Vietnam’s legislature approves establishment of free trade zone in Hai Phong

The new zone will introduce exceptional policies to attract capital, high-end services, research, and skilled labor, while promoting exports, manufacturing, tourism, and innovation. 

The free trade zone will be structured into multiple functional areas, including production sites, port and logistic hubs, commercial service zones, and other legally designated sections. 

These will operate as non-tariff areas subject to customs oversight, and will be managed by relevant state authorities in accordance with national regulations.

The Hai Phong People's Committee is authorized to decide on the establishment and boundary changes of the zone. 

It will be linked to the Dinh Vu-Cat Hai Economic Zone as well as the city's southern coastal economic zone.

Projects implemented within the free trade zone may focus on areas such as innovation, research and development, semiconductors, information technology, biotechnology, advanced materials, high-tech support industries, digital infrastructure, energy, and modern logistics. 

Trade fairs, dry ports, and commercial hubs are also included in the eligible sectors.

Simplified investment procedures

Foreign investors will be able to set up businesses in the zone without needing an investment registration certificate prior to the establishment. 

If they wish to launch projects, they will follow standard investment registration procedures, either individually or through their newly formed enterprises.

These foreign investors will also follow the same procedures as domestic investors when establishing economic entities. 

The business registration authorities will be responsible for checking compliance with market access regulations.

Qualified foreign nationals who work in the zone as experts, scientists, managers, or highly skilled workers, along with their families, will be eligible for visa exemptions and 10-year temporary residence cards. 

The Hai Phong People's Council will develop criteria for this category in consultation with the Ministry of Public Security and other relevant ministries.

Land lease, tax incentives

The Hai Phong government will be allowed to allocate or lease land in the free trade zone without holding public auctions or competitive bidding processes, except in the case of commercial housing projects.

Land and water surface use fees will be waived entirely for the duration of the lease for most investment projects, excluding those related to housing or commercial service land.

Enterprises operating in priority sectors will enjoy significant tax breaks. 

These projects will be eligible for a 10-percent corporate income tax rate for 30 years, a complete tax exemption for four years, and a 50-percent reduction for the following nine years. 

After the incentive period, a 15-percent tax rate will apply.

Projects outside of the priority sectors will also benefit from a 10-percent corporate income tax rate, but only for 15 years. 

These will also receive the same four-year tax exemption and nine-year reduction before the tax rate increases to 15 percent.

Cross-border trade, banking

Foreign investors in the zone will be allowed to engage in cross-border trade, with licensing procedures governed by existing foreign trade management laws.

Businesses headquartered and operating within the free trade zone may list prices, sign contracts, and process transactions in foreign currencies. 

They can both make and receive payments in foreign currencies for goods and services exchanged within the zone.

Foreign banks with branches in Vietnam will be permitted to open additional transaction offices inside the Hai Phong Free Trade Zone, allowing them to expand financial services to companies operating there.