Red Carpet, Tax Incentives Not Enough For SEZ: Experts

VietNamNet Bridge - Phu Quoc, Van Don and Bac Van Phong, in order to develop into powerful SEZs, need to have an outstanding business environment and new institutional policies, experts say.

Phu Quoc Island

The maximum land use duration has been lifted from 50 years to 70 years, or up to 99 years in special cases, under the latest draft law on SEZs which will be submitted to the National Assembly’s session in May.

The three SEZs would enjoy a series of other preferences, including the personal income tax (PIT), corporate income tax (CIT), VAT and luxury tax remission, as well as preferential rent for land and water surface use.

Regarding administrative procedures, the draft law says the time needed to obtain investment registration certificates will be cut by half to 5-10 days.

Commenting about the preferential treatment, Nguyen Van Phuc, former deputy chair of the National Assembly’s Economics Committee, said the compilation committee made a ‘breakthrough’ when suggesting preferences which were ‘unimaginable’ in the past.

“The investment incentives are competitive and we will have to change them regularly to create higher competitiveness to attract multinationals,” he said.

However, analysts say that investors expect not only tax incentives, but an open business environment and transparent institutional policies and procedures.

Kim Dong Hwi, an investor from South Korea, said the policy is no longer the most important factor for foreign investors to make a decision.

“A favorable business environment and open policies are sufficient conditions for investors to choose Vietnam as an investment destination and stay here,” he said.

An investor from Hanoi, who is considering the opportunities in Phu Quoc, said he still could not make a decision, because he fears the licensing problems cannot be settled.

VnExpress quoted experts as saying that SEZs will need many other favorable conditions.

Vietnam needs to remove many kinds of required licenses, while the court needs to shorten the time needed to hear disputes. 

He thinks that the private sector should also be allowed to join the SEZ board of management.

He said the degree of liberalization in the goods and service flow, and the institutional system are two prerequisites, while tax incentives will be just a secondary condition.

Deputy Minister of Planning and Investment Tran Duy Dong said at a meeting with the press in late February that the ‘free trade zone’ model is mentioned in the latest draft.

“We now have non-tariff areas, but the policy isn’t clear enough, so the law needs to elaborate on this. The zones will be connected with seaports and airports to ensure international competitiveness,” Dong said.

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