China scare over investment zones

Phu Quoc Island is to be designated a special economic zone to attract foreign investment.

The government is struggling to finalise a law for the establishment of special economic zones following warnings that China could exploit them to expand its influence.

Prominent economists, intellectuals, and some members of the National Assembly have added their voices to a wave of concern about the government’s plans.

The legislation, which is expected to be submitted to the National Assembly soon, will set up three economic zones, in the north, south and centre of Vietnam, giving generous tax breaks and other incentives to foreign investors.

Most controversial are provisions that could give foreign companies leases of up 99 years on plots of land. Many Vietnamese fear that Chinese enterprises could set up quasi-sovereign bases across Vietnamese territory.

The government’s lack of accountability has fed into latent fears that the Communist authorities are too close to China and are prepared to sacrifice national sovereignty for economic and political gains.

“Too negative”

Vietnam is hoping to emulate China’s industrial strategy, which began with the designation of Shenzhen near Hong Kong as a special zone to attract foreign investment.

Some economists have expressed concern that the Vietnamese zones are too remote and rural to attract investment without massive spending on infrastructure.

The northernmost zone is at Van Don, not far from the Chinese border, the southern one is the tourist island of Phu Quoc and the central zone is at Van Phong, north of Nha Trang.

“People are picturing it in a negative way and are pushing the issue of fear of China,” said the planning minister responsible for the project, Nguyen Chi Dung.

He urged the public to calm down, consider the proposals carefully and understand that the government will do everything it can to protect national sovereignty.

Officials have hinted that the length of the leases might be reduced, or local authorities could be given powers to refuse leases to certain investors on a case by case basis.

Anti-Chinese sentiment remains strong in Vietnam, with many alarmed at the scale of Chinese investment in the country, China’s growing military power in the South China Sea and its perceived influence over the Vietnamese Communist party.