Source: UNIDO COUNTRY OFFICE IN VIET NAM on AUGUST 2015
Box 11. From US Airbase to Special Economic Zone.
Clark airbase was a strategic United States military airbase during World War II, the Viet Nam war, and the Cold war. Clark Airbase has remained under the jurisdiction of the United States until 1991. The government of the Philippines decided to turn the airbase into one of the largest Special Economic Zone in Asia to offset the loss of revenues coming from the United States. Clark Special Economic Zone was established in 1995. Clark Special Economic Zone covers an area of 29,365 hectares, the area has generated in 2012, $ 4 billion exports revenue and give employment to 70,000 workers. The majority of the companies operating in the SEZ are from South Korea (26%) and from the US (21%). The SEZ offers fiscal incentives such as preferential tax rate of five percent (5%) based on Gross Income Earned provided that seventy percent (70%) of products are to be exported, exemption from taxes and duties on imported spare parts, exemption from wharfage dues and export tax, duty, impost and fees…
4.1. Economic Zones in Viet Nam
Viet Nam – Key Dates:
1986 The government of Viet Nam initiated a set of reforms, known as Đổi Mới or renovation in English, aiming to modernize and liberate economic policies.
1991 The first industrial park opens in Ho Chi Minh City. Industrial parks will play a key role in Viet Nam’s economic transformation.
1995 Viet Nam becomes a member of the ASEAN.
2007 Viet Nam becomes a full-member of the WTO.
Foreign Direct Investments in Viet Nam:
Since 1986, Viet Nam has chosen to internationalize its economy in order to transform its economy. The attraction of Foreign Direct Investments (FDIs) is thus central in this strategy of internationalization. Industrial Parks, Special Economic Zones, and Technology Parks are the main recipients of FDIs and are thus central to Viet Nam’s transformation. The recent multiplication of trade agreements and bilateral free trade agreement demonstrate the willingness of the Government of Viet Nam to integrate Viet Nam’s economy with the rest of the world. Trade has been the engine of Viet Nam’s growth during the last two decades; the total trade volume grew from USD 5 billion in 1990 to USD 298 billion in 2014. The presence of Samsung in Viet Nam provides a good example of a foreign company that contributes greatly to exports.
The company has chosen to transfer a large part of its Smartphone production from China to Viet Nam. Samsung has since 2011 invested a total of $ 11 billion in Viet Nam and aims to make 40% of world production by the end of 2015 (Fouqui, 2015). FDIs have surged between 2007 and 2009 (c.f. figure 14).`
Viet Nam divides economic zones into industrial zones, which comprise industrial parks and Export-Processing Zones, economic zones, which are large Special Economic Zones, and technology parks. Most economic zones in Viet Nam are located in the South East part of the country near HCMC and the Red River Basin near Hanoi.
Facts and Figures on Economic Zones in Viet Nam:
There are 313 economic zones in Viet Nam (292 industrial parks, 18 special economic zones (3 of which are referred to as export-processing zones and 15 of which are referred to as economic zones) (personal communication, MPI, 2015). There are around 2,500,000 persons working in Economic Zones in Viet Nam, representing around 2.5 % of the total workforce. The first economic zone was built in Ho Chi Minh City in 1991. The concept of industrial park was widely adopted since 2000 as a strategy for economic development. There was 61 industrial zones built or in construction in 2000, 293 industrial zones built or in construction in 2010, and 324 industrial zones built or in construction in 2013. By the end of 2014, EZs and IPs nationwide attracted more than 5,500 foreign direct investment projects and a total registered capital of $85.5 billion, 59 per cent of which was disbursed (Viet Nam news, 2015). The total revenue EZs and IPs pulled together in 2014 was $ 118 billion, a 18 per cent increase since 2013 (Viet Nam news, 2015). The import-export turnover was $ 73.4 billion, a 43 per cent increase in one year. Trade surplus from enterprises in EZs and IPs in 2014 was $5.8 billion, contributing to VND 87 trillion (approximately $ 4 billion) to the State budget (Viet Nam news, 2015). Economic zones in Viet Nam amount to 40% of Viet Nam’s total exports.
Some Special Economic Zones are referred to as Economic Zones in Viet Nam. They are defined as a “zone which has an economic area separated from the investment and business environment with geographical boundaries and especially favorable conditions for investors, and established in accordance with regulations of the government in the Decree No. 29/2008/ND-CP.” (MPI, 2009).
They have the following features:
The area has the potential to become an industrial hub
They cover an area of more than 10,000 hectares
They consist of free-tax zone and other functional areas such as: IP, EPZ, port,
residential complex, commercial areas…
They enjoy a strategic location (proximity to seaports, airports)
They host key projects and investment
They are established under a Decision of the Prime Minister.
There are three technology parks in Viet Nam. They are respectively located in Hanoi, HCMC, and Danang. The first technology park was established in 1998 in Hanoi.
iet Nam’s Industrial Parks and Export-Processing Zones – Environmental Impact:
Although industrial parks in Viet Nam have positively contributed to Viet Nam’s rapid economic transformation, they have also widely contributed to Viet Nam’s environmental degradation. Around 1/3 of all industrial zone in Viet Nam, don’t have a centralized waste water treatment or sewage system. Additionally, industrial zones consume lots of energy due to inefficient production methods. Most companies in industrial zones have not adopted strict environmental standards and release toxic emissions such as dust, SO2, NOx, GHG, UP-POP contributing to the air quality degradation.