Draft law proposes special economic zones under provincial administration

Draft law proposes special economic zones under provincial administration

A draft Law on Urban Development proposes establishing special economic zones as provincial-level administrative units with special governance mechanisms and preferential policies to attract strategic investment and create new growth drivers.

Part of the Vân Phong Economic Zone in Khánh Hòa Province. — Photo tuoitre.vn

Việt Nam could establish special economic zones (SEZs) as administrative units under provinces and centrally governed cities, under a draft Law on Urban Development released by the Ministry of Justice for public consultation.

The draft, comprising five chapters and 68 articles, proposes creating SEZs in strategically important locations under a special governance model, with preferential policies aimed at strengthening national competitiveness and promoting socio-economic development.

Under the proposal, the Government would decide on the establishment of SEZs after obtaining opinions from the National Assembly Standing Committee.

Two options for recognising SEZs are offered in the draft.

The first would require them to be existing coastal economic zones established by the Prime Minister that align with national socio-economic development and national defence strategies, have a population of at least 50,000, cover at least 500 square kilometres, and possess either an international airport or a Grade I seaport. They must also be designated as strategic areas with the potential to become new growth poles.

The second option would authorise the Government to determine the recognition criteria.

SEZs would not have an elected local government as proposed in the draft. Instead, a Special Economic Zone People's Committee, established by the provincial People's Committee, would act as the State administrative authority and perform the functions of local government.

Under the proposal, provincial people's councils would determine the size and structure of the committee, while its chairperson would be responsible for personnel management and recommending adjustments to staffing and organisational structures to meet governance requirements.

The draft prioritises strategic investors in sectors including inland waterway tourism, logistics, free trade zones and high-tech parks, with minimum investment capital starting from VNĐ1 trillion (US$38 million).

Higher investment thresholds apply to other sectors, including VNĐ1.5 trillion for marine ecological centres and high-tech aquaculture projects, VNĐ2.3 trillion for airport, seaport and transport infrastructure projects, and up to VNĐ10 trillion for high-end tourism developments.

Integrated tourism projects with casino operations would require a minimum investment of $2 billion.

According to the Ministry of Justice, more than 7,000 special economic zones operate in over 140 countries worldwide, serving as platforms to test new institutional and economic policies.

Việt Nam currently has 46 economic zones, including 20 coastal economic zones covering around 900,000 hectares. However, the ministry said many have yet to realise their full potential, despite favourable locations and transport infrastructure.

The proposed SEZ model is intended to create a new institutional framework to attract strategic investors, improve infrastructure and enhance the efficiency of investment and land use in key coastal economic areas. 

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