Lack of investment capital keeping border gate economic zones deserted

Border gate economic zones not taken shape yet

At Dinh Ba international border gate in Dong Thap, bordering Cambodia, besides the row of low-roofed resettlement houses and areas which have been designated bonded zones, border gate markets and trade centres, there are only deserted land plots. The border market here has been operational since January 2004, but there are only several shops and inns, while the majority of kiosks are used as accommodations or are permanently closed.

In fact, in 2000, Dong Thap province began clearing sites for the Dinh Ba economic zone. A 13 hectare area of clear land was obtained and a border market was built at the Dinh Ba international border gate area. The province’s authorities allocated the budget of 13 billion dong for expanding two residential areas with the total area of 26 hectares. In 2006, the Dinh Ba Border Gate Economic Zone Management Board was officially established; it then ordered heavier investment in infrastructure development.

However, to date, the border gate economic zone has not taken shape.

Similarly, Vinh Xuong border gate economic zone in Vinh Xuong district in An Giang province remains a vast sand bank. The asphalt road leading to the border gate has become a place for farmers to dry paddies and keep smuggled goods.

Thuong Phuoc economic zone in Dong Thap province has been operational since 2001, but administrative areas, bonded warehouses and trade centres have not even past the site clearance phase.

No investment capital

Every year, the state budgets capital for investment in important infrastructure items in border gate economic zones. However, local authorities’ officials said that the allocated capital is just ‘a grain of salt in the sea’, which means it is too little to be of any use.

Nguyen Van Ly, Head of the Dong Thap Border Gate Economic Zones’ Management Board, said that provincial authorities have even had to use capital from other programmes and projects for economic zone development.

To date, the total investment capital for Dinh Ba and Thuong Phuoc economic zones is 150 billion dong, while site clearance and the resettlement area for Thuong Phuoc zone alone cost nearly 50 billion dong.

“The capital demand is very big, estimated at one thousand billion dong. Meanwhile, the central budget gives money in dribs and drabs and local budgets are limited. That explains why the works have been going slowly,” Ly said.

Similarly, An Giang province, which has three economic zones, only gets 8-12 billion dong a year. “In 2009, we will get 15 billion dong, but this sum proves to be too small,” said Le Huu Trang, Deputy Head of the provincial border gate economic zone management board.

Under the regulations on border gate economic zone development, besides capital from the state budget, local authorities have the right to call for capital from domestic and foreign investors. The amount they are able to get largely depends on the finance and credit incentives given to investors.

A policy was once applied that people visiting economic zones could enjoy tax exemptions on 500,000 dong worth of goods per person per day at the trade centres there. With the mechanism, a lot of enterprises applied to open duty-free supermarkets, committing to invest in infrastructure items in the zones, including river ports and bonded warehouses.

However, the policy was removed in early 2009. As a result, the investment projects investors committed to before have been cancelled and border gate economic zones have fallen again into dormancy.

In the latest news, provincial authorities have proposed that the Government re-initiate the policy on exempting tax for purchasing goods at border gate economic zones. They said that only tax exemption policies can help attract the necessary investment into the zones.