VietNamNet Bridge – Some economists believe that the lack of a suitable system is the biggest problem blocking the dream of having special economic zones.
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Associate Professor Dr. Vo Dai Luoc from the Vietnam Academy of Social Sciences, in a recent interview given to VnMedia, revealed his views
VnMedia: After great effort in the last decades, Vietnam still does not have special economic zones in the true sense. The current open economic zones are operating like normal industrial zones. What are the problems here?
Dr. Vo Dai Luoc: I agree. At present, Vietnam has 15 open economic zones, called special economic zones or free trade zones. However, to date, the zones have been operating like normal industrial zones and they do not have special characteristics as we see in Chinese special economic zones. Why? There are many reasons. I think the biggest problem is that we still lack a suitable mechanism for the zones to develop.
VnMedia: Could you please tell us in more detail, especially in comparison with special economic zones in China?
Luoc: The Chinese Government offers a special system for economic zones, a foreign-oriented mechanism, like “a country inside a country,” which aims to attract capital, technologies and management methods from foreign countries.
Meanwhile, in Vietnam, there are only some preferences for open economic zones. The special economic zones in China follow the Hong Kong model (i.e., the mechanism is quite different from those applied to domestic institutions). Besides preferences, special economic zones also have very modern administration and economic systems that are in no way inferior to Hong Kong’s.
For example, in Shen Zhen special economic zone, there are only three administration management levels, while in every other province in China, there are up to 50-60 administration agencies for management. As such, in terms of administration alone, the number of management agencies has been cut to the lowest degree, so State intervention has also been at the lowest level.
In Shen Zhen, there are nearly no State-owned enterprises, while most are private with domestic and foreign investors. As such, we can see a clear difference in this mechanism.
Meanwhile, in Vietnam economic zones have management boards and no government to manage the zones. Thus, the zones are being managed by provincial authorities, while they do not have independent administrators. There are no strategic investors in the zones, but mostly domestic enterprises.
Let’s take Chu Lai Open Economic Zone as an example. The biggest and most important enterprise in the zone is Truong Hai Automobile Corporation, while there are only several foreign-invested enterprises. In Dung Quat Economic Zone, the nucleus is the State-owned Dung Quat oil refinery.
VnMedia: What solutions do you think are needed to develop open economic zones?
Luoc: I think that to run special economic zones successfully, policy makers need to consider proposals and suggestions made by foreign investors who will join the economic zones. To set up an economic zone, it is necessary to think about what systems investors want to see and with which they want to live and earn money.
In general, the system needs to be liberal and run on a market basis with minimal State intervention. Economic zones are different from normal industrial zones, because they are more modern, more international, and where there are not only economic entities, but there are also administration institutions.
As I said above, such a system should be built after considering opinions from investors. At present, the Ministries of Planning and Investment, Industry and Trade set mechanisms for the zones.
VnMedia: Will you and other experts make suggestions to the Government on building special economic zones?
Luoc: Experts have made suggestions to the Government many times. I also expressed my viewpoint. Government agencies do not disagree with us, but new policies cannot be implemented overnight.
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