Vietnam should think twice before investing in ‘risky’ special economic zones: official

Investing in special economic zones (SEZs) is a risky gamble for Vietnam and requires careful management and resource distribution, a conference in Ho Chi Minh City heard on Tuesday.

National Assembly delegate Truong Trong Nghia said many countries have failed in developing their own SEZs.

“An SEZ’s success depends on proper administration and management. But money, politics and interest groups can skew the original objectives  of the SEZ and cause it to fail,” he said.

He also said that since the proposed SEZs are all very expensive projects, estimated to cost $44 billion to develop, their development needs to be considered carefully.

Application of modern technology should be of particular focus when developing SEZs, and simply providing tax incentives to attract investments is not enough, Nghia added.

“Whoever has the technology can change the world. That’s why the government should look more into this,” he said.

Vietnam is planning to establish three SEZs, which are Van Don in northern Quang Ninh Province, Bac Van Phong in central Khanh Hoa Province, and Phu Quoc in the 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.

The Ministry of Planning and Investment estimated that the SEZs will be able to bring a total of $9.5 billion each year to the state coffers from tax payments and land related fees. In 2030, the total number of jobs created in the three areas is estimated to be over 760,000, with income per capita up to $13,000, 5.4 times the current level.

In response to Nghia, Nguyen Duc Kien, deputy head of the National Assembly’s Economic Committee, said the government would do whatever it takes to boost Vietnam’s development, even if there could be mistakes along the way.

“No matter if we succeed or fail in developing SEZs, we can learn from experience as we pursue our path,” Kien said.

The draft law on SEZs is expected to be discussed during a session of the National Assembly meeting on Wednesday.