Knowledge center

What the Special Economic Zones (SEZs) is?

Special Economic Zones (SEZs) have been formed and developed strongly in many countries worldwide due to the superiority that it brings. However, this is still a relatively new concept for Viet Nam in general and Vietnamese law in particular. At this time, the current law does not have any document stipulating the above issue. Therefore, today ATIM LAW FIRM will provide readers with the most general information about the SEZs based on synthesis and analysis from reliable sources.

China is considered the first place marking the establishment of the first special economic zone and also the most prosperous developed country with this model. However, this model was only known in Vietnam in the early 1990s, thanks to the appearance of foreign investment capital.

1)    Overview of the Special Economic Zone (SEZs)

In October 2017, the Draft Law on Special Economic Zones was submitted by the Government to the National Assembly for comments at the 4th session. However, due to many shortcomings, many points are not feasible as well as causing some difficulties. for people in the area where a special economic zone is expected to be established, so up to the present time, there have not been any specific regulations to strictly manage issues related to this model.

According to current Vietnamese law, there is no specific law on the above SEZs. Therefore, the definition of a SEZs in Vietnam is inherited from countries around the world, so it is possible to understand the definition of a Special Economic Zone (Special Economic Zones) (SEZs) is an inclusive term referring to an economic area that includes: Free Trade Zones (FTZs), Export Processing Zones (EPZs), and Tariff Zones (Freeports, FPs).

Special Economic Zones are divided into 5 categories as follows:

• Special Economic Zone on trade
• Special Economic Zone for trade and industry
• Special Economic Zone on the technical economy
• General Special Economic Zone
• Transnational Special Economic Zone.

Around the world, the SEZs have been told that has an important influence on key audiences including: developing countries, transnational corporations and domestic investors. Especially, for developing countries, the construction of SEZs intended for: (i) promoting trade; (ii) foreign exchange development; (iii) employment; (iv) attracting foreign direct investment; (v) exploitation of natural resources; (vi) objectives of industrialization; (vii) regional development; (viii) removing barriers on trade policies for exporters; (ix) checking the market opening policy; (x) political goals; (xi) technological innovation; (xii) tax income; (xiii) diversify industries and specialization.

2)    The situation of Vietnam’s Special Economic Zones

According to statistics, in the world, there are more than 200 special economic zones in more than 60 countries, depending on each country, they will have different names such as free economic area, and free industrial site, export promotion area. There are currently 03 economic zones oriented to development in Vietnam according to the particular economic zone model: Van Don’s economic zone, Bac Van Phong’s economic zone, and Phu Quoc’s economic zone:

• For Van Don’s Economic Zone: it was established in 2007 with the goal of becoming an island eco - tourism are and developing high – quality services, building an aviation center and trade hub regions of the world in Quang Ninh Province.
• For Bac Van Phong’s Economic Zone: it was established in Khanh Hoa province in 2006. It is known that this place develops very strongly in tourism and owns Dam Mon deep-water port, creating extremely convenient traffic between regions in the area. convenient.
• For Phu Quoc’s Economic Zone: was established in Kien Giang province in 2013 and this is still a new area being put into operation.

However, due to the lack of a common legal framework, up to now, 2 out of 3 economic zones have been approved by the Prime Minister to suspend the implementation of the master plan, in which the economic zone has been approved by the Prime Minister. Phu Quoc’s has been suspended since August 2019 and the latest is the Bac Van Phong’s special economic zone from June 2020. As for Van Don economic zone, on February 17, 2020, the Prime Minister issued Decision No. 266/QD-TTg to approve the adjustment of the general planning on the construction of the Van Don economic zone until 2040.

Through the above arguments and practices, it can be seen that the SEZs is still a new relatively new model for Viet Nam. Despite possessing many advantages, this model still has many shortcomings, it is necessary for the Government and legal legislative agencies to study specifically and clearly to be able to come up with an appropriate legal framework and apply it in the future, so this model will develop according to the goals it has set out.

Tran Ngoc Long - Paralegal