Proposed Establishment of the Free Trade Area in Haiphong

On May 13, as part of the ongoing 9th session, Minister of Finance Nguyen Van Thang, on behalf of the Prime Minister, presented to the National Assembly a draft resolution proposing special mechanisms and policies for the development of Hai Phong city.

In 2021, the National Assembly passed Resolution 35 on pilot special mechanisms and policies for the development of Hai Phong. A three-year review of the resolution’s implementation showed that while some mechanisms and policies have yielded positive results, they have not yet led to a breakthrough in the city’s development.

According to Minister Thang, there is a need to replace Resolution 35 with a new one that includes additional special mechanisms and policies in various fields to remove bottlenecks, attract investment, and promote rapid and sustainable development. This will have a greater impact on the Red River Delta region and contribute significantly to the country’s economic growth.

The proposed special policies for Hai Phong’s development are structured into six main groups with 41 specific policies. These include policies on investment management, financial and state budget management, planning and urban management, science and technology management, income of civil servants and public employees, and the establishment of a Free Trade Area in the city.

One of the key proposals is the establishment of a Free Trade Area in Hai Phong (referred to as the “FTZ”). This area will have a defined geographic boundary and will pilot breakthrough mechanisms and policies to attract investment, finance, trade, and services to promote exports, industry, research and development, and high-quality human resources.

The Hai Phong FTZ will be organized into functional areas, including a production zone, a port and logistics zone, a commercial and service zone, and other types of functional areas as stipulated by law.

The draft resolution proposes delegating the authority to the Hai Phong People’s Committee to decide on the establishment, expansion, and boundary adjustment of the FTZ in conjunction with the Dinh Vu-Cat Hai Economic Zone and the southern coastal economic zone, similar to the procedure for establishing industrial parks.

To boost investment and business activities in the FTZ, the resolution outlines special preferential policies, including streamlining administrative procedures related to investment, business, import-export, entry and temporary residence, and work permits. It also proposes optimizing land and water rent incentives and tax breaks and allowing foreign bank branches to open transaction offices within the FTZ.

The Economic and Finance Committee of the National Assembly, the reviewing body, affirmed the necessity of piloting the establishment of the FTZ, reflecting the political determination of both Hai Phong city and the Government.

However, the Committee also emphasized the magnitude of this undertaking, which goes beyond economic considerations and implicates national defense, security, and social order. Therefore, they requested a thorough assessment of the impact on economic growth, the budget, and society, as well as the regional spillover effects. They also stressed the importance of establishing a risk management mechanism and a monitoring system to ensure both flexibility and the maintenance of financial safety, economic security, and social order. Finally, they underscored the accountability of individuals and organizations involved in the implementation process.