Overview of Economic Zone

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Announcement of establishing Economic Zone

Vietnam currently has 17 CEZs covering more than 843,700 hectares. As December 2017, more than 1.89 billion dollars was invested in infrastructure construction in the CEZs (reaching 35.35% of the registered investment capital), of which 399,98 million dollars was invested by foreign investors. Accumulation of projects having effect as of 12/2017, the total number of foreign companies in SEZs was 471 foreign owned companies with total implemented investment of 30.15 billion of billion dollars (equivalent of 60.12% of registered investment capital), and 1,412 domestic companies with total implemented investment of 443.7 thousand billion VND (reaching only 16% of registered investment capital). Some CEZs have attracted strategic and giant projects such as oil refineries, mechanical plants, thermal power plants, automobile factories, household electrical appliances factories, transshipment ports, etc; and also attracted investors from countries and territories, such as the US, Germany, Japan, Korea, Taiwan, Hong Kong, Singapore and so on. The number of projects with investment capital of over 100 million dollars in industrial zones and CEZs is over 500. In 2018, CEZs exported more than 9.88 billion dollars. Jobs have been created for about 203,000, of whom 4,800 are foreigners and 188,000 are Vietnam nationals.

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Definition of Economic Zone

As prescribed in Decree No82/2018/ND-CP dated 22nd May 2019 on “MANAGEMENT OF INDUSTRIAL PARKS AND ECONOMIC ZONES”: A coastal economic zone (CEZ) is an economic zone which is formed in the coastal area and adjacent areas of the coastal zone, established according to the conditions, processes and procedures.

Overview of Economic Zone Policy

* Incentive policies applied to CEZs:

1.CEZ is deemed as an area given investment preferences or incentive policies which are applied to those present in the List of areas facing extreme socio-economic difficulties as per laws on investment.

2.Beneficiaries, principles and procedures for grant of advantages to investment projects located within CEZ shall be subject to laws on investment.

3.The expenses for investment in construction, operation or renting of condominium apartments and social infrastructure for workers in CEZs shall be deductible expenses for calculation of the taxable income of an enterprise with investment projects implemented within these industrial parks or economic zones.

Registration of that price and fee bracket is carried out periodically every 6 months or unless otherwise adjusted in comparison with the registered one.

3.Investors developing infrastructure of industrial park and functional sites within CEZs shall assume responsibility to build and operate concentrated wastewater treatment stations and other environmental protection works (if any) in accordance with legislation on environmental protection.

4.Investors developing infrastructure of industrial park and functional sites within CEZs who are given financial support from the state budget for investment in development of infrastructure of industrial parks and functional sites of CEZs shall be responsible for repairing, maintaining and operating such infrastructure intended for production and business activities of enterprises which are lessees or sublessees of land within industrial parks or functional zones within CEZs.

5.Comply with regulations on public security, order, maintenance of labor safety and sanitation, corporate culture, environmental protection, fire and explosion prevention. Cooperate with police forces and competent authorities in formulating plans for fire safety, control, maintenance of public security, order and social safety within local jurisdictions where investors are operating.

6.Prepare statistical reports for submission to competent authorities under the provisions of law.

* Development of housing, social, cultural and sports works for employees working in CEZs:

1.The State encourages organizations and individuals to invest in construction of dwelling houses for rent to employees working in CEZs, and stimulates employers and enterprises developing infrastructure of CEZs to invest in construction of dwelling houses, social, cultural and sports facilities for employees in CEZs.

2.Dwelling houses, social, cultural and sports facilities must satisfy dimensional, quality, aesthetic, safety and environmental standards as per laws.

3.People’s Committees at all levels shall be responsible for enabling employees to have easy access to healthcare, educational, social, cultural and sports services within their local jurisdictions.

4.Expenses for investment in construction, operation or lease of condominiums and social infrastructure works in service of workers working in industrial parks or economic zones of enterprises having investment projects Investment in industrial parks and economic zones shall be deducted when determining incomes subject to enterprise income tax as follows:

5.a) For the value of fixed assets: Calculated into the value of works and depreciation deducted into deductible expenses when determining the income subject to enterprise income tax if it meets the conditions of fixed assets according to regulations of the Ministry of Finance on management, use and depreciation of fixed assets.

6.b) Expenses (except for the case in Point a): To be included in deductible expenses when determining taxable income in accordance with the law on corporate income tax.

7.Incentives for investment projects on construction of houses, cultural and sports facilities, social infrastructure works in service of workers working in CEZs

Investment projects on construction of houses, cultural and sports facilities, social infrastructure works in service of workers in industrial parks or economic zones are eligible for incentives under the Law on social housing construction and related laws.

In general, Decree No 82/ND-CP has provided a comprehensive policy on conditions and procedures for establishing a CEZ and preferential policy for investors registering and operating business in CEZs. However, besides Decree No 82/ND-CP, local authorities have also implemented a number of incentives to attract investors such as: site clearance, labor training, ... The level of support varies among localities depending on the social-economic conditions of each locality. Investors who want to know specific information about preferential policies for each CEZ should visit the website of each locality (may access to some pages below:

http://chulai.quangnam.gov.vn/ (Chu Lai: English, Japan)

Documents / Website

Business/ Investor/ Organization

National Economic Zone Law and Regulation on

Economic Zone Management Organization Structure

Economic Zone Management Organization Structure

EZ Management Organization Structure