Experts call for fresh look at border economic zones

CA - Economists have urged the Government to stop setting up border economic zones and review existing ones that have failed to operate efficiently.

Of 28 border gate economic zones (BGEZs) built since 2004, only a few are successful, while the rest are empty and present a forlorn sight.

A master plan for BGEZ development through 2015 envisaged setting up only 27 of them.

Luu Quang Khanh, head of the Ministry of Planning and Investment's Department for Service Economy, said the target had been overshot because many provinces wanted them to help promote development.

The zones have been set up in 21 out of 25 provinces that border China, Laos, and Cambodia.

More than VND4 trillion (US$194 million), have been spent on building and running them since 2004, with at least VND700 billion ($34 million) spent each year on maintaining them, according to the department which is in charge of implementing the BGEZs development strategy.

The zones have been a failure so far, achieving trade of just $5.44 billion – or just 10 per cent of the country's total trade — a far cry from the target of $13.5 billion.

The Department of Service Economy admitted that only a few BGEZs like Lang Son, Quang Ninh, and Lao Cai, all on the border with bustling China, were successful.

Khanh said most of the idle BGEZs were in provinces bordering Laos and Cambodia and hence saw little trade.

There was hardly any investment in the BGEZs in Kon Tum, Tay Ninh, An Giang, and Dong Thap Provinces, Tuoi Tre (Youth) newspaper reported.

Since its opening in 2007 the 70,000ha Bo Y zone in Kon Tum Province on the border with Laos and Cambodia has created only 190 jobs and its annual revenues are just VND6.5 billion (over $315,000).

Around VND80 trillion will need to be invested by 2015 to make the BGEZ a complex comprising an industrial park, high-tech zone, and eco-tourism area.

Several BGEZs in the Mekong Delta region bordering Cambodia, like Moc Bai in Tay Ninh, Thuong Phuoc in Dong Thap, and Xa Xia in An Giang, are operating far below capacity.

A Dong Thap resident said more than 1,000 families had been relocated to build Thuong Phuoc BGEZ's border market area.

But since its opening in 2004, it has not seen any trade and has laid vacant.

Economists were worried about the concept of building economic zones in border areas, and said this was a waste of public resources.

Dr Vo Dai Luoc of the ministry's Social Science Institute said investment in economic zones in provinces that did not have much potential for border trade was wasteful, and called for a stop to further development and a review of existing ones.

Economist Le Dang Doanh concurred saying apart from the waste of resources, hundreds of thousands of hectares of farm lands were being taken over. He blamed some provinces for building bigger BGEZs than were necessary.

Others said ineffective BGEZs should be closed down and land restored to farmers.

Many BGEZs were expected to promote Vietnamese products, but have instead been trading in imports.

Duong Thanh Van, head of the Moc Bai BGEZ's investment office, said businesses chose to trade imported products since they were exempt from VAT, import duty, and special consumption tax while Vietnamese products were only exempt from VAT.

The Department for Service Economy was set to review the operations of all BGEZs, Khanh said, and recommend changes to the MPI.

Experts said to effectively run BGEZs, it was necessary to have a comprehensive, country-wide development plan rather than separately by a province or city.