Border Gate Economic Zones picture of 30 years and orientations for the new period Part 1 Expecting from leading children

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Import-export activities through Mong Cai ICD are bustling with vehicles. This area is also invested by Thanh Dat Joint Stock Company, belonging to Mong Cai Border-Gate Economic Zone (Quang Ninh). Photo: Quang Hung
Import-export activities through Mong Cai ICD are bustling with vehicles. This area is also invested by Thanh Dat Joint Stock Company, belonging to Mong Cai Border-Gate Economic Zone (Quang Ninh). Photo: Quang Hung

Being recognized as good performers among border-gate economic zones in operation, the economic zones bordering China, such as Mong Cai Border-Gate Economic Zone (Quang Ninh), and Dong Dang-Lang Son Economic Zone, have had impressive development, significantly contributing to the local socio-economic growth as well as national defence and security in the Vietnam-China border area. However, after a period of brilliant development, these economic zones are currently gradually slowing down and struggling in the direction of development in the coming period.

Mong Cai Border-Gate Economic Zone went to the top and then slowing down

Driving more than 300 km from Hanoi to Mong Cai City on July 1 2022, contrary to our imagination of a famous border gate economic zone, the “leading child” with many expectations, Mong Cai Border-Gate Economic Zone is not much different from other border areas, even somewhat dull. Immigration activities across Bac Luan Bridge I have remained “immovable” since the pandemic outbreak. However, import and export activities have been restored after being suspended many times at Km3+4 Hai Yen and Bac Luan Bridge II.

Hoang Trung Kien, Head of the Management Board of Quang Ninh Economic Zone, acknowledged that: Mong Cai economic zone plays a particularly important role in Quang Ninh province’s socio-economic development. Mong Cai economic zone has had positive results but is not commensurate with expectations.

Looking back at the process of establishment and development of the Mong Cai Border-Gate Economic Zone, Mong Cai economic zone has seen significant stages of change. In 2012, Mong Cai Economic Zone was officially established, becoming the largest-scale economic zone in the country. This economic zone has gradually grown strongly, and reaped many “sweet fruits”. In the five years (2010-2015), the total value of goods passing through Mong Cai international border gate has reached over US$23 billion, up 1.8 times compared to the previous five-year period (1996-2010), contributing nearly VND6,000 billion to the budget. In 2015, Mong Cai economic zone was evaluated as the most successful border-gate economic zones among 28 one across the country.

However, after that breakthrough period, the growth rate gradually slowed down. Up to now, ​​Mong Cai economic zone has attracted 138 projects, 40 FDI projects with a total registered capital of more than US$2 billion and 98 domestic projects with total registered capital of VND31,707 billion. Regarding import-export activities, in the five years 2015-2020, the total import-export turnover through Mong Cai Economic Zone reached over US$30 billion, contributing VND4,647 billion to the State budget. In 2021, the total import-export turnover achieved US$3.95 billion, contributing to the State budgetVND1,296 billion.

Dong Dang-Lang Son Economic Zone has gradually developed

Also popular and expected with many advantages is Dong Dang-Lang Son Border–Gate Economic Zone. In the 2010s, it took 4-5 hours to reach Lang Son city through National Road 1A, but now it only takes about two hours to get there through Bac Giang-Lang Son highway. This clearly shows the “transformation” of Lang Son and the development of the Dong Dang-Lang Son economic zone after nearly 14 years of operation.

Appreciating the role and significance of the Dong Dang-Lang Son Economic Zone, Ms Doan Thu Ha, Vice Chairman of the People’s Committee of Lang Son province, said: Currently, the economic zone has become an important communication hub in the region for economic, trade and tourism development between Lang Son in particular and the whole country in general and Guangxi (China). The border gate system has been upgraded to improve the transhipment capacity and receipt of import and export goods and attract production and business and export activities. There are 122 valid domestic projects in the area with a total registered capital of over VND13,000 billion and 20 foreign-invested projects with a total registered capital of over US$207 million, accounting for 67% of projects and 88% of the total capital of the whole province. Total investment capital from the state budget to build the infrastructure of the border-gate economic zone from 2010 to 2020 is over VND 6,940 billion.

Export goods are gathered at the parking lot of Tan Thanh border gate area of Dong Dang Border-Gate Economic Zone(Lang Son). Photo: Nguyen Thanh
Export goods are gathered at the parking lot of Tan Thanh border gate area of Dong Dang Border-Gate Economic Zone(Lang Son). Photo: Nguyen Thanh

Notably, in 2020 although the Covid-19 pandemic had a great impact, the total import-export turnover through border gates in Dong Dang –Lang Son economic zone was estimated at over US$17.5 million, an increase of US$6 billion compared to the 2011-2015 period.

“Based on the advantages of geographical location and border gate economic development orientation of Lang Son province, the flow of import and export goods through land border gates in Lang Son province is very high, always in the top group in the country. Import-export activities mainly arise at the border gate located in the border-gate economic zone, accounting for more than 90% of the turnover and revenues into the state budget. At normal times, there are about 1,300-1,500 trucks carrying goods through the border gates of Lang Son province every day on average, sometime, it can reach nearly 2,000 trucks per day,” said Doan Thu Ha.

According to Mr. Hoang Khanh Duy, Deputy Head of the Dong Dang-Lang Son Economic Zone Board said Dong Dang-Lang Son Economic Zone has made a great contribution to the state budget. From May 1, 2012 to the end of 2020, at four border gates in the economic zone, the revenue from fees reached VND 3,781.6 billion, accounting for 78.4% of the total revenue at all border gates in the province. In which, in 2020, this revenue reached VND471.9 billion, accounting for 96% of the total revenue, an increase of 186.4 % compared to 2012. Particularly, the total import-export tax revenue in 2020 at four border gates reached VND3,911.1 billion , accounting for 91.1% of the total revenue at border gates in the province.

Infrastructure Weaknesses

Assessed as the two most successful economic zones with the most remarkable results, however, compared to the advantages and expectations, the development of these two “big economic zones” is still worth discussing.

Border trade has been a key industry of Mong Cai border-gate economic zone, but it is heavily dependent on China. “Border trade activities are on a downward trend due to China’s new regulations on commodity standards and traceability, especially for agricultural products. said Mr. Hoang Trung Kien.

The investment to develop a comprehensive infrastructure system of Mong Cai economic zone is a must. Despite being prioritized for investment, the budget fund to support infrastructure investment in recent years has been limited. Infrastructure projects need a large investment and have a long payback period, but there are not mechanisms and policies to attract non-budget capital.

“That is the reason why some dynamic and strategic projects are delayed, affecting the investment attraction in the area,” said Mr. Kien.

Not only that, Mong Cai economic zone has not yet attracted large investment projects, especially investment projects in the field of logistics, financial centers. The on-site human resources of Mong Cai economic zone are mainly unskilled workers who are difficult to meet the requirements, especially in high-tech industrial production, and high-quality services and tourism.

Regarding Dong Dang-Lang Son Economic Zone, according to Mr. Hoang Khanh Duy, the construction of Dong Dang – Lang Son Economic Zone has been facing many difficulties and shortcomings. For example, the technical and social infrastructure system of the economic zone is not comprehensive and has not met the requirements of socio-economic development. The parking system is still lacking, especially at key border gates such as Huu Nghi, Tan Thanh, which has not met the import and export needs of enterprises. The investment environment has neither been improved much nor attracted large investment projects like neighboring provinces.

“The congestion of import and export goods, especially export agricultural products, still occurs at some times such as during the harvest season, at the end of the year; the import-export turnover has not seen a stable gowth,” said Mr. Hoang Khanh Duy.

Notably, the border-gate economic zone and the import and export activities through the province have been greatly affected by China’s mechanisms and policies in many fields, especially border trade activities and construction of works on the border line, traffic connection, and operation of border gates.

Speaking to reporters of Customs Magazine, Ms. Nguyen Thi My Huong, Deputy General Director of Sales and Services, Huu Nghi Xuan Cuong Joint Stock Company, the “leading” enterprise in investment in porting services at Huu Nghi International border gate said: with 17 hectares of parking space and a capacity of up to 1,000 vehicles, Xuan Cuong Company has made great efforts and taken measures related to operation and applied technology to increase movements of vehicles. On peak days, more than 2,200 vehicles can move and park at Xuan Cuong Company’s yards.

“During the peak periods, although the yards partly meet the needs of import and export of goods, they do not commensurate with the investment level in the border gate economic area on the Chinese side,” Ms. Nguyen Thi My Huong said.

Similarly, Mr. Hoang Xuan Vinh, Deputy Director of Bao Nguyen Transportation Trading Joint Stock Company said that with a total area of ​​10.4 hectares, the company is currently implementing the project of import-export yard to serve the import-export activities through Tan Thanh border gate (Lang Son). Bao Nguyen company is submitting to Lang Son Department of Planning and Investment and submitting to the Economic Zone Management Board to expand the yard four times with a total area of ​​over 56 hectares, bringing the total investment to nearly VND2,000 billion.

“Currently, the volume of agricultural products transported to the border area is high, if they are not exported in a few days, they will be damaged. Therefore, enterprises must consider the building of a cold storage to preserve them for a long time,” said Mr. Hoang Xuan Vinh

Difficult to solve the problem for the development

When investing in infrastructure located in Dong Dang-Lang Son Economic Zone, Deputy Director of Bao Nguyen Company said, the company also received certain supports, such as preferential land rental within 15 years. However, the also faced many difficulties such as site clearance. “In order to attract investment and promote development, local mechanisms and policies play a very important role. There are provinces that do very well in creating corridors and clean ground to attract businesses to invest more, but Lang Son has not done that. Businesses still have to take the initiative to do everything in advance,” Vinh said. He proposed that the state management agency should closely work with and support businesses more in site clearance work.

Sharing the same view, Ms. Nguyen Thi My Huong said in the process of investing in yards at Huu Nghi international border gate, one of the most prominent difficulties the company had to face is site clearance. Out of a total of 25 hectares of investment, there are still more than 8 hectares that have not been cleared though the company has been licensed for a long time. The second difficulty is the access to the incentive loans.

“So far, the company has not received any capital supports except the Covid-19 support policy which is applied for all businesses. Investment in the border gate economic area is a key investment and not all enterprises can invest on a relatively large scale like Xuan Cuong Company. Therefore, the company wants to receive better support on bank loan interest rates,” said Ms. Nguyen Thi My Huong.

Access to capital is also a problem that Mr. Vinh expressed many concerns. “Currently, it is still quite difficult for the company to access bank capital, especially at the investment stage, and it is imposible to bring investment project as collateral. The company expects simpler procedures to get loans as quickly as possible, “said Mr. Vinh.

Both Dong Dang-Lang Son Economic Zone as well as Mong Cai Economic Zone (Quang Ninh) are struggling to solve “problems” for the development in the near future.

According to Mr. Hoang Khanh Duy, Lang Son province will continue to prioritize resources to invest in developing the border gate economy and create a favorable business investment environment. From a planning perspective, the important solution is to continue to adjust the planning of major functional areas and border gate areas in accordance with the actual situation, development ability and other plannings of the province. Besides, the province will focus on investing in building a comprehensive technical infrastructure, traffic infrastructure, creating connectivity between functional areas in the border-gate economic zones with relevant areas to facilitate the management and operations of the state agencies and improve the capacity of goods circulation”, Mr. Hoang Khanh Duy said.

For Mong Cai border-gate economic zone, Mr. Hoang Trung Kien stated, Quang Ninh province will work with the Chinese side to reach long-term and stable agreements for trading activities through Mong Cai border gate, and continue to reform and modernize procedures related to customs clearance, entry and exit, import and export of goods at the border gate to ensure fast and convenient clearance.

In addition, Quang Ninh province will propose the Central Government to support to develop Mong Cai economic zone. Specifically, it is proposed that the central budget allocate enough capital to the infrastructure of the economic zone to complete the project of renovating and upgrading provincial road 341 (National Highway 18C) from Mong Cai economic zone to Bac Phong Sinh economic zone, Hai Ha district – phase 2.

“Quang Ninh province also proposes the Government to assign the Ministry of Industry and Trade to soon complete the proposal to the Government on establishing Mong Cai – Dong Hung border economic cooperation zone; proposes the Government to assign the Ministry of Transport to study and propose early implementation of the investment project on upgrading National Highway 4B to connect Mong Cai Economic Zone with the Northern border-gate economic zones to promote the effectiveness of the border-gate economic zone model, including Mong Cai”, said Mr. Hoang Trung Kien.

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