New growth drivers for Da Nang - Part 5: Outstanding policy mechanisms are needed for Da Nang to accelerate development

From the regional financial center

Building Da Nang into a regional financial center is a new approach in the city's development process. This is considered an opportunity for Da Nang to restructure its economy , promote growth and attract investment.

The Central Government has issued many documents guiding the construction and development of Da Nang into a regional financial center. The Central Government has established a Steering Committee on the construction of a regional and international financial center for Ho Chi Minh City and Da Nang.

The regional international financial center of Da Nang will be built on the basis of Da Nang 's competitive advantages in terms of geographical location, connectivity, convenient transportation, urban infrastructure and developed human resources... and basic development needs. However, Da Nang also faces many difficulties when the scale of the economy is still small; the financial market is still limited; the infrastructure is not yet synchronous and modern.

Da Nang's regional international financial center will be built on the basis of Da Nang's competitive advantages. Photo: Nguyen Trinh

The financial center model of Da Nang is expected to include 3 components:

- Offshore financial center with the role of focusing on attracting international investors to establish financial institutions and organize markets to provide integrated offshore financial services in the domestic and regional currency and capital markets;

- Fintech Center with the role of applying technology in providing financial services under the specific licensing mechanism of the financial center, connecting Fintech services and funding startups in other business fields;

- Ancillary activities serving financial activities in financial centers and other utility services.

Such a financial center will always play an important role in transferring capital to the entire economy, while also helping to link the city's key economic sectors as well as creating a central role and growth engine for the entire central coastal region.

In addition, the financial center will also contribute to helping Da Nang build and promulgate a controlled testing mechanism to create an environment for testing innovative solutions and technologies in financial activities, associated with the function of a national innovation center being formed in Da Nang.

Sharing concerns about building a regional financial center, some economic experts frankly said that Da Nang has many advantages to form a regional financial center with a focus on developing Fintech (financial technology).

But for a regional financial center to be formed with all the elements, we will have to go a distance of twenty years or more. Although it is difficult, we cannot help but take the step, because it is the vision of the country, not just of Da Nang, to develop the country and overcome challenges, risks of falling behind, challenges of the middle-income trap,... in the context of the world with too many fluctuations.

In fact, the construction of a regional and international financial center in Vietnam is a difficult, complicated, and unprecedented issue due to the specific situation and level of development of the financial market. This requires a full and comprehensive assessment of the impact on the fields of socio-economics, law, monetary security, national financial safety, social order and safety; ensuring compliance with the policy of developing a socialist-oriented market economy in our country.

However, the policy of building and developing Da Nang into a regional financial center is a requirement set forth in the Resolution of the Party and the Politburo.

To Da Nang Free Trade Zone

The 7th session of the 15th National Assembly, which is taking place at the end of May 2024, has discussed and considered the issuance of a National Assembly Resolution on the organization of urban government and piloting a number of mechanisms and policies for the development of Da Nang city in the new period.

Among the five new proposed policies, the most noteworthy policy is the Pilot Establishment of the Da Nang Free Trade Zone. This is the difference, the superiority, the breakthrough in the journey to affirm the role, strategic position and importance of Da Nang city in the Central and Central Coast regions and the whole country.

A Free Trade Zone is defined as a special economic zone “outside customs and within the territory”, officially demarcated within the national territory but is an area whose trade relations with the rest of the host country are export and import relations, and goods entering and leaving are subject to the control of the Customs force.

Free Trade Zones apply a special policy system in goods supervision, foreign exchange management, tax policy and business establishment to promote foreign trade development, attract foreign investment and promote international integration. There are 5,383 economic/free trade zones in 147 countries and territories in the world.

The Da Nang Free Trade Zone will include three main functional areas: commercial production area; logistics area, Logistics port and commercial service area. Photo: Nguyen Trinh

Da Nang Free Trade Zone is a functional area with defined geographical boundaries established by the Prime Minister to pilot policy mechanisms aimed at attracting investment, finance, trade, tourism and high-quality services, and the purchase and sale of goods with the outside world is an import and export relationship. The investment policy for infrastructure construction projects of functional areas is decentralized to the People's Committee of Da Nang City.

The Da Nang Free Trade Zone will include three main functional areas: commercial production area; logistics area, logistics port and commercial service area. In the first phase of the Da Nang Free Trade Zone, there will be a hard fence to ensure convenience in the management process, both piloting and completing in an open direction.

According to the city's proposal, the Management Board of Da Nang High-Tech Park and Industrial Park will perform the function of state management of the Da Nang Free Trade Zone, with the authority to manage according to the "one-stop, on-site" mechanism in all fields, creating convenience in handling investment procedures for enterprises.

Da Nang has an international airport, one of the commercial hubs for integration, to promote logistics activities. These are necessary prerequisites for piloting the establishment of Da Nang Free Trade Zone associated with Lien Chieu Seaport, piloting policy mechanisms aimed at attracting investment, finance, trade, tourism, high-quality services, and high technology.

Resolution 43-NQ/TW of the Politburo identified the construction of Lien Chieu Port associated with logistics development as one of the growth drivers of Da Nang. Lien Chieu Port has a favorable location in terms of depth, convenient traffic connections and connections with the city's industrial parks. This creates a huge competitive advantage for Lien Chieu in terms of freight and wharf costs.

Pilot establishment of Da Nang Free Trade Zone associated with Lien Chieu Seaport

The pilot establishment of the Da Nang Free Trade Zone is one of the breakthroughs in implementing a model that has been affirmed by the world but has no precedent and no practice in Vietnam.

In fact, when countries in the world build Free Trade Zones, they do it step by step, then learn from experience and perfect each step. Therefore, the establishment of Free Trade Zones is a new opportunity for the city to break through and rise up in a period of stagnation.

According to Chairman of the National Assembly's Finance and Budget Committee Le Quang Manh, the pilot establishment of a Free Trade Zone is a major policy with sufficient political and legal basis.

“This is a breakthrough policy, a political determination, a spirit of innovation, creativity, daring to think, daring to do of Da Nang and the Government in applying the world's advanced development model. If successfully implemented, it will create a premise to promote the socio-economic development of Da Nang and the whole region. This is also a trial step, while doing it, we will learn from experience to gradually improve,” said Chairman of the Finance and Budget Committee Le Quang Manh.

The pilot establishment of the Da Nang Free Trade Zone will open up a new direction in adjusting pilot mechanisms, creating a better business environment, accumulating experience and from there researching and developing legal documents applicable nationwide.

At the same time, it creates new development momentum, helps accelerate the city's socio-economic development process, promotes its role as a locomotive, leading the economic development of the North Central and Central Coast regions; is the basis for piloting new policy research, as a premise for legalizing regulations on free trade zones for the whole country. This is also a testing step, doing it while gaining experience to gradually improve.

Looking back at the 3-year journey of Da Nang piloting Resolution No. 119/2020/QH14 of the National Assembly, it can be seen that, besides the positive results achieved, the Resolution is mainly focusing on piloting the urban government model, lacking specific mechanisms and policies that are outstanding, breakthrough, motivating, and pervasive.

In the current context of development, Da Nang has enough conditions and foundations to officially organize urban government and needs to have specific mechanisms and policies that are outstanding, breakthrough, motivating and pervasive to support and promote development, helping the city achieve the goals set out in Resolution No. 43-NQ/TW and Conclusion No. 79-KL/TW of the Politburo.

THANH NGUYEN - HOANG PHAN

New growth driver of Da Nang - Part 1: The first brick of the IT industry

Da Nang's new growth engine - Part 2: Aspiration to become the Silicon Valley of Southeast Asia

New growth drivers of Da Nang - Part 3: New drivers with microchips, semiconductors and artificial intelligence

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