Establishing a Free Trade Zone in Da Nang: A Step Towards Vietnam’s Economic Prosperity

**Free Trade Zone and Special Mechanisms for Danang’s Development**

Establishment of the Danang Free Trade Zone in Lien Chieu Port

On the morning of June 26th, with the majority of delegates in agreement, the National Assembly passed a resolution on the organization of urban governance and the piloting of several mechanisms and special policies for the development of Danang.

The resolution includes the National Assembly’s approval for Danang to pilot a number of special mechanisms and policies in various fields, including financial management, state budget, investment, urban planning, and more. Notably, Danang is also allowed to pilot mechanisms and policies for attracting strategic investors in the fields of semiconductor manufacturing, artificial intelligence, and the management of science, technology, and innovation.

A significant aspect of the resolution is the establishment of the Danang Free Trade Zone, linked to the Lien Chieu seaport. This move aims to attract high-quality investment, finance, trade, tourism, and services to the city.

Mr. Le Quang Manh, Chairman of the National Assembly’s Finance and Budget Committee, affirmed that the pilot establishment of the Free Trade Zone is a significant decision with solid political and legal grounds. Its successful implementation will boost the economic and social development of Danang and the entire region.

However, as this is a new policy that hasn’t been implemented before in Vietnam, the resolution is considered a pilot, and the policies will be adjusted and improved over time. Therefore, a cautious and well-thought-out approach is necessary, avoiding high-risk factors that haven’t been thoroughly evaluated. Moreover, the policies should be based on the city’s capabilities, financial resources, and conditions.

According to the resolution, the Danang Free Trade Zone will include various functional areas as decided by the Prime Minister, such as production zones, logistics centers, commercial and service zones, and other types of functional areas as per regulations.

Investment Incentives and Land Policies for the Free Trade Zone

The resolution also outlines specific investment incentives and land policies for the Danang Free Trade Zone. The land retrieval process for the construction of the necessary infrastructure will follow the provisions of the Land Law, and the retrieval, compensation, and resettlement processes will be carried out in accordance with the law.

In cases where the proposed location for the Free Trade Zone hasn’t been included in the city’s land use planning or there are adjustments to the approved scale and location, the People’s Committee of Danang will compile and submit it to the City Council for approval, ensuring that it doesn’t exceed the allocated land-use indicators. This will also be updated in the next planning period for the city and the district.

Investors selected to invest in the construction and business of infrastructure in the functional zones of the Danang Free Trade Zone will be leased land by the People’s Committee of Danang, with the same rights and obligations as investors who are leased land for the construction of industrial park infrastructure according to the Land Law.

Investors who rent land in the functional zones of the Danang Free Trade Zone will have the same rights and obligations as those who rent land linked to infrastructure in industrial parks, as per the Land Law.

The resolution specifies investment incentives for the Danang Free Trade Zone, including the application of the same project duration, investment incentives, and land rent exemption and reduction policies as those for projects in economic zones, in accordance with the Investment Law and the Land Law.

Foreign investors establishing economic organizations in the Danang Free Trade Zone are exempt from having to obtain an investment registration certificate before establishing the organization. They will follow the same procedures as domestic investors, and the relevant authorities will check their compliance with market access conditions for sectors and fields with restricted market access for foreign investors, as per the Investment Law.

After the establishment of the economic organization, the implementation of the investment project will follow the procedures outlined in the Investment Law.

The Danang Free Trade Zone will also offer tax incentives, such as tax exemption and reduction policies, for projects within the zone, similar to those provided for projects in economic zones, in accordance with tax laws, land laws, credit laws, accounting laws, and other relevant legal documents.

Projects in the functional zones of the Danang Free Trade Zone will be eligible for additional investment incentives, similar to those offered for projects in economic zones, as per relevant laws and regulations.

Furthermore, for projects meeting the conditions for different levels of investment incentives within the same period, investors can choose to apply the highest level of incentives.

The resolution also states that enterprises with investment projects in the functional zones of the Danang Free Trade Zone will be given priority in customs procedures for import and export activities at the local level, provided they meet the conditions specified in customs, tax, and financial laws and other relevant legal documents, except for conditions related to import and export turnover.