal knowledge on multi-level mode as follows: :
– Training duration: at least 08 hours;
– Program content: Overview of multi-level sales; the law on management of business activities in a multi-level mode; code of professional ethics of multi-level sales; the law on protection of Consumers’ Rights; the law of advertising.
– Checking the completeness and validity of registration dossiers on examination and certification of legal knowledge on multi-level mode according to regulations;
– Planning time, place, mode of examination;
– Notification on examination plan;
– Organizing the examination;
– Evaluation of the test results;
– Notification on examination results.
Therefore, it can be seen that Circular No.10/2018/TT-BCT specifies the content on propaganda to improve legal knowledge on multi-level mode set by the Government in Decree No.40/2018/ND-CP, thereby ensuring that individuals and organizations after attending training courses have the basic legal knowledge to carry out multi-level business activities in accordance with law.
On May 04, 2018, the Ministry of Finance issued Circular No.41/2018/TT-BTC guiding some contents on financial handling and valuation of enterprises when transferring state-owned enterprises and single-member limited liability company whose 100% charter capital is invested by a State into a joint stock company. This Circular took effect since June 18, 2018.
Accordingly, Circular No.41/2018/TT-BTC regulates the inventory and classification of assets before equitization state-owned enterprises as follows:
– Assets used in production and business activities.
– Assets do not need to use, assets are stagnant, slow rotation, property awaiting liquidation.
– Assets formed from reward and welfare funds (if any).
– Assets leased or borrowed, supplies and goods kept for preservation, processing, agency, consigned, joint venture assets and other assets don’t belong to the enterprises.
– Assets attached to land which must be handled according to the plan on re-arrangement of house and land establishments under decisions approving by competent agencies in accordance with the law on rearrangement of state-owned houses and land.
– Assets of non-business units with revenues (land and housing establishments of non-business units with revenues under the law on reorganization and treatment of state-owned land and houses), non-business operating assets .
– Assets awaiting settlement decisions of competent agencies.
– Financial investments (contributing capital to joint ventures, contributing capital to establishing limited liability companies and other capital contribution activities) equal to the value of land use rights.
– Other assets (if any).
With detailed and specific regulations, Circular No.41/2018/TT-BTC is expected to provide a solid legal basis for the process of valuation of state-owned enterprises before equitization, thereby ensuring the transparency of this activity, avoid causing loss of state property.
On May 29, 2018, the State Bank of Vietnam issued Decision No.1158/QD-NHNN on mandatory reserve ratio applicable to credit institutions and branches of foreign banks. This Decision took effect since the maintenance period for the mandatory reserves in June 2018.
Accordingly, Decision No.1158/QD-NHNN regulates on mandatory reserve ratio applicable to credit institutions and branches of foreign banks as follows:
– Demand payment in Vietnam dong and maturity of 12 months is 3% of total deposit balances subject to mandatory reserve;
– VND deposits with a maturity of 12 months and over are 1% of the total deposit balances covered by mandatory reserve;
– Deposits in foreign currencies of credit institutions abroad are 1% of the total deposit balances covered by mandatory reserve;
– Deposits in foreign currency subject to other mandatory reserves than demand deposits and less than twelve months shall represent 7% of the total deposit balances covered by mandatory reserve;
– Deposits in foreign currency subject to mandatory reserves for other terms of 12 months or more shall be equal to 5% of the total deposit balances covered by mandatory reserve calculation.
– To submit Vietnam dong for demand deposits and on terms less than 12 months shall be 3% of the total deposit balances covered by mandatory reserve calculation;
– VND deposits with a maturity of 12 months and over are 1% of the total deposit balances covered by mandatory reserve;
– Deposits in foreign currencies of credit institutions abroad are 1% of the total deposit balances covered by mandatory reserve;
– For deposits in foreign currency, the mandatory reserve for demand payments and maturities of less than 12 months shall be 8% of the total deposit balances covered by mandatory reserve;
– Deposits in foreign currency subject to mandatory reserves with another maturity of 12 months or more shall correspond to 6% of the total deposit balances covered by mandatory reserves.
Therefore, as compared with the previous documents, Decision No.1158/QD-NHNN has adjusted to increase the mandatory reserves for credit institutions to ensure credit security, risk management better in the financial market.
