Hai Phong’s Free Trade Zone: A Strategic Gateway for Vietnam’s Economic Advancement

Hai Phong, a pivotal port city in northern Vietnam, is poised to establish the nation’s second free trade zone (FTZ), following the model set by the Van Don FTZ in Quang Ninh. This initiative is part of a broader strategy to transform Hai Phong into a modern, smart, and sustainable industrial city, serving as a central hub for international logistics and trade in Southeast Asia.

Official Government Announcement

In May 2025, the Vietnamese Government officially submitted a draft resolution to the National Assembly Standing Committee proposing the establishment of a Free Trade Zone (FTZ) in Hai Phong. This marks a significant step in the national development strategy, following the direction of the Politburo and Resolution No. 30-NQ/TW, which outlines the objectives for Hai Phong to become a smart, modern, and industrially advanced city by 2030 and a globally leading city by 2045.

The Ministry of Planning and Investment, on behalf of the Government, emphasized that the FTZ would operate under a pilot model, incorporating special mechanisms and policies that differ from the existing general legal frameworks in Vietnam. According to the Ministry’s representative, “This initiative is not merely a regional development project; it is a national-level policy experiment, vital for enhancing Vietnam’s competitiveness, innovation capacity, and integration with global supply chains.”

The Government has assigned Hai Phong authorities to coordinate closely with relevant ministries to detail the zoning, governance model, and incentive mechanisms, ensuring that the FTZ aligns with both national law and international commitments. The initiative will be subject to regular reviews and assessments to ensure transparency, effectiveness, and alignment with Vietnam’s broader economic goals.

Strategic Objectives and Vision

The proposed FTZ in Hai Phong is designed to pilot unique and breakthrough mechanisms and policies aimed at attracting investment, boosting exports, advancing industrial development, fostering research and development (R&D), and cultivating a high-quality workforce. The FTZ is envisioned as a geographically defined area where these specialized policies can be implemented to stimulate economic growth and innovation.

Proposed Locations and Scale

The FTZ is planned to encompass approximately 6,470 hectares, accounting for about 30% of Hai Phong’s economic zone area. The city has identified three strategic locations for the FTZ:

1. Southern Coastal Economic Zone: Covering around 2,300 hectares in the communes of Vinh Quang, Hung Thang, and Dong Hung in Tien Lang district. This area is adjacent to the Van Uc River and near the planned Tien Lang airport, offering multimodal transportation advantages.
2. Nam Dinh Vu Industrial Zone and Southern Dinh Vu Island: Spanning about 2,700 hectares, this area is earmarked for high-tech industrial production, key industries, and port logistics services. Plans include the development of new urban areas, public services, green spaces, and transportation infrastructure.
3. Cat Hai Island and Phu Long Urban and Tourism Service Area: Encompassing approximately 1,470 hectares, this location is adjacent to Lach Huyen port and a railway station connecting to the Lao Cai – Hanoi – Hai Phong – Quang Ninh railway line. It is suitable for high-tech industrial production, key industries, and port logistics services.

Functional Zones and Infrastructure

The FTZ will be organized into various functional zones, including:

• Production Zones: Dedicated areas for manufacturing and industrial activities.
• Port and Port Logistics Zones: Facilities supporting maritime trade and logistics operations.
• Commercial and Service Zones: Areas designated for trade, retail, and service industries.
• Other Functional Zones: Additional areas as defined by relevant laws to support the FTZ’s operations.

Each functional zone will be equipped with modern infrastructure and may feature secure perimeters to facilitate customs supervision and control of imported and exported goods, as well as the movement of vehicles and passengers.

Governance and Administrative Mechanisms

To streamline operations within the FTZ, the draft resolution proposes:

• Decentralization: Granting the Hai Phong People’s Committee the authority to establish, expand, and adjust the boundaries of the FTZ, aligning with the city’s economic zones.
• One-Stop Administrative Procedures: Implementing a “single-window, on-site” mechanism managed by the Hai Phong Economic Zone Authority, responsible for issuing certificates of origin, business licenses, retail permits, and labor permits (including renewals and revocations) for investors within the FTZ.

Incentive Policies and Investment Attraction

The FTZ is expected to offer a range of preferential policies to attract investment, including:

• Simplified Administrative Procedures: Streamlining processes related to investment, business operations, import-export activities, immigration, land use, and construction.
• Optimized Investment Incentives: Providing favorable terms for land and water surface leases, tax incentives, and other investment-related benefits.
• Foreign Exchange Transactions: Allowing transactions within the FTZ to be conducted in foreign currencies, enhancing its appeal to international investors.
• Banking Services: Permitting foreign bank branches to establish transaction offices within the FTZ.

These incentives aim to create a competitive environment that encourages both domestic and foreign investment, fostering economic growth and development.

Economic Impact and Projections

The establishment of the FTZ is anticipated to significantly contribute to Hai Phong’s economic development:

• Investment Density: By 2030, the average investment per hectare is projected to reach $12 million, with each project averaging $56 million. Between 2031 and 2035, these figures are expected to increase to $15 million per hectare and $70 million per project.
• Economic Contribution: The FTZ is projected to account for approximately 8.3% of Hai Phong’s Gross Regional Domestic Product (GRDP) by 2030.

These projections underscore the FTZ’s potential to serve as a catalyst for economic transformation in Hai Phong and the broader region.

Alignment with National Development Goals

The FTZ initiative aligns with Vietnam’s national development strategies, particularly the resolution by the Politburo aiming for Hai Phong to become a modern, smart, and sustainable industrial city by 2030, and a leading city in Asia by 2045. The FTZ is expected to play a crucial role in achieving these objectives by enhancing the city’s industrial capacity, logistics infrastructure, and international trade capabilities.

Source: Various sources