Experts weigh in on Ho Chi Minh City’s plan for 4 free trade zones

The plan, recently submitted by the city's Department of Industry and Trade to the municipal administration, proposes FTZs in Can Gio, Cai Mep Ha, Binh An, and Bau Bang.

The zones are intended to integrate closely with strategic infrastructure such as seaports, railways, and international gateways, aiming to accelerate the city's economic growth in the coming years.

Vu Kim Hanh Dung, head of the international trade law department at the University of Economics and Law in Ho Chi Minh City, described the concept of four specialized FTZs as 'smart and appropriate,' while emphasizing that each should be supported by policies and legal frameworks tailored to its function.

She suggested beginning with a small pilot zone in the southern economic hub to test policies and collect practical data before broader implementation.

For example, Dung suggested that Can Gio could follow Shanghai's model by piloting mechanisms that go beyond national legal frameworks, with an emphasis on technology and finance.

Cai Mep Ha, she added, could take inspiration from Singapore by streamlining logistics and trade procedures, offering tax exemptions and permitting full foreign ownership.

Vlad Savin, partner at Acclime Vietnam, a leading corporate service provider based in Ho Chi Minh City, described the initiative as a bold policy step but stressed that the top priority should be establishing a robust legal framework that clearly defines procedures, incentives, and management.

Noting that Vietnam has no precedent for detailed FTZ regulations, he urged the city to pursue a pilot mechanism through a dedicated resolution in close consultation with the National Assembly and relevant ministries.

"Without such a framework, FTZs risk being ambitious in concept but fragmented in operation," Savin said.

He added that global experience highlights the potential rewards.

According to the Germany-based Kiel Institute for the World Economy, more than 5,000 special economic zones exist worldwide, accounting for around 20 percent of global trade.

By 2024, China had 22 FTZs that attracted US$282 billion in foreign direct investment, or 24.3 percent of the national total.

Singapore, meanwhile, has built its reputation as a hub since enacting its FTZ law in 1966.

Ho Chi Minh City could draw lessons from both models: Shanghai excels in piloting financial reforms, while Singapore thrives on rule-based governance and seamless infrastructure, Savin advised.

Observers also pointed to three legal barriers that could slow the city's FTZ plans.

These include a lack of detailed rules for taxation, customs, banking, and administration; limits on foreign ownership under Vietnam's Investment Law; and cumbersome visa and residency rules for foreign experts.

To address these challenges, they recommended piloting visa exemptions, easing ownership caps, and offering long-term residence permits of up to 10 years for specialists and scientists working in FTZs.

With the city aiming to position itself as a regional financial and economic hub, getting the first FTZ right will be crucial to attracting foreign capital and paving the way for broader expansion.