Vietnam fostering economic zones

Vietnam is pouring more money into upgrading and building economic zones and offering most preferential treatment to investors there, in a move to make them become economic engines in the near future.

Vietnam plans to invest 16-24 trillion Vietnamese dong (VND) (1- 1.5 billion U.S. dollars) in the 2006-2010 period in building and upgrading infrastructure of eight existing economic zones, home to many key projects, including those at national level, the country's Ministry of Planning and Investment said, noting that the money will come from various sources, including state budget.

The state monies spent on constructing and upgrading infrastructure of two economic zones stood at only 242 billion VND (15.2 million dollars) in 2004 and 285 billion VND (17.9 million dollars). A large amount of state monies will be poured into building 2-4 new economic zones by 2010, the ministry said, noting that the funds will cover expenditures for site clearance and construction of some technical infrastructure within the zones.

When developing economic zones, Vietnam centers on two directions: modern feature and focal point. First, the zones are to be built at large scale with high technology level. Second, the zones are to house national key projects as backbones and others in such fields as industry, trade, transport, tourism and urban development, as blood vessels.

Specifically, Vietnam's first oil refinery named Dung Quat with annual processing capacity of 6.5 million tons of crude oil under construction is the focal point of the Dung Quat Economic Zone in central Quang Ngai province. The refinery, scheduled to operate in late 2008 or early 2009, will lessen the country's reliance on refined oil imports.

Exploitation of iron ores in the Thach Khe Mine, steel production and thermoelectric generation will be the focal points of the Vung Ang Economic Zone in central Ha Tinh province, and operation of an international container transit port in Van Phong Bay and high-grade tourism resorts along the seaside are to serve as focal points of the Van Phong Economic Zone in central Khanh Hoa province.

To lure both foreign and domestic investment into economic zones, Vietnam has offered investors most preferential treatment. Enterprises are exempt from corporate income tax for four years since they start to gain profits, have to pay only half of the tax in the nine following years. For the first 15 years since they start business, they enjoy corporate income tax of only 10 percent, instead of the normal rate of 28 percent.

Projects involving high technologies or being of importance to the development of local specific industries or sectors or to the socio-economic development of a region even enjoy corporate income tax of 10 percent during their lifetime.

Besides, Vietnamese people and foreigners working in economic zones are eligible for 50-percent reduction in personal income tax, said the ministry. Overseas Vietnamese and foreigners permanently residing in Vietnam are allowed to buy residential houses in the zones.

Nguyen Van Lua, deputy head of the Chu Lai management board of the Chu Lai Open Economic Zone in central Quang Nam province, the first of its kind in Vietnam, said that by mid-July, 120 foreign- invested and domestic projects with total capital of 1.5 billion dollars, which focus on industry and tourism, had registered to operate in the zone.

He said the zone, whose construction started in 2003, has an ideal location since it is situated next to the national road No. 1A and the West-East transport corridor of Southeast Asia: 860 km from the capital of Hanoi, 865 km from southern Ho Chi Minh City, and 400 km to South Laos and Northeast Thailand.

By mid-July, the Chan May -- Lang Co Economic Zone in central Thua Thien -- Hue province had lured 54 foreign and domestic- backed projects with total registered capital of more than one billion dollars. The respective figures in the Dung Quat Economic Zone were 94 and 3.4 billion dollars, according to the ministry.

To date, four economic zones in the central region have already operated, though some infrastructure works are underway. Four other zones, Van Phong, Vung Ang, Nghi Son in central Thanh Hoa province, and Nam An Thoi in southern Kien Giang province, are still under construction.

Source: Xinhua