HCMC to launch Free Trade Zone linked to Cai Mep Ha Port

Ho Chi Minh City plans to establish a free trade zone (FTZ) linked to Cai Mep Ha Port, with future expansions to Can Gio, An Binh and Bau Bang, optimizing unique local advantages while maintaining a unified management model, according to a new resolution.

The municipal People’s Council on Friday approved a draft resolution outlining the procedures for establishing, expanding, and adjusting the boundaries of the FTZ.

The move implements the parliament’s Resolution 260 amending and supplementing some articles of Resolution 98/2023 on piloting special mechanisms and policies for HCMC’s development.

Accordingly, the southern metropolis will initially establish a single FTZ at Cai Mep Ha in the former Ba Ria-Vung Tau province, covering roughly 3,800 hectares.

Ba Ria-Vung Tau and Binh Duong provinces in July merged with HCMC to form the new HCMC.

The Cai Mep Ha area has been designated as the core zone, aiming to leverage the advantages of Cai Mep-Thi Vai, Vietnam’s largest deep-sea port complex.

From the core zone, functional subzones will be developed in areas with specific advantages in logistics, port infrastructure, and transport connectivity.

The expansion will not be confined to geographically contiguous areas and may include non-adjacent zones, provided they can link to technical infrastructure and logistics networks and share the management system of the Cai Mep Ha core zone.

This approach ensures unified governance, prevents institutional fragmentation, and maximizes the advantages of each area.

Under the plan, the An Binh subzone, located in the former Binh Duong province, is planned to integrate with existing inland ports and logistics centers. Positioned near major transport arteries and interregional transport hubs, it is well-suited for goods transfer by road and rail.

An Binh is designated as a satellite logistics subzone, supporting cargo consolidation and distribution, and direct connectivity with the Cai Mep Ha core zone.

Similarly, the Bau Bang subzone, also in the former Binh Duong province, has a strategic advantage in rail connectivity. It is linked to the HCMC-Loc Ninh railway, connecting the Cai Mep-Thi Vai deep-water port cluster with inland areas and the trans-Asia economic corridor.

Bau Bang is expected to serve as a hub for transferring goods from the Central Highlands, Cambodia, and northern provinces of Vietnam to the international port system.

The Can Gio subzone is projected to be linked with an international transshipment port project. Strategically located at a maritime gateway, it is well-positioned for container transshipment, international logistics services, and marine-related commercial activities.

Once integrated into the FTZ, Can Gio will serve as a “transshipment gateway,” supplementing functions that the Cai Mep Ha core zone cannot accommodate due to space constraints for large-scale port development.

The choice of a “one zone, multiple subzones” model stems from authority limits and the need for flexibility in implementation. Under Resolution 260, HCMC is only authorized to establish an FTZ linked to Cai Mep Ha. Therefore, to include other areas in the system, the city must use an expansion mechanism rather than create independent zones.

Under general regulations, functional subzone expansions are normally allowed only once the established zone reaches around 70% occupancy. However, the resolution permits expansions even if the Cai Mep Ha core zone has not met this threshold, provided they serve national objectives or urgent requirements for integration and strategic investment attraction.

The FTZ is designed to operate under a duty-free model, applying special customs and management mechanisms to facilitate international trade. All subzones, even if non-contiguous, will follow the same policy framework and be managed under a single authority, ensuring consistency and seamless governance.

HCMC expects that the model will generate a new growth engine, leveraging port facilities, logistics, and regional connectivity. The model is also seen as a key foundation for the city to strengthen its position in the global supply chain while reinforcing the Southeast region’s role as an economic driver in the coming period.

According to the parliament's Resolution 260, 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%.