Aug 28, 2012

Vietnam - Building special economic zone – the inconclusive itinerary

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VietNamNet Bridge – As for developing countries, special economic zone is considered a reasonable model that helps develop the national economies. However, the facts have not substantiated this in Vietnam.

Special economic zones once existed in Vietnam

The first special economic zone was the Vung Tau – Con Dao Special Zone, which was established following the National Assembly’s Resolution released in May 1979.

Vu Tuan, on behalf of the then government council, when presenting about the plan to set up the Vung Tau – Con Dao project, emphasized that the special economic needs to be established to serve the development of the oil and gas industry.

After 12 years of operation, the special economic zone was dissolved in 1991, following by the important event of the establishment of a new province – Ba Ria-Vung Tau. There was not much explanation about the decision. However, opinions from the well informed circle said the model of special economic zone could not bring any differential things.

The country’s oil and gas industry made a big leap in its development during the 12 years. However, this should be explained by the natural resources and the international support, not by the existence of the special economic zone.

As such, in thoughts of Vietnamese people, the first special economic zone development plan failed completely.

Minister of Science and Technology Nguyen Quan, in a recent workshop, when recalling that time, said: “We did not go to the last gasp, while developing special economic zones needs this.”

The 15 economic zones

However, despite the dissolution of the Vung Tau-Con Dao special economic zone, the idea of developing special economic zones has never fallen into oblivion as people thought.

Local authorities and state management agencies still believe that it’s necessary to develop economic zones which serve as the motive force leading the national economy to develop.

Therefore, a new movement of setting up economic zone was triggered, which has led to the establishment of 15 economic zones out of the 18 zones programmed. The 15 economic zones cover an area of 662 hectares.

When determining to develop economic zones, Vietnamese local authorities recalled the Shenzhen story. Thirty years ago, it was an underdeveloped small village. However with 100 million yuan worth of capital allocated by the Chinese government, a special economic zone has been established, which then has made big leaps in its development.

However, due to many reasons, including the lack of the long term vision, a lot of economic zones remain half-finished, or have been idle because they cannot attract investors.

The noteworthy thing is that the economic zones cannot compete with other economic zones in the region in attracting investors, and they finally compete with each other.

Dr Vo Dai Luoc from the Asia Pacific Economics Center has noted that in Vietnam, there has been no open economic zone in the true sense of the word, and that all the economic zones established so far are simply industrial zones with many limitations.

The officials from the Ministry of Planning and Investment have revealed that the ministry is considering re-program the development of the economic zones. It is very likely that only five economic zones would receive the investment from the state budget.
If this comes true, other economic zones would turn into industrial zones as described by Luoc

What Quang Ninh expects for?

The failure with the economic zones has made people keep doubtful about Quang Ninh province’s plan to set up two new economic zones of Mong Cai and Van Don.

However, some experts have expressed their support to the plan. They said that the key for developing economic zones is a reasonable special mechanism to attract investors, and if Quang Ninh can do that, it would succeed.

Compiled by Kim Chi


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