On June 16, 2022, the National Assembly of the Socialist Republic of Vietnam officially approved a Resolution to pilot some specific mechanisms on finance, budget, land and investment attraction policies for the development of Khanh Hoa province (“Resolution”). The Resolution shall take effect from August 1, 2022 and will be implemented within the next 05 years thereafter.  

Khanh Hoa eyes mid-October tourism reopening – Picture: VnExpress International

A) Regarding financial and State budget management:

Annually, the central budget shall only replenish targets to the provincial budget with no more than 70% of the increase in central budget revenue. The determination of the targeted replenishment amount shall be based on total revenue, not individual revenues. 

The province is allowed to borrow capital through the issuance of local government bonds; from domestic financial institutions, other domestic organizations and foreign loans of the Government. The Provincial People’s Council shall decide to allow districts, towns and provincial cities to use budgets of district, towns, cities and other lawful sources to support Khanh Son and Khanh Vinh districts in (a) preventing and overcoming the consequences of natural disasters and epidemics, (b) implementing national target programs on sustainable poverty reduction, (c) building new rural areas and (d) developing socio-economic conditions in ethnic minority and mountainous areas. 

This is a good sign for Khanh Son and Khanh Vinh districts, which are populated with a large number of ethnic minorities having difficult socio-economic conditions. 

B) Regarding State management in the field of planning and land:

Decentralization of the Provincial People’s Committee and the Provincial People’s Council to approve and decide on provincial issues such as: (a) approving the partial adjustment of the general planning on construction of functional areas and urban areas; (b) decision to change the purpose of land use for rice cultivation under 500 hectares; (c) decision on the investment policy of the overall project with the scale of Group B projects in the field of transport and irrigation according to the regulations on public investment; (d) promulgate a list of public investment projects that separate compensation, support, resettlement and site clearance projects from public investment projects. 

This decentralization aims to reduce the Government’s workload, and create opportunities for the Provincial People’s Committee and the Provincial People’s Council to proactively decide on its own issues, ensuring scientific, fast, efficient, strict and economical in land management. 

C) Regarding the development of Van Phong Economic Zone:

The Resolution stipulates a list of 06 priority industries and occupations to attract investment, including:  

(1) Investment in building innovation centers, research and development (R&D) centers; investment in information technology, research, production and high technology transfer in the fields of ocean, marine, biotechnology, marine medicinal herbs and marine ecology with an investment capital of VND 1,500 billion (about USD 65 million) or more; 

(2) Investment in construction and the business of commercial and financial centers with an investment capital of VND 12,000 billion (about USD 521,7 million) or more; 

(3) Investment in construction and the business of urban areas with a land area of ​​300 hectares or more, or a population of 50,000 people or more; investment in construction and the business of hotels, resorts, high-class resorts and general entertainment with golf courses with an investment capital of VND 25,000 billion (about USD 1 billion and 87 million) or more; 

(4) Investment in the clean energy industry, processing industry, high-tech manufacturing, precision mechanics, oil and gas processing, electronics, health care service area with an investment capital of VND 6,000 billion (about USD 261 million) or more; 

(5) Airport construction and business, investment in harbors, port areas in special seaports, logistics services, seaport logistics services, ports, harbor areas, general ports, specialized ports having an investment capital of VND 2,300 billion (about USD 100 million) or more, belonging to a Class I seaport; 

(6) Investment in construction and infrastructure business of the non-tariff zone with an investment capital of VND 6,000 billion (about USD 261 million) or more. 

The Resolution also defines criteria for strategic investors depending on the above industries.  In addition, the Resolution allows strategic investors to enjoy many incentives, such as deductible expenses to determine taxable income for research and development (R&D) activities equal to 150% of the activity’s actual cost when calculating corporate income tax. Strategic investors are also prioritized in customs procedures for imported and exported goods of investment projects. 

This Resolution only stipulates new policies to attract strategic investors with good capacity and experience to deploy large dynamic projects that are appropriate for the Van Phong Economic Zone, and also to encourage harmony with other economic zones. 

D) Regarding marine economic development in Khanh Hoa province:

The Resolution supports creating conditions for domestic investors to conduct aquaculture activities at sea by assigning, licensing and exempting fees for use of marine areas. 

E) Regarding Khanh Hoa Fisheries Development Support Fund:

The Resolution allows the establishment of the Khanh Hoa Fisheries Development Support Fund to assist people in preserving and developing fisheries, contributing to the province’s general economic development goals.