As assigned by the Prime Minister, the Ministry of Planning and Investment has coordinated with the Ministry Finance and other relevant agencies to draft a Prime Ministerial decision that will create a mechanism to provide capital support from the central budget to develop infrastructure systems at coastal economic zones (EZs).

According to the Ministry of Planning and Investment, since the establishment of the first EZ, Chu Lai Open Economic Zone, in 2003, another 14 EZs have been established nationwide, covering a total area of 627.633ha of land and water.

 

        Currently, there are two EZs in the Red river delta, namely Van Don EZ (Quang Ninh) and Dinh Vu – Cat Hai ( Hai Phong); there are 10 EZs in the Central coastal area:

Nghi Son (Thanh Hoa), Dong Nam Nghe An (Nghe An), Vung Anh (Ha Tinh), Son La (Quang Binh), Chan May – Lang Co (Thua Thien Hue), Chu Lai (Quang Nam), Dung Quat (Quang Ngai), Nhon Hoi (Binh Dinh), Van Phong (Khanh Hoa), Hon La (Quang Binh) and Nam Phu Yen (Phu

Yen). There are also two EZs in the south — one spread across Phu Quoc island and South An Thoi islands (Kien Giang) and one in Dinh An (Tra vinh).

 

      Some economic zones - Chu Lai, Dung Quat, Nhon Hoi, Nghi Son, Vung Anh, Chan May - Lang Co, Van Phong, Van Don, Nam Phu Yen — have basically been completed with detailed planning in regards to the socio-technical infrastructure land clearance and resettlement issues. The remaining EZs are still in the initial stages of planning. Preparations regarding hiring of personnel and the mobilization of capital for the construction of infrastructure construction and compensation for land clearance are all underway.

EZs in Vietnam have attracted 250 domestic and foreign investment projects with a total registered capital of about US$26.5 billion. There are about 60 foreign-invested projects with a total registered capital of approximately US$18.8 billion.

 

        Among these, there are some significant projects in Nghi Son EZ, Vung Anh EZ, Dung Quat EZ, including oil refineries, shipbuilding plant, steel works, metallurgy and heavy mechanics factories, and a thermo-electricity power plant.

 

      Since 2004, EZs have enjoyed the support of capital from the central budget for the construction of technical and social infrastructure works, and some important services and utilities for the EZ. The State has also provided investment for infrastructure outside precincts in EZs, and compensation for land clearance for precincts, plus, developing sewage and liquid waste treatment.

 

         As at the end of 2008, 10 EZs had been supported with targeted capital from the central budget to the tune of VND2.4 trillion ( USD 126.3 million). Besides, EZs have also enjoyed support from the central budget in other forms, through ODA, government bonds, and retained earnings.

Chu Lai economic zone has been authorized by the Prime Minister to use profits gained from the locality for the purpose of reinvestment — i.e. a fund of VND872.8 billion (USD45 million) was reallocated from the state budget to develop Chu Lai.

 

       Dung Quat EZ secured government bonds worth VND270 billion (UsD14.2 million) for Binh Long road project, Dung Quat port. Meanwhile, Chan May — Lang Co EZ gained US$ 5.3 million of official development assistance (ODA) fund for the project of Lang Co environmental improvement.

 

      State-owned enterprises, non-state enterprises and foreign invested enterprises invest more commonly invest in infrastructure items from which capital is recoverable — such as electricity plants, water supply, telecommunications service, sea port infrastructure, and other utility works and services.

The funds provided from the state budget and investment capital resources of enterprises are both critically important to the construction and development of technical infrastructure works in EZs.

 

 

        According to the Ministry of Planning and Investment, the construction and development of EZs in Vietnam has been initially been a highly successful initiative.

Along with capital support from the central budget, other capital resources have been mobilized to invest in the construction and development of socio-technical and cultural infrastructure works for generally serving EZs, including main axis network, industrial zone infrastructure, vocational training school, hospital, television/ cultural/ sports centers, electricity supply, water supply, post and telecommunication, sea port infrastructure, sewage and solid treatment work and other utility works for serving business activities of enterprises.

 

 

       However, there are some factors during the process of investment in the construction and development of EZs infrastructure that need to be addressed:

 

     In order to solve the above problems, it is important to draw up a clear and reasonable mechanism on disbursing capital support from the central budget for investing in the development of technical infrastructure and social infrastructure system or coastal economic zones. This mechanism shall he created based on current provision of the investment Law and related guiding documents.

 

      For example, paragraph one in Article 36 of the Decree No.08/2006/ND-cp dated 22nd September, 2006, requires that the government shall use capital resources from the central budget to following: (1) Investment In the development of technical infrastructure and social infrastructure systems outside functional areas and essential utility service economic zones; (ii) Compensation for land clearance in functional areas and for the resettlement, agricultural resettlement of households whose land is revoked; (iii) settlement in the centralized sewage and waste treatment s of functional areas.

 

      Meanwhile, Article 17 of the Decree No. 29/20o8/ND-CP dated 14th March 2008, regarding the support of industrial zone, export processing zones and economic zones, states that: (i) investment projects to develop important technical infrastructure and social infrastructure shall be arranged with capital from both local budgets and the central budget; (ii) investment for construction of large-scaled infrastructure, which play a key role to the development of the economic zone will be raised through issuance of bonds; (iii) Technical infrastructure and social infrastructure works, key public and utility works in the economic zone shall be entitled to use ODA capital, preferential credit capital, and other technical supports; (iv) Attracting investment capital under such forms as BOT, BT, BTO and other forms in compliance to the current laws; (v) investment projects for the construction and trading of infrastructure in functional areas In the economic zones shall mobilize their own capital through the investors (vi) investment projects developing technical infrastructure and social infrastructure which generally serve the economic zones shall mobilize capital from the land fund in accordance with the provisions of the Land Law.

 

       Also, according to the Ministry or Planning and Investment, the purpose and requirement of this decision is to give detailed provisions on the conditions, principles and items, regarding the management and use of the Supporting funds allocated from the central budget for investment in the construction and development of technical infrastructure and social infrastructure in coastal economic zones in order to fulfill the objective proposed in the Decision No.1353/QD-TTg dated 23rd September, 2008 of the Prime Minister that by 2020, coastal economic zones shall contribute about 1s- 20% to GDP of the whole country and create non-agricultural jobs for about 1.3 to 1.5 million people.

 

       The mechanism on providing capital support from the central budget for investment in the development of technical infrastructure and social infrastructure as stipulated in the draft decision shall only be applicable to coastal EZs which have been (i) listed in the Master Plan on the development of coastal EZs of Vietnam to 2020, approved by the Prime Minister In Decision No.1353/QD-’TTg dated 23 September 2008 /9/2008; (ii) EZs which have been established under the decision of the Prime Minister and operated in accordance with provisions of Decree No.29/2OO8/ND-CP dated 14 March 2008 of the government providing for industrial zones, export processing zones and economic zones, and (iii) EZs whose management boards are established under the Decision of the Prime Minister. According to professional experts, the newly established mechanism shall facilitate EZs to enhance their investment for infrastructure so as to better attract investment in the future coming time.