Vietnam warned its “SEZ dream” may make it suffer

 Other countries have SEZs, why can’t we?

There are over 3,500 SEZs operational in 135 countries all over the world. The great successes of the SEZs have prompted Vietnam to follow the countries to develop SEZs to attract foreign investments.

The eighth Communist Party’s Central Committee’s Meeting came to the conclusion that Vietnam would set up three SEZs: in Van Don-Quang Ninh Province in the north, Bac Van Phong in Khanh Hoa Province in the central region, and on Phu Quoc Island in Kien Giang Province in the south.

According to the Ministry of Planning and Investment, plans for the Van Don and Bac Van Phong SEZs have been submitted to the government for approval. Meanwhile, the plan on the Phu Quoc SEZ is still being compiled.

In fact, Vietnam began dreaming of setting up SEZs, which offer special investment incentives to attract investments, a long time ago.

In 1979, the Vung Tau-Con Dao SEZ was established, which focused on developing oil and gas projects. However, the existence of the SEZ was annulled in 1991, after the government determined that it would not bring special profits.

Quang Ninh provincial authorities once sought permission to develop two SEZs, Van Don and Mong Cai. However, only one SEZ has been approved.

Most recently, the Quang Ngai People’s Committee has also sent words intimating that it wants to develop an SEZ in the province on the basis of the existing Dung Quat Economic Zone (EZ).

While waiting for the opportunities to develop SEZs, Vietnam has been developing many EZs. It has planned to build 18 coastal EZs, of which 15 have been set up, covering an area of 54,000 square hectares.

However, Vietnam is still keen to develop SEZs. Vuong Dinh Hue, Head of the Communist Party’s Economics Committee, noted that Vietnam still does not have any SEZ in the true sense of the word, which can attract giant investors and advanced technologies.

Hue, while confirming the consistent policy of Vietnam on developing SEZs to create key economic regions, said that Vietnam, one of the 10 countries with the longest coasts, has great potential to do this.

Might warnings make Vietnam shrink back?

While Vietnamese show their strong determination to develop SEZs, their enthusiasm has been tempered by warnings from international experts that many countries have suffered failure with their SEZs.

Andrew Grant, Director of McKinsey Singapore, said in order to successfully develop SEZs, Vietnam needs to apply sufficiently attractive policies and investment incentives.

Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management (CIEM), has also warned that SEZs require special mechanisms, or Vietnam will fail with the SEZ model.

Thanh believes that Vietnam should have no more than two SEZs, Phu Quoc and Van Don, which have favorable enough geographical conditions.

Meanwhile, Dr Le Dang Doanh, a well-known economist, believes that Vietnam should now consider developing only one SEZ, in Phu Quoc, with a second being developed perhaps tens of years later.