Da Nang Free Trade Zone: New driving force and investment attraction opportunity

The area proposed to be a logistics zone (after Lien Chieu Port), one of 10 areas planned to build a Free Trade Zone

New momentum

As an advisor to the Department of Industry and Trade of Da Nang, and also a participant in the development of the Project to establish a Free Trade Zone, Associate Professor, Dr. Bui Quang Binh, lecturer at the University of Economics (University of Da Nang) said that the development of a Free Trade Zone starts from the strengths of Da Nang, in which Da Nang's prime strategic location is a huge advantage.

Currently, Da Nang has a limitation that the city's development momentum is slowing down. The necessary scale for a developed urban area has not been reached. "This is the reason why Da Nang is trying very hard to create new momentum for development. Therefore, Da Nang has proposed that the Central Government and the National Assembly pass Resolution 136/2024/QH15, in which the development momentum of Da Nang comes from the construction of a Free Trade Zone," Mr. Binh commented.

This was also confirmed by Mr. Tran Chi Cuong, Vice Chairman of the People's Committee of Da Nang City. Da Nang is one of the few localities with both an international seaport and an international airport, located on the country's main roads, helping the City to be more favorable in economic development, investment, trade, services and tourism .

Therefore, the establishment of a Free Trade Zone is proposed to develop according to the integrated business urban model, including many functional areas (production areas, logistics centers, trade - service areas and other types of functional areas according to the provisions of law) to maximize the development advantages of the City.

This special policy applied to Da Nang is also linked to the future development roadmap of Lien Chieu seaport and Da Nang international airport, creating favorable conditions for Da Nang to become a regional and international freight transit center, contributing to strongly attracting domestic investment capital as well as FDI capital into the city and the dynamic region of the Central region.

Ms. Nguyen Thi Tuyet Mai, Deputy Director of the Investment Promotion Support Center of Da Nang City (IPA Da Nang) informed that the City is researching and planning 10 locations to develop a Free Trade Zone.

“We are calling for strategic investors to build infrastructure for the three main functional zones of the Free Trade Zone: the production zone, the trade-service zone and the logistics zone,” said Ms. Mai.

Regarding incentives, the representative of IPA Da Nang affirmed that investors in the Free Trade Zone will enjoy incentives as well as outstanding support, for example, the project's operating period is up to 70 years.

Along with that, the procedures and processes of foreign enterprises investing here are applied as domestic investors; they enjoy preferential customs regimes and incentives on exemption and reduction of land rent, corporate income tax, and taxes on goods and services purchased and sold in the zone.

Based on the experience of many countries such as Germany, the Netherlands, Singapore, China and the UAE, Dr. Tran Thi Hong Minh, Director of the Institute for Policy and Strategy Studies, suggested that Da Nang can apply many creative solutions to build an effective and sustainable Free Trade Zone.

First, investing in modern logistics infrastructure is a key factor. Accordingly, for Da Nang, Tien Sa port and Lien Chieu port need to be upgraded synchronously to expand cargo handling capacity and meet increasing demand. Along with that, Da Nang needs to develop domestic logistics centers, contributing to connecting the free trade zone with neighboring areas and expanding the international market.

Da Nang also needs to build a legal framework and flexible incentive policies to attract investment in the Free Trade Zone. Tax incentives and a transparent customs mechanism will help businesses reduce administrative procedures and facilitate international trade.

Next, the Da Nang Free Trade Zone not only aims at economic growth, but also must ensure sustainability and environmental friendliness. Therefore, Da Nang should encourage the use of renewable energy, reduce carbon emissions, and promote green production in the area.

Finally, Dr. Tran Thi Hong Minh suggested that digital transformation is an indispensable factor for the development of the Da Nang Free Trade Zone.

Many new opportunities open up

From the perspective of businesses, the Free Trade Zone will create a strong attraction, with logistics businesses being the first to benefit.

Mr. Le Quang Duc, Deputy General Director of Da Nang Seaport Joint Stock Company, said that basically, the Free Trade Zone puts the role of production first. Production is related to transportation, import and export in large volumes, so it is necessary to use seaports.

“All free trade zones in the world are related to seaports, the role of seaports in free trade zones is extremely important. The development of seaports and free trade zones are closely linked,” said Mr. Duc.

From the perspective of a port operator, Mr. Duc commented that when Lien Chieu seaport develops well, it will create a competitive advantage for the Free Trade Zone and Da Nang port.

From this, it can be seen that the Free Trade Zone and the seaport are two symbiotic factors that resonate with each other. The Free Trade Zone will bring goods to the seaport, and if the seaport develops well, investors will come to the Free Trade Zone.

Mr. Nguyen Duy Minh, Vice President of the Vietnam Logistics Services Association (VLA), commented that Da Nang is the first locality in the country to pilot the establishment of a Free Trade Zone. This is not only a great driving force for the economic development of Da Nang City in particular and the regional economy in general, but also a tool to direct the flow of world trade through the Free Trade Zone...

According to Mr. Minh, with the attraction from the Free Trade Zone, Da Nang will have a competitive advantage and great opportunity to attract investment in economic sectors, thereby making a breakthrough. To seize this opportunity, some enterprises under the VLA have discussed organizing sea transport to directly connect Vietnamese goods with the world.

Not only opportunities for logistics, many businesses also affirm that Da Nang will be the chosen location as a center for producing high-value export goods, a modern tourism and service center of the world...

As a business that has been present in Da Nang for a very long time (more than 30 years), Mr. Richard Leech, Deputy General Director of Phu Long Real Estate Joint Stock Company, believes that Da Nang has the potential to become a leading technology center not only in Vietnam, but also in the Asia-Pacific region.

Da Nang's development potential in the fields of semiconductors, artificial intelligence (AI), and data centers is further enhanced thanks to resolutions of the National Assembly, which provide specific incentive policies to attract investors and strategic partners in the high-tech sector...

These policies are designed to create a favorable environment for innovation investment, positioning Da Nang to become a leading manufacturing center for semiconductor chip production, AI development, and data center operations in the region.

And we cannot forget that Da Nang has great opportunities to develop high-quality tourism and resorts, combined with international events... This will attract more tourists and investors.

“We believe that Da Nang can provide further investment opportunities in key areas such as new technology, finance, infrastructure, tourism. All of which are developing in a sustainable manner,” said Mr. Richard Leech.

With many years of experience in advising Taiwanese businesses to explore the Vietnamese market, Ms. Ngo Pham Tran, President of the Vietnam - Taiwan Business Association (VTBA), shared that Taiwanese electronics businesses as well as VTBA member businesses wish to cooperate with Da Nang to invest in the Free Trade Center.

Some industries related to semiconductor microchips, semiconductor packaging and testing, VTBA is also in demand and is selecting and surveying in Da Nang City.

“This is a new starting point. I think that, in addition to the electronics sector, Da Nang is also a very attractive place for semiconductor and microchip investors to choose,” the Chairman of VTBA affirmed.

Similarly, with the Free Trade Zone, Ms. Janette Phi, CEO of Philogix Consulting Company, said that when many investors are looking for opportunities, Da Nang is an ideal destination for cooperation and investment in the field of science, technology, life and health.

“Da Nang has a software park, a high-tech zone, and a foundation to combine life sciences and AI. We are looking for opportunities to promote the development of the life sciences industry on this infrastructure,” Ms. Janette Phi revealed.

According to Resolution 136/2024/QH15, the policy mechanisms applicable to Da Nang Free Trade Zone include:

1. Foreign enterprises entering the zone do not need an investment license and investment project to register for establishment.

2. Apply preferential customs regime for enterprises with investment projects in the zone with current conditions (except conditions on export/import quotas).

3. Corporate income tax (CIT) is exempted for 4 years, 50% reduction in tax payable for the next 9 years, preferential tax rate of 10% for 15 years.

4. Value Added Tax (VAT) applies a rate of 0% to goods consumed domestically.

5. Exemption from special consumption tax (except for unfenced areas and 24-seat cars).

6. Enterprises with investment projects in the Free Trade Zone are allowed to lease land for 70 years.

7. Exemption from land rent for the first 3 years of basic construction and at least the next 11 years of the project.

8. Support investment in infrastructure construction inside and outside the area, based on the City's budget balance capacity and the rationality of the master plan.

9. Invest or support investment in development costs for innovative startup projects based on the City's budget balance capacity and the project's eligibility conditions as prescribed by the City People's Council.

Source: https://baodautu.vn/khu-thuong-mai-tu-do-da-nang-dong-luc-moi-va-co-hoi-thu-hut-dau-tu-d259742.html