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Da Nang Free Trade Zone: Implementation Plan, Incentives, and Investment Opportunities
Da Nang has received approval to develop a free trade zone, which is part of Vietnam’s ambitious plan to establish multiple free trade zones (FTZs) nationwide. This initiative, alongside major developments planned in Hai Phong and Dong Nai, signifies a significant shift in Vietnam’s economic strategy and trade development.
On June 16, the Da Nang People’s Committee announced that Deputy Prime Minister Nguyen Hoa Binh signed Decision No. 1142/QD-TTg to establish the Da Nang FTZ, spanning approximately 1,881 hectares. This article examines Vietnam’s FTZ plan and its implications for the country’s economy, trade, and logistics, aiming for rapid and sustainable growth.
Vietnam’s vision for FTZ development
According to Resolution 136/2024/QH15 (“Resolution 136”), an FTZ is defined as a specialized area with determined geographical boundaries established for the pilot implementation of regulations and policies to attract investment, finance, trade, tourism, and high-quality services. Meanwhile, in its Logistics Report 202, the country’s Ministry of Industry and Trade has recognized FTZs as designated areas where goods can be imported, stored, manufactured, and traded without typical trade barriers such as quotas, tariffs, or foreign exchange controls. These zones are physically separated from the rest of the country and operate under special regulations.
While FTZs are common globally, with over 3,500 operating worldwide, they represent a new frontier for Vietnam. Currently, the country operates smaller specialized zones like export processing zones, bonded warehouses, non-tariff areas, and duty-free shops, which serve as stepping stones toward full-fledged FTZs.
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Current Trade Zone Models in Vietnam |
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Type |
Purpose |
Key Benefits |
|
Industrial Parks |
Industrial Parks serve as specialized zones for manufacturing and industrial activities. These designated areas welcome both domestic and foreign enterprises, including export processing companies, to establish facilities for producing goods for both export and domestic markets. |
They offer various incentives based on location and industry type. |
|
Export processing zones |
Export Processing Zones are dedicated spaces focused exclusively on export-oriented manufacturing. These zones cater specifically to export-processing enterprises, to boost exports, attract investment, and foster economic development. |
They provide enhanced government support and incentives beyond what’s available in standard industrial zones. |
|
Bonded warehouses |
Bonded Warehouses function as secure storage facilities where businesses can keep their goods during various stages of the customs process. These warehouses accommodate products that are either awaiting customs clearance, have already completed customs procedures, or are scheduled for export, re-export, or import into Vietnam. |
They offer benefits such as deferred tax payments and exemptions from export duties. |
| Source: Thuvienphapluat, Vietnam Briefing | ||
Compared to smaller-scaled models, FTZs offer more comprehensive benefits. For instance, while EPZs specialize in export manufacturing and bonded warehouses handle goods storage, FTZs support diverse activities, from manufacturing and storage to an array of services. This broad scope enables Vietnam to reduce or eliminate trade barriers, thereby attracting foreign investment and fostering sustainable economic growth.
Da Nang: Pioneer in FTZ Development
The Da Nang Free Trade Zone will be distributed across multiple non-contiguous locations in the city. It will include functional areas for manufacturing, logistics, trade and services, digital technology, IT, and innovation, along with other designated zones. The zone comprises 7 specific locations:
- Location 1 (100 hectares): Hoa Hiep Bac Ward, Lien Chieu District
- Location 2 (77 hectares): Hoa Hiep Bac Ward, Lien Chieu District
- Location 3 (500 hectares): Stretching from Hoa Hiep Bac Ward, Lien Chieu District to Hoa Lien Commune, Hoa Vang District
- Location 4 (559 hectares): Hoa Ninh Commune, Hoa Vang District
- Location 5 (90 hectares): Hoa Ninh Commune, Hoa Vang District
- Location 6 (154 hectares): Located in Hoa Nhon and Hoa Ninh Communes
- Location 7 (401 hectares): Located in Hoa Nhon and Hoa Phu Communes, Hoa Vang District
The FTZ aims to become a regional economic hub and strategic growth engine for both central Vietnam and the country as a whole. In the long term, the zone is positioned to become a crucial link in global and Asia-Pacific supply chain networks, serving as both a manufacturing center and an international goods transshipment hub. Its strategic location, including being connected to Lien Chieu Port, Da Nang International Airport, and the East-West Economic Corridor, provides significant advantages. Aligning with the planned Da Nang International Financial Center, Da Nang FTZ is expected to create a modern, smart, and highly competitive economic ecosystem, which will strengthen Vietnam’s position in regional and international markets.
Investment incentives in Da Nang FTZ
According to Resolution 136, FTZs in Da Nang offer an attractive package of investment incentives for businesses. Projects can operate for an extended duration of up to 70 years, with land rent exemption and reductions similar to economic zones. Under Decree No. 19/2025/ND-CP on Special Investment Procedures, projects in FTZs are considered special investment projects, allowing foreign companies to establish operations without obtaining or adjusting investment registration certificates.
Businesses are expected to enjoy substantial tax benefits similar to those offered in economic zones and non-tariff zones. These include:
- A reduced corporate income tax (CIT) rate of 10 percent for 15 years;
- A full CIT exemption for the first four years;
- A 50 percent CIT reduction for the following nine years; and
- Special tax treatment for goods and services traded within their boundaries.
To further enhance business operations, the government has implemented priority customs processing and offers additional benefits matching those in economic zones. These comprehensive incentives create an environment designed to minimize costs and bureaucracy while maximizing business potential.
Note: In tandem with the newly enacted CIT Law and the implementation of a two-tier local administration system, the tax incentives associated with FTZs may be revised to align with ongoing legislative updates. Businesses are encouraged to closely monitor forthcoming directives for any potential changes.
National expansion plans for FTZ establishment
Da Nang is not the only area targeted for FTZ development. The government is also setting similar plans for other regions, specifically Hai Phong (in the North) and Dong Nai (in the South). According to economic experts, Vietnam’s strategic coastal location offers significant advantages for international shipping, with numerous sites already functioning as major trade gateways in global supply chains. This creates opportunities to develop the FTZ model, such as Da Nang, Hai Phong, and Dong Nai, which connect closely to international seaports and airports to facilitate global trade and capitalize on integration opportunities.
Hai Phong
Recently, Finance Minister Nguyen Van Thang has proposed a new FTZ in Hai Phong City with a total area of 6,400 hectares across three areas within the Southern Hai Phong Coastal Economic Zone (connected to Nam Do Son Port) and the Dinh Vu – Cat Hai Economic Zone (connected to Lach Huyen International Port). The proposal aims to promote economic development, attract foreign investment, and leverage its advantages as a logistics, seaport, industrial, and service hub in the context of global competition. During 2024-2025, the project proposal is expected to be finalized and submitted to the Prime Minister for approval to establish a new generation FTZ in Hai Phong City.
Dong Nai Free Trade Zones
Vietnam’s Imex Pan Pacific Group (IPPG), led by Chairman Johnathan Hanh Nguyen, is evaluating investment opportunities in a proposed 8,000-hectare free trade zone (FTZ) in Dong Nai province. Strategically located near Ho Chi Minh City, Dong Nai serves as a key industrial and logistics hub in southern Vietnam. The province houses two major infrastructure projects: the under-construction Long Thanh International Airport and the newly inaugurated Phuoc An International Port. Dong Nai authorities are planning specialized zones within the FTZ dedicated to several key sectors, including:
- Manufacturing and industrial production;
- Logistics and warehousing;
- Financial services and financial technology (fintech); and
- Digital innovation and
This development aims to leverage Dong Nai’s strategic location and infrastructure to attract foreign investment and boost regional economic growth.
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Hai Phong (North) |
Da Nang (Central) |
Dong Nai (South) |
|
|
Administrative units before the provincial merger |
|
|
|
|
GRDP (US$ billion) |
26.07 |
10.71 |
23.31 |
|
Population (million people) |
4.7 |
3.1 |
4.5 |
|
FDI (US$ million) |
|
|
|
|
Major International Seaport |
Hai Phong Seaport |
Da Nang Seaport |
Phuoc An Seaport |
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International airport |
Cat Bi International Airport |
Da Nang International Airport |
Long Thanh International Airport (expected to be launched in 2026) |
Source: Ministry of Planning and Investment, Thanh Nien
Strategic Benefits for Vietnam and Foreign Businesses
Catalyst for Vietnam’s economic growth
Vietnam’s FTZs play a pivotal role in attracting foreign businesses by encouraging trade and investment through reduced transaction costs and investor-friendly policies, which significantly boost foreign direct investment (FDI) and incentivize companies to establish operations in the country. These zones drive economic growth by creating a dynamic and competitive business environment, spurring job creation, enhancing productivity, and contributing to overall GDP expansion.
Additionally, FTZs enhance Vietnam’s global integration by providing smoother access to international markets and strengthening economic ties with global partners, solidifying its position in the global supply chain.
Encouraging more seamless investments
For foreign businesses, FTZs offer key advantages such as lower regulatory barriers, including simplified procedures, streamlined licensing, and investment incentives, which minimize administrative hurdles. Investors also benefit from efficient logistics operations, supported by improved infrastructure, faster customs processing, and reduced operational and transportation costs.
Furthermore, Vietnam’s strategic location and growing consumer base make its FTZs an ideal gateway to Southeast Asia, enabling businesses to tap into the broader ASEAN market and beyond.
Conclusion
The establishment of the Da Nang FTZ marks a pivotal step in Vietnam’s economic strategy, aiming to enhance trade, attract foreign investment, and promote sustainable growth. By offering a range of benefits and comprehensive support for various sectors, the FTZ is set to transform Da Nang into a key economic hub in the Asia-Pacific region. Its strategic positioning alongside essential transport infrastructures further reinforces Vietnam’s competitiveness in global supply chains, promising significant advancements for the country’s economy and logistics capabilities.
(US$1 = VND 26,130)
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