Vietnam’s Policy of Economic Zoning

It took the Vietnamese reformers only five years to realize that quick development of their country’s economy could be pushed forward not only by work and capital, but also by utilizing the factor space. Capitalizing on the experiences of several maritime Southeast Asian countries with “Growth Triangles” as well as of “Silicon Valley Industrial Park”, of Taiwan and of China with their “Special Economic Zones”, Vietnam decided in 1991 to establish its first “Special Economic Zone” (SEZ) in Tan Thuan/Saigon. During the following fifteen years three so-called “Key Economic Areas” and 140 “Industrial Zones”, “Export Processing Zones” and other units with similar names have been created. The SEZ have proven to be cornucopias on the one hand, because they helped to accelerate the transfer of capital, technology and management to Vietnam and provided almost 1 million jobs. Furthermore they served as catalysts for the industrialization and urbanization of some areas and served, moreover, as models of dealing with the complexities of modernization. On the other side, the SEZ are extremely unequally distributed over the country, and therefore tend to reinforce the social and regional differences within Vietnam. Moreover, foreign companies to be invested in the SEZ frequently have to lead a Robinson Crusoe existence and are therefore rather insulated from the domestic economy. Last but not least however, the Vietnamese legislation, facing the SEZ proves frequently to be a toothless tiger.