VietNamNet Bridge – The Quang Ninh provincial authorities have vowed to develop the Van Don Special Economic Zone (SEZ) in the locality. But they still don’t know how to find the $12 billion worth of capital needed to build the SEZ.

There is no shortcut for anyone to take to develop SEZs. In order to develop SEZs, it is necessary to develop the infrastructure items first. Andrew Grant, CEO of McKinsey & Company Singapore said when asked to give advice to the Van Don SEZ project.

Sharing the same view, a professor from Harbin University said that investors would not take risk to set up their businesses in SEZs in their early days, and that they would only consider the investment after they can see the infrastructure items get completed.

Therefore, it is necessary to develop the infrastructure system first before trying to attract investors.

The plan on the Van Don SEZ development built up by the Quang Ninh provincial authorities says that in 2014-2030, the SEZ would need $12 billion worth of capital.

In the first phase of development, 2014-2020, the period for infrastructure development, Van Don would need $5.2 billion.

In general, an SEZ would experience two stages of development. At first, the state’s capital would play a very important role to help call for investments. However, later, it would be necessary to mobilize capital from the other different sources.

Different policies would be needed for the two different stages of development. In the first stage, due to the limited capital from the State, Vietnam may think of mobilizing capital from the land.

Dr. Tran Dinh Thien, Head of the Vietnam Economics Institute, said Vietnam needs the “financial policies powerful enough” to mobilize resources for the infrastructure development period, and the “outstanding preferential policies” for the next period.

The most important thing Vietnam needs to do is to convince the investors that they would get benefits if setting up businesses in Van Don. However, Thien noted that the investors still think the investment incentives given by Vietnam to foreign investors are not attractive enough.

“It is necessary to offer the investment incentives bigger than the currently applied preferences. But how big the incentives should be remains a question for discussion,” Thien said, reminding that though the SEZ in Dubai don’t collect the corporate income tax, still can get big revenues from fees and other fixed charges.

“I believe that the government may think of earning money from the other sources instead of the tax collection, so as to both satisfy the investors and ensure the benefits for the nation,” Thien said.

He many times emphasized the importance of the Van Don SEZ development, saying that the SEZ would not only serve the Quang Ninh’s economic development, but also act as the driving force for the whole country’s growth.

Deputy Governor of the State Bank Dao Minh Tu gave cautious comments when talking about the SEZ model.

“There are too many issues to be discussed: whether to develop the finance & banking market in Van Don? How the mechanism on the foreign exchange should be like?” Tu said.

Dat Viet