Vague legality - barrier to investment in free trade zones

DNHN - infrastructure development

Free Trade Zones (FTZs) are considered a driving force for economic development, offering significant benefits to businesses. However, Vietnam has yet to officially establish any FTZs, primarily due to the lack of a clear legal framework for this model.

According to Ms. Cao Cẩm Linh, Head of the Research Committee of the Vietnam Association for Logistics Human Resource Development, localities and businesses are interested in investing in FTZs but do not know where to start due to the absence of specific legal regulations. To date, only Da Nang has been approved by the National Assembly to pilot the establishment of an FTZ, but progress has been very slow.

Mr. Trần Chí Dũng, General Secretary of the Vietnam Logistics Business Association, stated that after many years, the lack of a legal basis remains the biggest challenge in implementing FTZs. He suggested incorporating FTZ-related content into a chapter of the Law on Commerce to create a clear legal foundation. "We can start by issuing a trial list and gradually expand the scope after seeing its effectiveness," Mr. Dũng emphasized.

Mr. Trần Thanh Hải, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), acknowledged that there are currently no legal documents governing FTZ investments within industrial zones. This lack of regulation has stalled implementation, even when infrastructure and human resources are ready. Mr. Hải proposed rapidly supplementing legal provisions to establish FTZs in economic zones and industrial parks to reduce logistics costs and enhance competitiveness.

Ms. Cao Cẩm Linh cautioned against rigidly replicating the models of Da Nang or other countries. Instead, she suggested that each locality should build FTZs based on their unique strengths. This approach would not only improve operational efficiency but also make it easier to gain approval from regulatory authorities.

Businesses also proposed that FTZs should be implemented in key areas such as seaports, airports, or land border gates—places with high volumes of import and export goods. Investments in locations without strategic advantages could lead to resource wastage.

Implementing FTZs in Vietnam requires more than just infrastructure and workforce readiness; it demands a comprehensive strategy encompassing legal frameworks, operational mechanisms, and regional development orientations. If addressed holistically, FTZs could become a crucial driver for enhancing logistics efficiency, boosting exports and imports, and increasing national economic value.

Da Nang: A Pioneer in FTZ Pilots

Da Nang is currently leading the pilot model for FTZs. However, to expand and effectively utilize these zones, close coordination among regulatory agencies, businesses, and local governments is required, especially the establishment of a clear and feasible legal framework.

Bà Rịa - Vũng Tàu: A Strategic Candidate for FTZs

Amid the growing importance of FTZs as a strategic goal for boosting local and national economies, Bà Rịa - Vũng Tàu has emerged as a prominent candidate thanks to its strategic geographical position, modern seaport infrastructure, and multimodal transportation network.

Mr. Phạm Quang Nhật, Director of the Department of Industry and Trade of Bà Rịa - Vũng Tàu, affirmed that the province has all the necessary factors to develop an FTZ connected with seaports. In particular, the Cái Mép - Thị Vải port cluster is a critical pillar, located on the Asia-Europe and Asia-America international maritime routes through the East Sea—a vital global trade artery.

In 2024, this port cluster ranked among the top 30 largest container port clusters in the world. The number of direct maritime routes connecting to Europe and America from Cái Mép - Thị Vải ranks third in Southeast Asia, after Singapore and Malaysia. Furthermore, the presence of major shipping lines such as MSC, Maersk, CMA-CGM, Evergreen, and ONE demonstrates the region's potential and international significance.

According to Mr. Nhật, Bà Rịa - Vũng Tàu is focused on upgrading the Cái Mép - Thị Vải port cluster to become a modern international transshipment port, meeting regional and global standards. The development of green and smart ports is seen as a key strategy, not only to enhance operational efficiency but also to reduce environmental impacts, aligning with sustainable development goals.

Modernizing the Cái Mép - Thị Vải port cluster will provide a critical foundation for establishing an FTZ connected to seaports. This is considered a breakthrough move, maximizing the province's geographic and commercial advantages.

Mr. Nhật pointed out that trends in global trade shifts, increased demand for maritime transport, and the development of larger ships are favorable factors for Bà Rịa - Vũng Tàu to build FTZs. Changes in global trade flows not only enhance the role of major seaports but also drive demand for FTZs, integrating logistics and manufacturing activities.

With these advantages, Bà Rịa - Vũng Tàu aspires to become a leading logistics and seaport hub in the region and a critical point on the global trade map.

To realize this goal, Mr. Nhật emphasized the need for a clear legal framework and supportive policies from the government. These are essential conditions to attract investment and form the basis for effective FTZ implementation, avoiding resource wastage.

The FTZ linked to the Cái Mép - Thị Vải port cluster is expected to be a significant driver, not only fostering economic growth in Bà Rịa - Vũng Tàu but also providing momentum for Vietnam's national economy in an era of global integration and competition.

DNHN