Vietnam considers free trade zone in Hai Phong with sweeping special policies

Minister of Finance Nguyen Van Thang on Tuesday proposed a draft resolution that would replace Resolution 35/2021 and introduce a pilot free trade zone in Hai Phong to the law-making National Assembly.

The draft outlines six major policy groups and 41 specific mechanisms, notably the creation of a Hai Phong Free Trade Zone (FTZ).

According to Minister Thang, the FTZ will include functional areas such as production zones, port and logistics hubs, and trade and service clusters.

The draft resolution empowers the Hai Phong People’s Committee to decide on the establishment, expansion, and boundary adjustments of the FTZ, particularly in areas like the Dinh Vu-Cat Hai economic zone and the city’s southern coastal economic zone.

This decentralization aligns with national goals on devolving power to localities, as set out in Resolution 18/2017 and reiterated at recent Party Central Committee meetings, including directives by Party General Secretary To Lam.

To enhance the FTZ's appeal, the draft proposes streamlining administrative procedures—covering investment licensing, imports/exports, immigration, labor permits, land use, and construction.

The zone would offer generous tax and land incentives and permit foreign bank branches to open transaction offices within its boundaries.

A ‘one-stop, on-site’ mechanism will be piloted, where the Hai Phong Economic Zone Authority would be responsible for directly managing and issuing key business licenses, including certificates of origin, trade permits, retail licenses, and labor documents.

While the National Assembly’s Economic and Financial Committee broadly supports the FTZ pilot, the committee’s chairman Phan Van Mai warned that it touches on sensitive issues such as defense, security, and social order, and requires further assessment on socio-economic impacts, fiscal implications, risk management, and interagency accountability.

The Economic and Financial Committee also agreed with allowing land use outside national land-use targets but called for clearer guidance.

Regarding tax incentives, this committee endorsed corporate income tax breaks similar to those in existing economic zones but advised limiting the duration, particularly in light of global minimum tax regulations.

Mai also highlighted other concerns over the pilot FTZ.

He called for measures to prevent illicit re-export and transshipment via the FTZ, address currency exchange and payment mechanisms in foreign currencies, and ensure compliance with anti-money laundering and foreign exchange risk protocols.