Operation Mechanism of Special Zones

Since July 1, 2025, pursuant to Resolutions of the XV National Assembly regarding the restructuring of commune-level administrative units, Vietnam now has 3,308 commune-level administrative units and concurrently established 13 special zones. These special zones are established based on the reorganization of existing administrative units to serve the goals of socio-economic development in the new phase. According to the aforementioned Resolutions, Vietnam currently has 13 special zones, including:

1) Van Don (Quang Ninh); 

2) Co To (Quang Ninh); 

3) Cat Hai (Hai Phong city); 

4) Bach Long Vi (Hai Phong city); 

5) Con Co (Quang Tri); 

6) Ly Son (Quang Ngai); 

7) Hoang Sa (Da Nang city); 

8) Truong Sa (Khanh Hoa); 

9) Phu Quy (Binh Thuan); 

10) Con Đao (Ba Ria Vung Tau); 

11) Kien Hai (Kien Giang); 

12) Phu Quoc (Kien Giang) - the largest special zones in Vietnam; 

13) Tho Chau (Kien Giang)

This article will provide an overview of the operational mechanisms of these 13 special zones, highlighting their differences compared to the operational mechanisms of ordinary commune-level administrative units. Additionally, it proposes some priority policy solutions to promote effective and sustainable development in these special zones.

Operation Mechanism of the 13 Special zones

(i) Unique Mechanisms and Policies: 

In terms of duties and powers, the governance of the 13 special zones will function similarly to commune-level administrative units, without district-level governance (under Article 27). The special zones will receive direct guidance and management from provincial or centrally-governed municipal authorities.

The special zones governments are endowed with significant autonomy. The Law on Organization of Local Government (amended) allows the Chairman of the special zones People's Committee to be delegated powers equivalent to those of provincial-level People's Committees, facilitating swift and effective local decision-making. This differs from ordinary commune-level administrative units, aiming to grant greater autonomy, responsibility, and flexibility in decisions on planning, finance, budgets, and socio-economic development policies tailored to each locality's specific conditions. Additionally, it establishes mechanisms for special zones to proactively respond to emergencies, unexpected situations, and events to firmly protect national sovereignty, territorial integrity over sea and island areas, leverage economic advantages, potential, international economic integration, and ensure the attraction of residents, protection, and development of island and sea areas.

The long-term goal of establishing special zones is to create areas with superior mechanisms and policies to compete with economic special zones in the region and the world to attract investment, advanced technology, and develop leading economic sectors. The special zones will apply unique investment mechanisms and policies regarding investment, finance, budget, land, labor, science, and technology. These mechanisms will be proposed by local governments to the Government for submission to the National Assembly for consideration and decision for each special zone, based on the requirements of socio-economic development, defense, security, and the capacity of each special zone.

(ii) Focus on Developing Key Economic Sectors: 

Although there is no separate "Special Zone Law" with distinct and entirely different preferential policies compared to existing economic zones and industrial zones (such as tax incentives, separate financial mechanisms...), the 13 special zones will still prioritize infrastructure investment, attracting investment in key economic sectors such as tourism, maritime economy, services, high-tech industry, through current preferential policies applied by the Government to areas with special economic and social conditions or established economic zones, industrial zones.

Each special zone will have its own development orientation, suitable to its potential and advantages. For example, Phu Quoc (Kien Giang) will continue to be a global tourism, event, and economic center, while developing aquaculture, fishing, and fish sauce production; Van Don (Quang Ninh) is oriented towards developing sea tourism, high-tech aquaculture, logistics, and maritime services; Con Dao aims for a "smoke-free" development model, linking tourism with environmental education...

Overall, the establishment and operation of the 13 special zones represent a bold step for Vietnam, demonstrating its determination for innovation and investment attraction. The success of these special zones will depend on the establishment and implementation of sufficiently strong, flexible, and transparent mechanisms and policies, as well as the administrative machinery and local communities' adaptability and innovation in these areas.

International Experience in Economic Zone Development and Application in Vietnam

The Special Economic Zone (SEZ) or Special Administrative-Economic Unit model has been successfully applied by many countries, especially in coastal or island areas. However, Vietnam's current approach - transforming some island districts or cities into commune-level administrative units named "special zones" - is a relatively new and unique direction, with few similar precedents globally at the island-level administrative level.

From international experience, many countries have successfully exploited the potential of sea and island areas through the development of SEZs in strategic locations. Specifically:

• China has implemented a series of SEZs in coastal areas such as Shenzhen, Zhuhai, Hainan Island. These were the first areas chosen to pilot open-door reform policies, attract FDI, and promote international trade.

• South Korea developed the Incheon Free Economic Zone (IFEZ) - including Yeongjong Island, Cheongna, and Songdo - into a hub for logistics, tourism, and information technology.

• Singapore, while not formally named SEZs, effectively operates as a global financial-commercial center thanks to open-door policies, favorable investment environment, and efficient operational capabilities.

• The United Arab Emirates (UAE), especially Dubai, stands out with its system of free economic zones such as Jebel Ali, Dubai Internet City, Dubai Media City... attracting global businesses in technology, media, and commerce.

• Puerto Rico, a US territory, was the first in the world to establish a modern SEZ model from 1942 - marking the beginning of the global SEZ development wave.

  
  

Despite Vietnam's different model in naming and administrative level, lessons from international experience remain valuable for reference. Most SEZs worldwide are located in coastal or island areas - similar geographical and ecological conditions to SEZs in Vietnam. Additionally, the land area scale of many new SEZs in Vietnam is equivalent, even larger than some famous SEZs worldwide. For example:

• Van Don (582 km²) and Phu Quoc (575.29 km²) have areas nearly equal to or larger than IFEZ (517.3 km²) in South Korea, and the initial Shenzhen SEZ in China was only about 493 km².

• Some SEZs like Con Dao (75.79 km²), Co To (47 km²), and Phu Quy (18 km²), though smaller, are similar in size to specialized zones like Jebel Ali Free Zone (57 km²) or Busan-Jinhae Free Economic Zone (82 km²).

From these compatibilities, it is evident that applying international experience to the development of special zones in Vietnam is entirely feasible if adjusted appropriately to domestic institutional, economic, and cultural conditions.

Direction and Priority Policy Solutions for the Development of 13 Special zones

During the development of special zones, an important factor lies not only in the land area scale but also heavily depends on the planning orientation, unique mechanisms, and special preferential policies suitable for each region. Drawing from successful international experiences in SEZ economic models, Vietnam needs a long-term strategy to gradually transform the existing 13 special zones into dynamic economic centers, strongly attractive to investment. This strategic step needs to be prioritized for implementation. Accordingly, the following solution groups should be focused on implementation:

1. Establishing a Legal Corridor and Separate Policy Mechanisms:

First and foremost, it is essential to promptly develop and issue a separate law on special zones. This will create a clear, stable legal foundation superior to current general laws, thereby increasing attractiveness for domestic and foreign investors. Specifically: 

(i) Granting high autonomy to special zone authorities, especially the Chairman of the special zone People's Committee, with administrative management and economic operation powers equivalent to higher levels, not limited by ordinary authorization from provinces/cities;

(ii) Applying strong preferential mechanisms in taxes (corporate income tax, personal income tax, VAT), land leasing fees, customs procedures, labor regimes... competitive with special zones in Asia and the world;

(iii) Allowing the promulgation of flexible separate policies suitable to the conditions of each special zone, similar to successful models in Hong Kong, Shenzhen, Dubai...

2. Comprehensive, Modern Infrastructure Investment Strategy:

Infrastructure development needs to focus on critical competitive advantage areas, including:

(i) Expanding airport systems, seaports, roads for convenient connection to major economic centers, while investing in school, health, residential, and entertainment systems to attract high-quality labor.

(ii) Developing high-speed internet infrastructure, ensuring wide coverage across the region.

(iii) Promoting luxury resort tourism, sea sports, eco-tourism linked with environmental conservation.

(iv) Applying science and technology in aquaculture and seafood processing to enhance product value.

(v) Exploiting renewable energy potentials like wind and solar to develop clean energy.

(vi) Combining economic development with strengthening defense, security, and sovereignty protection.

3. Enhancing Training and Attracting High-Quality Human Resources:

Design deep training programs tailored to key sectors of each special zone. At the same time, implement policies to attract high-level human resources domestically and internationally, offering incentives in accommodation, income, career opportunities... Besides, collaborate with universities and international organizations to organize training programs, enhance skills for local labor force, especially in high-tech and quality service sectors.

4. Establishing a Unique Development Strategy for Each Special zone:

Each special zone needs clear development orientations based on geographic, resource, and specific advantages (e.g., special zone with favorable seaport positions like Van Don, Cat Hai should develop into logistics and maritime service hubs). Develop separate legal regulations that are stable and transparent, especially regarding real estate ownership and transfer, land lease terms..., helping to build investor confidence.

Conclusion

Transforming current administrative zones into special economic zones is a strategic approach to effectively harness potential, create new growth drivers, and enhance national positioning. Achieving this goal requires consensus and close coordination between political will, breakthrough legal frameworks, strong investment resources, and active community participation. The success of the special zone model demands long-term strategic vision, flexible governance, and the ability to adapt to today's rapidly and unpredictably changing global context.