The Ministry of Construction has green-lighted Kien Giang province’s proposal to suspend the master plan to develop Phu Quoc Island into a special administrative-economic zone (SEZ).
In areport to the Government Office, the ministry said: “Right now is not the righttime to establish a master plan to develop Phu Quoc Island into an SEZ due tolack of provisions in the current laws on planning [to set up a specialeconomic unit].”
But as along-term development strategy, it said the province should draft a new masterplan to develop Phu Quoc sustainably, ultimately making it an SEZ.
KienGiang authorities had sought permission from the Government to suspend themaster plan until a draft SEZ law is approved by the NationalAssembly.
In areport to the Prime Minister, the province said it now wanted todevelop the island into a normal economic zone and hire a foreignconsultant to create a new master plan.
Last August, the Prime Minister approved the province’s master plan to develop Phu Quoc into an SEZ withareas earmarked for urban development, tourism, services, housing, agriculturaland forestry development, and specialised areas for airports, seaports andnon-tariff zones.
However,the province said it had been difficult to implement the master planbecause there was still no legal basis for the establishment, managementand operation of SEZs.
KienGiang authorities last year suspended land-use conversions and landtransfers in the proposed Phu Quoc SEZ.
Thedecision was made following an increase in the number of illegalconstruction works and land transactions on Phu Quoc Island, which had ledto land speculation and high land prices.
Inaddition to the Phu Quoc SEZ, the Government wants to developtwo other SEZs, namely Van Don in the northern province of Quang Ninh andBac Van Phong in the central province of Khanh Hoa.
TheMinistry of Planning and Investment expects the three SEZs to contributebillions of dollars to the economy each year from 2020 onwards.
TheGovernment has agreed in principle that the SEZs would enjoy specialregulations and fewer limitations so they could woo more investors.
Thedraft law on SEZs aims to create a legal basis for the establishment,development, management, and operation of the three zones, ensuring that theyare used according to their regional potential and advantages.
Thezones are expected to attract investment, technology and managementcapabilities from abroad, and form high-growth areas with new management modelsand modern living environments.
Theywould also focus on research and development, start-ups, new technologies,high-quality health and education services, quality resorts, and tourismservices.
Toachieve these, preferential policies related to taxation and land lease,among others, would be offered.
Thedraft law for SEZs originally proposed many incentives such as incometax waivers for 10 years for managers, scientists and specialists workingthere. For other individuals who live and work there, the zones were to betax-free.
Investorswould also enjoy value-added tax (VAT) incentives for import of equipmentand machinery not manufactured domestically.
However,in the latest draft submitted to the NA, several incentives have been watereddown. For instance, the period of income tax waiver for managers, scientistsand specialists has been halved to just five years.
The taxexemption for individuals has also been taken out, as has the VAT waiver forimported equipment and rental incentives.
NAdeputies and experts have said that there were too many incentives andthat those related to taxes were likely to be misused.
Currentlythere are no SEZs in the country. There are 18 coastal economiczones, 27 border economic zones and 325 industrial zones.
Vietnamestablished the Vung Tau-Con Dao SEZ in 1979, but shut it down in 1991 becauseof ineffectiveness.-VNS/VNA