Vietnam Free Trade Zones: Introduction
Vietnam Free Trade Zones are also called Economic or Industrial Zones. With the aim to attract foreign direct investment (FDI) to the country leading to the stimulation of the economy, the Vietnamese government has set up special areas all around the land.
These special free trade areas are earmarked for the production of goods and services. In these free trade zones, foreign investors and business owners who have set up here are provided with various free trade zone benefits concerning fiscal and non-fiscal policy incentives.
Some popular Vietnam Free Trade Zones
- Vietnam Free Trade Zones are also called ‘Economic Zones’ or ‘Industrial Zones’. There are 18 coastal economic free trade zones set up by the government along with over 325 state-supported industrial parks spread across the country.
#1 Dinh Vu – Cat Hai Economic Zone
- Established in 2008, the Dinh Vu – Cat Hai Economic Zone is one of the key coastal economic zones in Vietnam.
- Spread across an area of approximately 22,000 hectares, this economic zone is set up in Hai Phong City in the Northern Key Economic Zone.
- It is well-connected to the world through its various ports including the Dinh Vu Port, Nam Dinh Vu Port, and Cat Hai Port, airports including the Cat Bi International, and road networks.
- In this free trade zone, there are 9 industrial parks set up which attract various local and international firms to the region. Some of these industrial parks include the following:
- NDV- Nam Dinh Vu Industrial Zone
- Trang Due Industrial Zone
- Cat Hai- Lach Huyen Industrial Zone
- Ben Rung Industrial Zone
- Besides the above, companies are also offered various storage spaces like warehouses, health centres, education and training centres, security, and more.
- Companies are provided with a corporate income tax holiday for the first four years and a reduced tax rate for an additional 9 years.
- Some of the major industries include the following:
- Manufacturing Industry
- Petrochemicals Industry
- Electronics Industry
- Telecommunication Industry
#2 Hoa Khanh Industrial Zone (HKIZ)
- Established in 1997, the Hoa Khanh Industrial Park is located in the Da Nang City in Vietnam in the Central Key Economic Zone.
- It has a well-developed infrastructure including warehouses, factories, labour force, utilities, and more.
- It is also well-connected to the world with its established transportation network including the close proximity to the Da Nang International Airport, the North-South railway, and the Tien Sa and Han River Ports.
- The authorities have allowed for the exemption of all fixed assets and other materials required to maintain machineries that are used for the production of goods and services.
- Companies are provided with a corporate income tax holiday for 2 years and a reduction in the tax rate for an additional three years.
- They can be set up in some of the following major industries in this zone:
- Petrochemical Industry
- Garments Industry
- Agricultural Industry
#3 Vietnam-Singapore Industrial Park (VSIP)
- Established in 1996, the Vietnam-Singapore Industrial Park (VSIP) was set up in the Binh Duong Province.
- Spread across 8,600 hectares, this zone was developed on the basis of the economic cooperation between Vietnam and Singapore. It was a joint venture investment between the Vietnam state-owned company Becamex IDC Corporation and Singaporean company, SembCorp Development.
- It is well-connected to the world owing to its close proximity with its transportation network created owing to the North-South railway, Tan Son Nhat International Airport, and Saigon Port.
- Companies receive a corporate income tax holiday for 2 years with an additional reduction in tax for 4 years.
- Some of the major industries in this specific Vietnam Industrial zone include the following:
- Electronics Industry
- Food Industry
- Construction materials
#4 Phuoc Dong Industrial Park (PDIP)
- Established in 2007, the Phuoc Dong Industrial Park (PDIP) was set up in the Ho Chi Minh City in the Southern Key Economic Region.
- Spread across approximately 2,200 hectares, this region is considered to be an industrial, commercial and residential space catering to all individuals.
- It is well-connected to the world with its established transportation network including the road system, port such as the ICD Hiep Phuoc Port, and more.
- It also has a well-developed infrastructure with water treatment plants, electrical systems, and more.
- Companies receive a corporate income tax holiday for 2 years with a reduction in the tax amount for an additional 4 years.
- Some of the major industries that you can set up in this specific Vietnam Industrial zone include the following:
- Light Industry
- High-tech Industry
- Export processing Industry
- Construction materials
#5 Hiep Phuoc Industrial Park Company (HIPC)
- Established in 2008, the Hiep Phuoc Industrial Park Company (HIPC) was another Park set up in the Ho Chi Minh City in the Southern Key Economic Region.
- Spread across approximately 1,686 hectares, this region is well-connected to the rest of the world owing to its close proximity to the established transportation infrastructure including roads, highways, airports, and seaports.
- It also has a well-developed infrastructure with carious facilities, security systems, a strong labour force, and more.
- Some of the prominent industries that companies can set up in this Vietnam Industrial zone include the following:
- Heavy Industry
- Chemical Industry
- Mechanical Engineering
- Construction materials
Why set up business in the Vietnam Free Trade Zones?
#1 Foreign ownership
- In Vietnam, the government has permitted foreign individuals to have complete ownership of their business in most of the sectors.
#2 Tax benefits
- New companies are provided with corporate income tax holidays for up to a period of 4 years. Following this, companies are also subjected to a low corporate income tax of approximately 10% for up to 15 years.
- Additionally, both local and foreign employees can benefit from a 50% part reduction in the personal income tax.
#3 Business-friendly policies
- The Vietnamese government has issued various business-friendly policies and initiatives to attract foreign investment into the domestic economy.
- Additional tax cuts are given to companies involved in high-technology projects or socialised projects.
- There are tariff cuts imposed on companies that trade products in the Southeast Asia region.
#4 Vietnam free trade zones are well connected to the world
- There are multiple seaports and airports around the country that companies can take advantage of. Most of the Vietnam Industrial zones are set up adjacent to them as well.
- Moreover, there are established road and railway networks available within the country as well which allows for easy transportation of goods and services across Vietnam.
#5 Well-developed infrastructure in Vietnam free trade zones
- The government has been investing in the different industrial parks to improve the infrastructure and ensure it meets the international standards.
- Businesses can take advantage of these developed infrastructures including various storage facilities, factories, security systems, and more new features available in the parks.
#6 Doing business in Vietnam
- As per the Doing Business Report of 2020 by the World Bank, Vietnam had a rank of 70th out of 189 countries in terms of Ease of Doing Business.
- Businesses can also take advantage of the lower overhead costs in Vietnam owing to lower minimum wage requirements, cheaper availability of resources, and more.
#7 Larger consumer market
- The growing population in Vietnam can potentially serve as a huge consumer market for the business.
#8 Relationships with other countries
- Vietnam has developed strong diplomatic relationships with different countries in both the East and West, including the United States, China, Malaysia and Canada.
- It is also a member of various organisations such as the World Trade Organisation, ASEAN, and European Union.
- Such relationships allow for an efficient facilitation of trade for the businesses.
How can Tetra Consultants help you set up in Vietnam Free Trade Zones?
- There is a wide range of Economic Zones spread across Vietnam with multiple Industrial Parks within each zone. Therefore, it may be cumbersome to choose a suitable Zone and Park for your business. Tetra Consultants is there to assist you with this process.
- Once we understand your business activities, needs, and long-term objectives, we will research thoroughly and select a suitable Industrial Zone for your business. We will inform you about the different free trade zone requirements you may be required to meet when incorporating your business in your chosen Industrial Zone.
- Once this is completed, we will proceed to register company in Vietnam with the relevant authorities on your behalf so that you can focus your time and energy on conducting your business.
- We will also leverage our banking network to open a corporate bank account for your newly incorporated business.
- Once the registration process is completed, we will continue to ensure your new business compliance with the government regulations.
- Contact us now for more information about the Vietnam Free Trade Zones and how our team can set up your business in your chosen Zone. Our dedicated team of experts will revert within the next 24 hours and answer any queries you may have.
Does Vietnam have any Free Trade Zones?
- Yes, there are 18 coastal economic zones in Vietnam with over 325 industrial parks within the zones. These industrial parks are spread across the country.
- In Vietnam, Free Trade Zones are known as ‘Economic Zones’ or ‘Industrial Zones’.
- Contact us for more information about the Economic Zones in Vietnam and our dedicated team of experts will revert within the next 24 hours.
How many Special Economic Zones are there in Vietnam?
- In Vietnam, there are 18 Economic Zones within which there are over 325 industrial parks.
Can a foreigner set up their business in Vietnam?
- Yes, foreign individuals are permitted to set up their business in Vietnam and have 100% ownership of their business as well.
- However, there must be at least one local representative of the firm.
Why should I set up my business in Vietnam?
- Registering your business in Vietnam may be a good idea for you for the following reasons:
- Foreigners can have complete ownership of their business
- The government policies are business-friendly
- Businesses are provided with various fiscal (tax holidays & tax benefits) and non-fiscal incentives (infrastructure & transportation networks) to attract Foreign Direct Investment (FDI) to the country.
- Businesses can take advantage of the well- established infrastructure and the highly skilled and cheap labour force available in the region.
What would be the cost of setting up my business in Vietnam?
- The total engagement fee that you will be required to pay will be based on the services you need from us. Our comprehensive service package includes planning and strategising with our clients to select a suitable free trade zone and legal entity for the business, registering your Vietnam company with relevant authorities, opening a corporate bank account, ensuring the business’s compliance with government policies, and more.
- This total engagement fee that will be charged includes the Vietnamese government fees that are required to be paid during the incorporation process of the business.
- Since we believe in total transparency, we will discuss these costs with you further, prior to the incorporation process.
Who benefits from the establishment of a Free Trade Zone?
- The government establishes Free Trade Zones with the motive to increase foreign direct investment in the country, subsequently leading to economic growth. Hence, the government benefits from the establishment of a Free Trade Zone.
- The government also offers various tax exemptions and benefits, high-quality infrastructures, and more to the businesses in the Free Trade Zones and thus, businesses also benefit from this.