Proposal for free circulation of the US dollar in Phu Quoc sparks controversy
By Nguyen Nga
October 26, 2017 | 06:34 AM GMT+7
Kien Giang province's 'breakthrough' proposal to allow free circulation of the US dollar (USD) in Phu Quoc special economic zone (Phu Quoc) has sparked controversy.
A view of Phu Quoc island. Photo: vietnamnet.vn
Proposed under the Draft Law on Special Administrative and Economic Zones, which was submitted to the members of Vietnam’s National Assembly for review, the plan would allow free exchange of other currencies into USD... The province also proposes that foreign visitors joining in casinos in Phu Quoc after paying taxes should be allowed to bring their money out of Phu Quoc without the State Bank’s licenses.
Considering this proposal to be quite "normal", financial economist Bui Kien Thanh opined that "Once a region is converted into a special zone, its regulations and rules are no longer relevant to ones of its country. This special zone has its own special policies and regarding currencies in a free market, using any currency is normal. If Phu Quoc is considered to be a special zone of Vietnam as Hong Kong of China, it must be legally separated from Vietnam. Then, the making of a separate law for the special zone will be effective."
In 1949, the Singaporean government had the idea of economic development through special economic zones where using foreign currencies for purchasing and selling house was allowed, Thanh added.
Disagreeing with the proposal above, financial expert Nguyen Tri Hieu said that this proposal is unreasonable and "not worthy of application". "If the free circulation of USD is allowed in Phu Quoc, the spillover effect will be further beyond Island”. He added that it could undermine the anti-dollarization policy of Vietnam.
Economic expert Le Dang Doanh also disagreed with this proposal, saying that it adds little to Phu Quoc’s appeal to investors. "SEZ aim to attract investment. I do not think the special zone should be separated from the national monetary policy in order to achieve this."
According to experts, there is a rule that strong currencies will overwhelm the weak ones. "Phu Quoc favors the USD for large transactions. Then which role does the Vietnamese currency play in Phu Quoc", Doanh wondered and stressed "This proposal should be very carefully considered, especially for its implications on national monetary policy.”
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