Vietnam's central hub Danang rolls out unprecedented incentives for Free Trade Zone

Danang has rolled out a slate of unprecedented incentives to attract investment flows, particularly FDI, into its Free Trade Zone.

Danang Free Trade Zone (FTZ) is the country's first of its kind, officially established under a prime ministerial decision issued in June 2025.

The FTZ spans 1,881 hectares across Hai Van ward, Ba Na commune, and Hoa Vang commune. It is divided into seven functional areas focusing on manufacturing, logistics, commerce and services, digital technology, IT, and innovation.

Foreign firms entering the FTZ do not need an investment license or to submit an investment project to register a company. They are also eligible for preferential customs mechanisms under current regulations, except for conditions related to export turnover, said Do Quynh Tram, deputy director of the municipal Department of Industry and Trade.

Investors enjoy a four-year corporate income tax exemption, followed by a 50% reduction for the next nine years, with a preferential 10% rate applied for 15 years. AI and semiconductor specialists receive a five-year personal income tax exemption. There are also exemptions from VAT and special consumption tax, except for unshielded areas and 24-seat vehicles.

Infrastructure investors can lease land for up to 70 years, with a three-year rent-free period during construction and 11 years from project commencement. The city will also consider supporting infrastructure investments inside and outside the zone based on budget capacity and overall planning feasibility, as well as funding development costs for innovative startup projects according to criteria set by the city People’s Council.

In addition, infrastructure investors can deduct R&D expenses when calculating corporate income tax.

According to Tram, to optimize the city’s unique advantages, build a pioneering institutional model with international competitiveness, and establish a new destination for global FDI flows, Danang has also proposed a set of new, special policy mechanisms for the FTZ.

Accordingly, it would allow land allocation or leasing without auctions or competitive bidding for priority sectors within the FTZ, and designate investors to develop technical infrastructure connecting functional areas or linking to seaports, airports, and international border gates under the PPP model.

Notably, projects within the FTZ would be fully exempt from land and water surface rental fees for the entire lease term, except for residential projects and those on commercial-service land.

Foreign investors can hold up to 49% of charter capital in sectors such as airport operations, cargo terminal services, ground handling, airside operations, and in-flight catering; and up to 51% in international transshipment logistics centers at airports. In addition, they are permitted to engage in transshipment, temporary import for re-export, and cargo transit activities, according to the proposals.

The city’s Party chief Le Ngoc Quang described the FTZ as a breakthrough model aimed at trade liberalization and deeper integration, contributing to raising Danang’s profile on the Asia-Pacific logistics map.

At a meeting of the permanent Cabinet members on December 5, Prime Minister Pham Minh Chinh said that piloting several free trade zones is a new initiative that must be feasible and efficient. “Agencies are required to draw on international experience and, based on Vietnam’s conditions, develop distinctive, superior, and feasible mechanisms and policies.”

The PM also noted that these policies should not unduly impact the overall investment environment and should combine general regulations with special mechanisms suited to each zone and locality.

On July 1, 2025, Danang and its neighboring province of Quang Nam were merged to form the new Danang.