The National Assembly has approved a resolution piloting several mechanisms and special policies to promote the development of Hai Phong city, with an overwhelming majority of 447 out of 449 delegates voting in favor (93.51% of the total number of National Assembly deputies).
A notable feature of this resolution is the establishment of the Hai Phong Free Trade Area, which offers a range of special policies.
According to the National Assembly’s resolution, the free trade area is organized into functional zones for production, port and logistics services, a logistics center, and a commercial-service area. Zones that meet the requirements will function as duty-free areas, under the supervision of customs and relevant state management agencies.
The Hai Phong People’s Committee has the authority to establish and adjust the boundaries of the Free Trade Area, in conjunction with the Dinh Vu – Cat Hai Economic Zone and the Southern Coastal Economic Zone. The Management Board of Hai Phong Economic Zone will directly manage the Free Trade Area, providing public administrative services and supporting businesses in investment, production, and trading activities.
Hai Phong’s new political and administrative center. (Photo: Nguyen Hue)
The Free Trade Area prioritizes high-tech industries such as integrated circuits, design and manufacturing of components, chips, and semiconductor materials, biotechnology, new materials technology, automation, supporting industries for high-tech industries, logistics, trade, and exhibitions.
Foreign investors can establish economic organizations in the Free Trade Area just like domestic investors, without having to obtain an Investment Registration Certificate beforehand. Enterprises within the zone enjoy preferential customs procedures and are exempt from specialized inspections for goods that have been certified as conforming to international or regional standards.
A Range of Special Mechanisms and Policies
The recently approved resolution entails a series of preferential policies for the Hai Phong Free Trade Area regarding administrative procedures, land and water rent, and tax breaks.
Specifically, projects within the Free Trade Area are exempt from land and water rent for the entire lease term (except for commercial housing and commercial-service projects). Enterprises in priority sectors will benefit from a 10% corporate income tax rate for 30 years, with a four-year exemption and a 50% reduction for the subsequent nine years. After the incentive period, the applicable tax rate will be 15%.
For income from projects not in priority sectors, a 10% tax rate will apply for 15 years, with a four-year exemption and a 50% reduction in payable tax for the next nine years.
Notably, the resolution allows for visa exemptions and grants 10-year temporary residence cards to experts, scientists, individuals with special talents, managers, and highly skilled workers employed by enterprises within the Free Trade Area. The People’s Committee is authorized to allocate land and lease it without auctions or bidding for projects involving land use within the zone.
Additionally, experts, scientists, talented individuals, managers, and highly skilled workers in the Free Trade Area will enjoy a 50% reduction in personal income tax for ten years.
Apart from the special mechanisms designed for the Free Trade Area, the National Assembly has also resolved to implement other unique policies to catalyze breakthroughs in Hai Phong’s development.
Specifically, Hai Phong is permitted to borrow through the issuance of local government bonds, obtain loans from domestic financial institutions, and access the government’s external borrowings. The total debt balance must not exceed 120% of the local budget revenue as per the allocation stipulated in the Law on State Budget. The National Assembly determines the annual borrowing and deficit levels according to the State Budget Law.
The central budget will provide Hai Phong with 70% of the increase in export-import revenue (excluding VAT) compared to the estimate assigned by the Prime Minister. These funds will be used to invest in infrastructure for economic zones, industrial parks, the Free Trade Area, and socio-economic projects on Bach Long Vi Island, without exceeding the total increase in revenue compared to the previous year.
Hai Phong is also authorized to decide on the application of fees and charges not yet included in the Law on Fees and Charges and adjust the rates of existing fees and charges.
The city is empowered to reclaim land for the development of a logistics center (over 50ha) and logistics services (up to 50ha) to serve seaports and airports.
Additionally, Hai Phong can reclaim small, narrow land parcels scattered within residential areas to create a land fund for auctions.
Furthermore, Hai Phong is permitted to establish a venture capital fund from the budget to invest in high-tech enterprises and creative startups. Officials and civil servants utilizing this fund are exempt from liability in case of damage due to objective reasons, provided they have followed the proper procedures and have not engaged in self-interested behavior.
These special mechanisms and policies for Hai Phong will officially take effect from July 1, 2025 (the date the resolution comes into force).
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