The free trade zone and new industrial zones are expected to become the driving forces for the socio-economic development of Danang City in the new context.
On June 26, 2024, the National Assembly issued Resolution No. 136/2024/QH15, replacing Resolution No. 119/2020/QH14 dated June 19, 2020, on piloting the urban government model and special policies for Danang’s development. The Resolution introduces numerous special and unprecedented mechanisms and policies in Vietnam. Notably, it allows Danang to establish the Danang Free Trade Zone, the first of its kind in the country.
Building an optimal free trade zone model for Danang
The Resolution states that the Danang Free Trade Zone is “a functional zone with a defined geographical boundary, established to pilot mechanisms and policies aimed at attracting investment, finance, commerce, tourism, and high-quality services.” This includes production zones, logistics centers, commercial and service zones, and other types of functional zones as prescribed by law.
Danang holds a strategic position of economic, commercial, military, and national defense importance. It is a livable city and a national tourism hub on the Central Heritage Road, with favorable natural conditions and a crucial transportation network. The city boasts a deep-water seaport, an international airport, both sea and land borders, and is the endpoint of the East-West Economic Corridor.
These factors create favorable conditions for building and developing a free trade zone in Danang. In this zone, foreign businesses and investors can import raw materials and goods, and engage in production, preliminary processing, packaging, and labeling before exporting to other countries or distributing them within Vietnam.
“The establishment of the Danang Free Trade Zone, associated with Lien Chieu Port and Danang International Airport, is among the most critical decisions to drive the city’s socio-economic development. It will promote production, processing, recycling, assembly, classification, and packaging of export and import goods. Additionally, it will provide logistics services and establish an international cargo transshipment center, enhancing technical infrastructure and maximizing the value chain of seaports and airports,” said Vu Quang Hung, member of the Standing Committee of the Danang City Party Committee and Head of the Danang Hi-tech Park and Industrial Zones Authority.
The Resolution will take effect on January 1, 2025. All levels of government in the city are urgently preparing resources to invest in and build the Danang Free Trade Zone. To date, Danang has identified and proposed 10 locations for the zone.
Based on functional subdivisions, these include a logistics zone (locations No. 1 and 9) covering approximately 180 hectares; a logistics and production zone (locations No. 2 and 3) spanning about 579 hectares; a production zone (location No. 4 within the expanded Hi-Tech Park) covering 559 hectares; a trade-service and innovation zone (locations No. 5, 5A, 6, and 7) covering 699 hectares; and a reclaimed coastal zone along Nguyen Tat Thanh Road combined with a section from Nguyen Sinh Sac Road to the Da Phuoc International Urban Area for MICE tourism, duty-free shopping, sports, and a casino, covering 300-350 hectares.
The Danang Free Trade Zone will focus on three main areas: production, logistics, and trade-services. For production, the five key industries are advanced electronics; aircraft manufacturing, aviation support, and services (MRO); advanced mechanics (robotics and green technology); pharmaceuticals and biotechnology; and assembly, testing, and packaging of semiconductors.
For logistics, the zone will emphasize multimodal transport, warehousing, and modern services, especially in conjunction with the operation of the Lien Chieu Port project, the largest cargo port under development in the Central region. For trade-services, the focus will be on tourism services, IT, software, and the digital economy, along with financial services supporting Danang’s development as an international financial center.
The Resolution also provides attractive mechanisms and policies for the free trade zone. Foreign investors can establish economic organizations in the zone without needing investment projects or procedures for granting investment registration certificates. Additional incentives include land rent exemptions or reductions, corporate income tax benefits, and preferential treatment for goods and services traded within the zone. For projects meeting multiple investment incentive conditions, investors can choose the highest incentive level.
Danang is also authorized to invest in technical and social infrastructure to support production and business activities in the zone. The Danang Hi-tech Park and Industrial Zones Authority will oversee the zone’s operations, making it the only unit in Vietnam managing four types of models: hi-tech parks (Decree No. 10/2024/ND-CP), industrial parks (Decree No. 35/2022/ND-CP), concentrated IT zones (Decree No. 154/2013/ND-CP), and free trade zones (Resolution No. 136/2024/QH15).
Momentum from new industrial zones
The establishment of the free trade zone will connect effectively with new industrial parks and clusters, including Hoa Cam Industrial Park – Phase 2, Hoa Ninh Industrial Park, and Hoa Nhon Industrial Park.
Hoa Cam Industrial Park – Phase 2 has a total planned area of 119 hectares. Approved for investment under Decision No. 363/QD-TTg dated March 18, 2022 with a total planned area of 119 hectares, it is adjacent to the existing Hoa Cam Industrial Park in Hoa Tho Tay Ward and Hoa Nhon Commune. Investor selection will follow Decree No. 115/2024/ND-CP on land-based investment projects.
Hoa Ninh Industrial Park, with a planned area of 400.02 hectares in Hoa Ninh Commune, Hoa Vang District, is a priority project under Decision No. 1287/QD-TTg dated November 2, 2023. It is also a key project to attract investment in Danang City in the period 2020 – 2025 as prescribed in Decision No. 641/QD-UBND dated February 26, 2021 of the People’s Committee of Danang City.
Expected to attract 218 secondary projects with a total investment of VND26 trillion, it will generate annual revenue of VND26.7 trillion, contribute over VND3.38 trillion to the budget, and create jobs for over 47,700 workers.
It is financially effective with an internal rate of return (IRR) of 15.26%, and a payback period of about 10 years and two months. To date, the city has completed the conversion of land use purposes for 43.97 hectares of forest land within the planned Hoa Ninh Industrial Park investment project under Resolution No. 63/NQ-HDND dated November 15, 2023 of the People’s Council of Danang City. On that basis, the selection of investors to build and operate infrastructure in Hoa Ninh Industrial Park will be implemented and completed in 2025.
Hoa Nhon Industrial Park, located in Hoa Nhon Commune, is expected to span 237 hectares with an investment of about VND5.6 trillion. This project is part of the Green Core Center subdivision plan under Decision No. 359/QD-TTg dated March 15, 2021 and will undergo investor selection procedures in 2025.
These industrial zones are designed to attract investment, support industrial production, and drive Danang’s industrialization and modernization. It will also ensure the scientific, reasonable, and effective development of industrial zones at locations with favorable waterway and road transport systems, playing a leading role in industrial development, and promoting the socio-economic restructuring of the city.
The city aims to promote clean industries with high-tech content and environmentally friendly products while encouraging the use of clean energy and low-emission technologies. Economic development aligned with environmental protection remains a top priority.
