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Vietnam’s industrial zones (IZs), export processing zones (EPZs) and economic zones (EZs) have blossomed over the past 20 years thanks to the development of a raft of policies and mechanisms conducive to investment attraction, writes Vu Dai Thang, Director of the Ministry of Planning and Investment’s Department of Economic Zones Management
 

The constitution of legal regulations and relevant policies on the development of IZs, EPZs and EZs in Vietnam has passed four stages. At the first stage during 1991-1997, Decree 322-HDBT dated October 18, 1991 on EPZs was issued. Accordingly, EPZs were considered a legalised model to attract foreign investors in the spirit of the Foreign Investment Law.

In the second stage, from 1997 to 2006, all regulations governing IZs, EPZs and EZs were introduced in the governmental Decree 36/ND-CP dated April 24, 1997. At this stage, decentralisation to some IZs and EPZs management authorities was put into practice.

In the third stage, from 2006 to 2008, the Investment Law 2005 and Decree 108/2006/ND-CP were promulgated seeing new regulations, focusing on greater decentralisation to local authorities, increasing the rights and responsibilities of municipal and provincial people’s committees, local departments of planning and investment and IZs and EPZs management authorities, in licencing and withdrawing investment certificates.

Decree 108/2006/ND-CP replaced the Decree 36/ND-CP, but regulations on management of IZs and EZs in other fields out of investment field were not issued immediately, resulting in a lack of legal framework and causing difficulties for local authorities and enterprises in managing IZs and EZs during this period.

In the fourth stage, after 2008, Decree No 29/2008/ND-CP was promulgated with additional regulations on operations of IZs and EZs in the bid to boost decentralisation on a national scale.
Throughout these four stages. all regulations relating to IZs, EPZs and EZs operations including planning, establishment, expansion, investing, investment policies and management were completed, and so satisfying the actual needs of local authorities and the business community.

Decree 29/2008/ND-CP has remarkably contributed to the completion of management mechanism and policies for IZs, EPZs and EZs development. This decree provides specific regulations in relate to state management on IZs, EPZs and EZs in many fields such as planning, investment, construction, land management, environmental protection, labour, trade and customs.

The decree stressed the policy of decentralisation, authorisation from central management authorities, provincial authorities to IZs and EZs management units and standardising management model on the principle of a “one door” policy via IZs and EZs management units.

Generally, ministries and relevant agencies have timely and actively practised all the regulations introduced in Decree 29/2008/ND-CP and they submitted for prime ministerial approval to issue important circulars, decisions or guidance documents in the following fields:

IZs, EPZs, EZs environmental protection: The Ministry of Natural Resources and Environment issued the Circular 8/2009/TT-BTNMT dated July 15, 2009, providing regulations on environmental management and protection issues at IZs, EPZs and EZs, which clarifies specific duties and responsibilities of relevant agencies.

Authorisation of granting business licences, commodities trading activities of foreign-invested enterprises, certificates of origin (C/O) form D, licences for opening foreign trade representative offices in Vietnam have been instructed in numerous Ministry of Industry and Trade legal documents or direct authorisation.

Appraisal of IZs detailed planning approval, initial designs for project groups B, C in the IZs and planning certificates in IZs was instructed by the Ministry of Construction in Circular 19/2008/TT-BXD dated November 11, 2008.

The restructuring of IZs and EZs management authorities was studied by the Ministry of Home Affairs and submitted to the prime minister to issue decisions for establishing IZs and EPs management authorities on the mergers of coastal IZs and EZs and border gate EZs management units. Labour management at IZs and EZs: The Ministry of Labour, Invalids and Social Affairs issued Circular 13/2009/TT-BLDTBXH dated May 6, 2009, guiding the implementation of state management over labour issues at IZs, EZs, EPZs and hi-tech parks.

MPI’s role

For planning tasks, the MPI has cooperated with relevant ministries and local governments to constitute and submit the prime minister the Coastal Economic Zones Development Masterplan, asking prime ministerial approval for adding northern Nam Dinh province-based Ninh Co EZ, central Quang Tri province’s Dong Nam EZ and northern Thai Binh province’s coastal EZ into Vietnam’s coastal EZs development master plan.

The MPI also cooperated with relevant agencies and submitted for prime ministerial approval of Vietnam’s IZ Development Plan to 2015 with a vision until 2020. The MPI also appraised cities’ and provincial IZ development plans and delivered them for prime ministerial approval.

The MPI has been reviewing the national coastal IZs and EZs development plan to 2020.
In the meantime, the MPI planned to allocate part of state budget for investing in IZs infrastructure in difficult localities and propose using part of state budget to develop EZs’ technical infrastructures in annual local socio-economic development plans.

Programming and hosting investment promotion events in partnership with local governments to call for investment into IZs and EZs has been done by the MPI. Besides, the MPI have also conducted regular check-up to make sure IZs and EZs regulations are followed.

Regarding the constitution of legal documents, the MPI submitted for prime ministerial approval to issue new decisions governing operations of 13 coastal EZs (Quang Ngai’s Dung Quat, Quang Nam’s Chu Lai, Thanh Hoa’s Nghi Son, Nghe An’s Dong Nam, Quang Binh’s Hon La, Thua Thien Hue’s Chan May-Lang Co, Tra Vinh’s Dinh An, Kien Giang’s Phu Quoc Island and Nam An Thoi Islands EZ, Quang Ninh’s Van Don, Khanh Hoa’s Van Phong, Ha Tinh’s Vung Ang, Phu Yen’s Nam Phu Yen and Binh Dinh’s Nhon Hoi) and to issue Decision 66/2010/QD-TTg dated October 27, 2010 on the establishment and operation of Ca Mau province’s Nam Can EZ.

Implementation barriers

Some obstacles have emerged during the implementation of IZs and EZs regulations which need to be addressed.

First, the authorisation and decentralisation to IZs, EPZs and EZs management units in some fields was not properly practised due to either differences in some laws or lacking guidance of relevant ministries.

Second, some preferential policies for IZs, EPZs and EZs were inconsistent and unstable. Currently, IZ enterprises are no longer enjoying preferential corporate income tax and import tax rates, except those in IZs located in underprivileged localities. This policy has affected IZ investors, particularly international firms which are looking to invest and expand production in Vietnam.

Besides, some localities have been not active in restructuring less effective management units at IZs, EPZs and EZs.

Regulatory improvements

Problems in implementing Decree 29/2008/ND-CP need to be addressed quickly.
The revision of Decree 29/2008/ND-CP should be first done by adding some regulations on planning and establishing IZs, EPZs, EZs and operations of coastal EZs, border EZs and infrastructure developers to catch up with the current context.

Second, practising full decentralisation at IZs and EZs management units is needed, as is regularly streamlining power from central and provincial levels to IZs, EPZs and EZs management units.

Third, the role of IZs and EZs management units in inspection, investigation, issuing administration punishments, managing labour and environmental issues must be clarified so as to facilitate management units to implement a “one-stop-shop” policy.

Finally, state management agencies supervising IZs, EPZs and EZs management units must be strengthened.