Chu Lai Open Economic Zone Attracting Investment with Special Mechanism
What are major successes of Chu Lai Open Economic Zone in investment attraction and infrastructure construction since it was officially established in 2003?
Emerged from a sandy soil with a very poor agricultural production, Chu Lai Open Economic Zone now houses many factories, workshops, tourist sites and townships. Many very large projects are located in the open economic zone, e.g. Chu Lai - Truong Hai Automotive Engineering Complex, Chu Lai Float Glass Plant, Chu Lai Soda Production Factory and Cat Vang Ecological Tourist Site. Operational projects in Chu Lai OEZ have considerably contributed to the overall development of Quang Nam province, generated key industrial products and increased local budgetary revenue. Many important infrastructure projects have made the initial formation of the open economic zone like Cua Dai Bridge, three coastal rescue routes, coastal Thanh Nien Road, Tam Hiep Port, Ky Ha Port, a road connecting National Road 1A to the highway, roads to Chu Lai Airport, central hospitals and many resettlement zones.
To date, Chu Lai Open Economic Zone is housing a total of 85 investment projects with a combined registered capital of US$1.5 billion, of which 56 projects valued at over US$750 million are in operation. Projects in the economic zone paid VND12,191.5 billion to the local State Budget in the 2006-2012 period, accounting for 50.67 percent of the province’s budgetary income, of which the year 2012 contributed VND3,295.5 billion and accounted for 58.8 percent of the province’s total budgetary revenue. This source of income has helped Quang Nam province balance a half of its investment capital need.
Investment environment, policies and mechanisms are constantly improved and perfected. Typical mechanisms and policies include investment policy for Chu Lai Open Economic Zone and Free Trade Zone; mechanism for investment in passageways into Ky Ha Port for vessels of 20,000 DWT; and tax break mechanism for Truong Hai Auto Company. These policies and mechanisms are praised by investors because they help reduce burdens on them when their projects are yet to generate profits.
As a pioneering and successful economic zone in the country, the development of Chu Lai Open Economic Zone is both an opportunity and a challenge for Quang Nam province. What are the challenges and opportunities? How has the province overcome challenges and grasp every opportunity?
Chu Lai Open Economic Zone has confronted a lot of challenges in the course of construction and development. For example, the financial mechanism for the economic zone at the early time is unstable and yet to meet investment requirements. Investment incentive mechanism is unattractive. Social and technical infrastructure was still weak. However, I think that objective and subjective challenges in the past 10 years are not very serious as the Chu Lai Open Economic Zone was set up and developed as a new form of economic development in a locality with many unfavourable economic and social conditions. In return, we received the active ad timely support and guidance from provincial leaders, the close collaboration of relevant departments and organisations, the determination and effort of the staff, the Chu Lai Open Economic Zone Authority and business community when we announced viewpoints, strategies and investment development plans of the economic zone.
These initial positive results however fell short of initial expectations of the Politburo and the Government when they advocated the formation and development of Chu Lai Open Economic Zone.
We advised the Provincial People’s Committee to introduce a suitable human resource training mechanism to meet labour requirements of investment projects. In addition, we identified roles and functions of local governments, related organs and the Chu Lai Open Economic Zone Authority to consult the Provincial People’s Committee on coordination and cooperation regulations on land management, planning, status management, environmental resources and others. Thus, we not only effectively perform good State management but also do additional function of serving investors.
According to experts, Chu Lai Open Economic Zone now lacks special, unique policies and mechanisms to attract strong flows of investment capital. So, how will the province overcome this limitation?
As I said above, incentive policies are not enough to offset disqualified human resources, small local market scale and unsuitable infrastructure for large-scale projects because investors will have to spend more to deal with such shortcomings. From that reality, Quang Nam province has actively studied special mechanisms and policies for specific projects like investment for passageways into Ky Ha Port, Cua Dai Bridge, Nam Hoi An Resort and Truong Hai Auto Company. Therefore, special mechanisms for investors are necessary conditions to build and develop infrastructure works - the decisive factor to the success of Chu Lai Open Economic Zone.
In addition, we advised the Provincial People’s Committee on specific incentive mechanisms for investors when they invest in Chu Lai Open Economic Zone as stipulated in the Decision No. 12/2007/QD-UBND dated May 15, 2007. Chu Lai Open Economic Zone also applies a single-window mechanism for investment procedures to save time and expenses for investors. Accordingly, the Chu Lai Open Economic Zone Authority is the lead agency representative of investor to work with relevant agencies to have investment administrative procedures done without asking any charges from investors. This mechanism reportedly shortens the time for investment procedures to a third (compared with general regulations.) seeing difficulties facing investors, Quang Nam province always tries the best to seek and apply suitable solutions to support investors. As a result, investors save a lot of time and expenses when they work with administrative agencies. The efforts of Quang Nam province are highly appreciated by investors.
Could you talk more about development orientation of Chu Lai Open Economic Zone towards 2020?
In the future, Chu Lai Open Economic Zone will continue to be developed as a general economic zone with automotive engineering industry taken as the centre. It will focus on developing service sectors like tourism, urbanisation, transportation, international tourism, and commercial services. The authority will improve investment attraction mechanisms and policies to exert a pull on domestic and foreign infrastructure investors as well as production and business investors.
Chu Lai Open Economic Zone will attract investment capital for the development of supporting industries in order to support driving industries, promote comparative advantages and internal forces sourced from the driving project of Chu Lai Truong Hai Automotive Engineering Complex, establish product-finishing industries, seek to join global production value chains, and accelerate the formation and development of national multi-purpose automotive engineering centre in the economic zone to quicken the process of industrialisation and modernisation to make Quang Nam an industrialised province by 2020.
