Free trade zone to create new momentum for HCMC’s breakthrough development

Breakthrough mechanisms for the Ho Chi Minh City Free Trade Zone (FTZ) are expected to help the city attract high-quality investment in finance, trade, and services, promote exports and industrial development, boost R&D, and draw high-caliber human resources.

The National Assembly, the country's legislature, on Wednesday passed a resolution amending and supplementing its Resolution No. 98/2023/QH15 on piloting special mechanisms and policies for the development of HCMC.

The new resolution introduces a superior legal framework for the HCMC FTZ model. These breakthrough mechanisms are expected to remove bottlenecks and help HCMC transform its advantages in seaports, multimodal transport, and urban scale into new growth drivers.

Numerous breakthrough incentives on tax and land for the FTZ

According to the resolution, the HCMC FTZ, set to be located in the Cai Mep Ha area of the former Ba Ria-Vung Tau province (now part of HCMC after their July merger), is established to pilot exceptional mechanisms and policies to attract investment, finance, trade, services, and high-quality human resources.

The municipal People’s Council is authorized to decide on the procedures for establishing and expanding the boundaries of the zone. Meanwhile, the city People’s Committee has the power to make such decisions for the FTZ associated with seaports in the Cai Mep Ha area.

The HCMC Export Processing and Industrial Zones Authority (HEPZA) will directly manage the FTZ. Currently, the establishment of industrial zones and economic zones falls under the Prime Minister's authority.

In terms of taxation, enterprises implementing new investment projects in the HCMC FTZ will enjoy a corporate income tax rate of 10% for 20 years, including a four-year tax exemption and a 50% reduction in payable tax for the subsequent nine years.

A 50% reduction in personal income tax for 10 years will apply to experts, scientists, talented individuals, managers, and highly skilled workers earning income from salaries and wages for work performed in the FTZ.

HCMC is granted autonomy in selecting strategic investors under the principles of transparency and openness, based on criteria such as capital scale, experience, and technology commitments.

Under the resolution, strategic investors must demonstrate funding capacity and satisfy equity requirements, including at least 20% equity for projects under VND30 trillion ($1.14 billion) and at least 15% equity for projects of VND30 trillion or more.

If multiple investors participate in one project, total equity must meet the above thresholds, with at least one investor contributing at least 30% and the rest at least 15%.

Regarding land policies, the Chairperson of the HCMC People’s Committee is authorized to allocate or lease land without auctioning land-use rights or bidding to select investors for land-use projects within the FTZ (excluding commercial housing projects). HCMC is also empowered to decide the price framework for infrastructure rental in the zone.

According to many experts, granting HCMC greater autonomy over land policies is a key factor. Allowing land allocation and leasing without auctions or bidding will facilitate the attraction of strategic investors, including major global corporations called “eagles.”

The resolution also introduces strong simplification of specialized administrative procedures. Imported and exported goods within the FTZ will be exempt from specialized inspections if they have been certified as meeting standards and technical regulations, or if conformity assessment results are recognized under international treaties.

Enterprises in functional areas that meet non-tariff area conditions may trade goods with external areas under import-export relationships, and may list prices, value goods, and make payments in foreign currencies among themselves.

FTZ to create breakthrough development momentum for southeastern Vietnam

Experts believed that the HCMC FTZ, if integrated with a deep-water port in Cai Mep Ha, could form a “port–service city” comprising duty-free shopping centers, entertainment complexes, international events, post-port tours, and large-scale MICE ( meetings, incentives, conferences and exhibitions) services.

Many large enterprises in HCMC have expressed readiness to embrace the FTZ, viewing it as a major opportunity to restructure their operations. Nguyen Quoc Ky, chairman of tour operator Vietravel, told local media that the FTZ is not only a driver of economic growth but also opens up new space for tourism development.

Experience from Singapore and Busan (South Korea) shows that FTZs often serve as “nuclei” for the formation of integrated complexes featuring entertainment, duty-free shopping, international marinas, and high-end accommodation, creating outstanding value-added chains, Ky noted.

HCMC has sufficient potential to join this “top-tier playing field” if it develops the FTZ in an open manner, linking international trade with distinctive tourism experiences, he added.

HCMC assessed that the establishment of the Cai Mep Ha FTZ will create breakthrough development momentum, enabling the southeastern region to fully leverage the advantages of the Cai Mep-Thi Vai deep-water port and Long Thanh International Airport in the neighbouring province of Dong Nai, positioning the region as a leading maritime and logistics services hub in Southeast Asia.

In recent years, the trade-service and tourism sectors have consistently been among the most important pillars of the city’s economy, maintaining double-digit growth for many consecutive years and making significant contributions to HCMC’s overall growth.

In 2025, total retail sales of goods and consumer service revenues are estimated to increase by 13.5% year-on-year. Meanwhile, the tourism sector is expected to welcome around 8.5 million international arrivals and 45 million domestic visitors, with total annual revenue of approximately VND260 trillion ($9.88 billion), up 36% from last year.

This represents a sufficiently large market foundation for the FTZ to become a new highlight in the development strategy of HCMC in particular and Vietnam in general.

According to HCMC’s proposal released in August, the city plans to establish four free trade zones in Can Gio, Cai Mep Ha, An Binh, and Bau Bang, linked to the seaport and railway systems. These zones are expected to form a mega port cluster of Cai Mep-Thi Vai-Can Gio, aimed at promoting logistics and international trade and serving as the region’s key commercial gateway.

Among them, the Cai Mep Ha FTZ is the largest, covering more than 3,700 hectares in the former Ba Ria-Vung Tau province. It is expected to span 1,000-2,000 hectares, associated with an international transshipment port and Ganh Rai Bay, and is set to play the role of a strategic maritime gateway.