Ties That Grind

Vietnam’s decision to enact a policy creating Special Economic Zones with leaseholder incentives for foreign investors have ignited the passions of citizens fearful it will be a Trojan horse for Chinese influence

- Robyn Wilson

On the ninth of June 2018, scores of Vietnamese took to the streets. The cause of contention: the Vietnamese government’s plans to enact the Special Zone Act, creating three Special Economic Zones (SEZ) across the country.

Located in the provinces of Quang Ninh and Khanh Hoa, and the island of Phu Quoc, these new zones promise investors incentives intended to boost real estate development—including a particularly contentious proposal to extend 99year land leases to foreign investors.

Protestors fear this incentive may weaken Vietnamese sovereignty. They believe the policy would be exploited by the Chinese—a fear spawned in part by Vietnam’s history of Chinese rule, as well as the more recent and ongoing territorial dispute between the two countries over China’s militarisation of several islands in the South China Sea.

In a bid to calm the rising tide of public anger, the government delayed its June 15 vote on the draft SEZ legislation until October. But their attempts to keep the peace failed, as a series of heated and, in some cases, violent protests ensued for three days, resulting in the arrest of around 100 people.

WHAT PROCEDURES ARE GOING TO BE IN PLACE TO APPROVE THESE LEASES OF LAND TO THE CHINESE OR OTHER INVESTORS WHO WANT TO DO BUSINESS IN THE SEZS? IS IT GOING TO BE DONE RIGOROUSLY AND WITH A CLEAR POLICY ON WHAT IS APPROPRIATE DEVELOPMENT AND THE PURPOSE OF USE?

Though the land lease extension remains a significant issue for the Vietnamese people, common views expressed among the real estate community point to the legislation not having much of an impact on Vietnam’s already thriving property market.