Despite generous investment incentives, formerly-established open economic zones in Vietnam are still ineffective and cannot become a new engine for growth.
Vietnam National Assembly and the Government should carefully review tax incentives in future special economic zones to avoid budget losses and negative socio-economic impacts, according to Nguyen Thu Huong, senior manager of Oxfam.
Economist Pham Chi Lan said that providing incentives for too many fields in special economic–administrative zones would increase the tax inequality for businesses.
The latest draft law of the special economic zones has been amended based on the opinions of several members of the National Assembly to reduce incentives for several investment projects including casino, tourism and entertainment services.
Without both of economic incentives and a special administrative institution, the special economic zone will hardly be able to sustain its appeal, according to experts.
With increasing incentives, a better legal framework and stronger competitive advantages, Vietnam's real estate market has attracted a significant influx of capital from both local and foreign investors in recent years.
Based on the nine criteria categories set forth in the draft law on special administrative-economic zones (SEZs), the incentives offered to Van Don, Bac Van Phong and Phu Quoc are deemed to be better than those in China, South Korea and Singapore.
According to Luu Bich Ho, former Director of Development Strategy Institute, Ministry of Planning and Investment, because of the perception, thought and interest of law enforcement agencies, special economic zone (SEZ) of Vietnam has not reached the highest level of business liberalization to compete and attract investment.
Market mechanism in build-operate-transfer (BOT) projects in Vietnam seems to be put in loose control as investors involved in the BOT definitely obtain profits other than losses owning to the State's incentives.
It looks like investors are trying to cash in on incentives for green power projects.
