Leaders question whopping $44 bil price tag for new special economic zones in Vietnam

Vietnam needs to raise a massive $44 billion to develop three special economic zones (SEZs), authorities said at a meeting on Monday.

Members of the legislative National Assembly were discussing once again whether to launch the SEZs, Van Don in northern Quang Ninh province, Bac Van Phong in central Khanh Hoa province, and Phu Quoc in southern Kien Giang province.

The Ministry of Finance has calculated that $44 billion will be needed to develop the zones, with the state budget covering from 10 to 19 percent of each one and the rest coming from investors.

The total figure amounts to 65 percent of Vietnam’s total government spending last year, which hit $67 billion, and is more than four times as much as the country spends on education each year.

The sheer size of the figure was questioned by leaders of the National Assembly at the meeting. “What benefits will these areas bring to our country?” asked Phung Quoc Hien, the National Assembly's vice chairman.

The economic benefits these zones will potentially bring have not been made clear, said Hien. Convincing figures are required before we decide to invest in them, Hien added.

“The country's annual investment budget for the next five years is only $88 billion. How can we put half of that into these zones?” asked National Assembly Chairwoman Nguyen Thi Kim Ngan.

Ngan also asked officials to be clear that most of the $44 billion will come from investors, not from the state budget.

Legislators also expressed their concerns over a recent land rush in the three areas following the news they have been earmarked as SEZs.

Speculators have been taking the opportunity to sell land at inflated prices to investors, which could potentially create a real estate bubble even before the areas have officially become SEZs.

“I ask the leaders of these zones to be careful about speculators. What if the draft law is not approved?” said Tong Thi Phong, the NA's vice chairwoman. 

Vietnam's draft law on SEZs would allow investors to enjoy tax and land use incentives, as well as simplified administrative procedures. The bill could open the door to local and foreign investors.

The bill has been under discussion since last year and will continue to be debated at the 5th session of the National Assembly, which is scheduled for May 20.