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FAQs About The Special Economic Zones and Vietnam’s SEZ Draft Bill

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The locations of the three proposed SEZ. Photo courtesy: https://www.luatkhoa.org/dac-khu/

In June 2018, many were shocked to witness the largest demonstration in Vietnam since the end of the war in 1975, where thousands of people marched on the streets of several major cities. One of the reasons that compelled the Vietnamese people to protest was because of the proposed Special Economic Zones Law, which their National Assembly’s members were going to pass.

Despite the fact that under public pressure, the draft bill was ultimately announced to be halted until the next National Assembly’s meeting in October 2018, people still protested against it. Their reason? They feared that they were going to lose essential portions of their country to foreign investors, namely, the Chinese. The government of Vietnam, on the contrary, continued to insist on the passing of this law, citing economic development and jobs opportunities for hundreds of thousands.

Which side is right?

1. What Is A Special Economic Zone?

A Special Economic Zone (SEZ) is defined as an area in which business and trade laws are different from the rest of the country.

Theoretically, an SEZ can attract foreign investment, expand production, create jobs, and boost export-import. However, that would only happen if a set of conditions is met: the rule of law, together with clearly defined laws and regulations that both facilitate production and business activities, which are binding on all investors and able to adjust market failures, as well as other public issues.

In practice, and in the particular case of Vietnam, the government has yet to make available any information regarding the conditions under which the proposed SEZs will operate.

Can the SEZs create real jobs for the Vietnamese people? Can they boost production and trade? If they fail, and the nation falling into debts, who would be held accountable, and how? What are the punishments against them? Alternatively, will they say, “It’s none of your concern; it’s the Party and the State’s business”?

The above questions remain unanswered.

2. What Is The SEZ Project?

The SEZ project is a “grand policy” of the Politburo of the Vietnamese Communist Party (VCP), to establish three special economic zones in Van Don (a district in the Northeastern Province, Quang Ninh), Bac Van Phong (of Khanh Hoa Province), and Phu Quoc (of Kien Giang Province) as shown in the picture above. Foreign investors shall be granted special favors in these areas, for example, the 99-year land lease.

This project is codified in the proposed SEZ Law or the “Law on the Special Administrative-Economic Units”. Traditionally, and as in this time, the government of Vietnam does not publicize the names of the lawmakers concerned in any lawmaking process, so no one knows the architects behind the SEZ Law.

In case this SEZ Law is found to have contained some defects, or its enforcement would lead to severe consequences, no one, especially Party’s officials, shall be held responsible due to the lack of transparency and accountability in the country.

3. What Is “Special” About These Three Zones?

Overall, conditions in Van Don, Bac Van Phong, and Phu Quoc are not favorable for development. These include infrastructure, skills of the labor force, science and technologies, and financial-economic facilities.

Regarding geographic location, however, all the three districts are located in critically strategic sites of Vietnam, and they hold a crucial implication for national security. To make matters worse, Vietnam’s northern giant neighbor, China, where most of the potential investors would come from, has for centuries been known to keep an ambitious dream of becoming a hegemonic superpower.

China pays particular attention to Van Don and to Vietnam in general, whom she considers being the “buffer zone” for her to “move southward” to the geo-strategic South China Sea. For this reason, even when the SEZ law does not mention China but only refers to “foreign countries,” obviously China is the only nation the Vietnamese people are concerned about.

4. What Are The Goals Of The SEZ Project?

The SEZ project revolves around these promises: the three SEZs shall be where new institutions are tested and adopted with more freedom and less control, where innovation is stimulated, where more jobs are created, and more incomes are generated for local people. In short, the SEZs shall boost production and commerce, and lead to economic growth.

However, all of those promises remain vague and unfounded. Van Don, Bac Van Phong, and Phu Quo as stated, do not have favorable conditions to establish SEZs, because of poor infrastructure and technological bases and an unskilled labor market.

Most importantly, no political leader, no official of the VCP and the State shall bear any responsibility if those promises become unfulfilled. If the project fails, or if it causes any adverse consequences for the people and Vietnam, the victims would have no meaningful recourse.

5. What Are the Potential Consequences Of The SEZs That Vietnamese People Fear?

5.1. Territorial concession

By stipulating a land lease of up to 99 years and granting other special privileges to potential Chinese investors, the SEZ Law is paving the way for China to infiltrate Vietnam under her “salami-slicing” strategy.

Salami slicing is a strategy that the communist Chinese government has used since 1949 to take over territories in the South China Sea and the Himalayan region, in a gradual, step-by-step manner. The tactics were to open the door for Chinese immigrants to settle, do business, set up Chinese language schools, establish their own administrative system, and promote Chinese culture and customs in foreign lands. By doing that, they have legitimized China’s presence and power in the area and gradually built up Chinese autonomy inside Vietnam. If and when the time comes, this group with absolute autonomy could “rise” to demand sovereignty or for the Chinese-controlled area to “exit Vietnam and come back to merge into the motherland of China.”

5.2. A dumping ground for China’s waste

The SEZs may face the risk of failing to absorb advanced technologies and management skills, but that’s not it, after all. They are likely to become a market for low-quality products made in China and a dumping ground for her waste, most seriously toxic and e-waste.

5.3. The conflict between local people and Chinese immigrants

Overpopulation in China has led to high rates of unemployment and illegal immigration into neighboring countries, especially in Vietnam, where the government with its lousy governance fails to take control of the issue. As a result, bitter conflicts have arisen between local people and Chinese immigrants, which remain unresolved. In recent years, incidents of violent clashes have occurred between Chinese immigrants and the local Vietnamese community in Hai Phong, Quang Ninh, Thanh Hoa, Ha Tinh, as well as other provinces in Vietnam.

For example, in Quang Ninh in the mid-2000s, Chinese immigrants had thrown stones at Vietnamese people. In Thanh Hoa and Ha Tinh, drunken Chinese workers even falsely imprisoned a few local people after collectively assaulted them.

5.4. Economic loss

Accordingly, once the SEZ Law is passed, $70 billion USD shall be invested in the three SEZs, and that is like gambling ours and our children’s future on an uncertain race. Besides, with special favors granted to investors (mostly foreign) who could hardly be controlled, the government would definitely take the risk of substantial tax losses and budget deficits.

Many precedents can be found for this decision like this. One among them is the bauxite mining project in Tay Nguyen (Vietnam’s Central Highlands), which is also another grand policy of the VCP and the State. It was implemented despite public demonstration, notably the fierce protest from the late military general, Vo Nguyen Giap, and 4,000 Vietnamese intellectuals, domestic and overseas. The grand project lost almost US$170 million between 2013 and 2016. No one among those who made the promises for economic development and job opportunities for the locals were to take any responsibility for this loss.

With the government’s current institutions and management capacity, the SEZ project cannot and will not ensure economic success. The issue confronting the state is that if it fails like the Tay Nguyen bauxite mining project, no political leader shall bear any responsibility. Worse, if the SEZ project leads to territorial concessions, then it does not matter which leader or official of the VCP and the State takes responsibility, Vietnamese citizens would still suffer the irreversible consequences.

6. Why Does the VCP Insist On Implementing The Project?

The answer lies in the entrenchment of crony capitalism, with interest groups collaborating closely with the corrupt central and provincial governments, seeking to gain in grand projects in the name of “development.”

Also, “the obvious answer is ‘casinos and red-light districts,’ as these SEZs are the only places in Vietnam where these people can do business freely…. another reason that many people are aware of but still reluctant to spell out (for ‘political sensitivity’) is ‘the China factor.’ Otherwise, there is nothing else there” (Nguyen Quang Dy, 2018).

7. Is There Any Alternative Solution To The SEZ Project?

Experts point out that the SEZ idea was something that belongs to the last century, that it has become out of date, and that the SEZs are not relevant to the current circumstances of Vietnam. Instead, the urgent thing to do now is to launch a fundamental and comprehensive institutional reform in the nation, focusing on:

– setting the private sector as the basic economic sector, contracting the state sector to its minimum;
– recognizing and protecting private ownership of land;
– establishing democracy, and protecting and promoting freedom rights to mobilize the citizenry for the development cause of the nation.

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Robbery Unwittingly Exposes Potential Corruption In Vietnam

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Comics about the BOT robbery exposing potential corruption on Tuoi Tre Comics. Photo courtesy: Tuoi Tre Cuoi.

The story first sounded like the twisted plot of a comedy about feudal Vietnam a few centuries back. It went like this:

Three bad guys robbed a court official’s post and shocked the township when news on the enormous amount of money the robbers had taken, spread like wildfire. The officials scrambled to explain the origin of the funds while trying to scale down its size, but only to raise even more suspicion on their corruption among the public.

It was, however, not a movie plot but a real story in Vietnam 2019 with a small difference: the location of the robbery was a well-known BOT (Build-Operate-Transfer) toll booth near Ho Chi Minh City.

During the Tet celebration last week, three men robbed the BOT booth of the Ho Chi Minh City-Long Thanh-Dau Giay expressway in Dong Nai Province. They allegedly took over 2B VND or approximately 86k USD at once. The amount was rumored to be from only one shift of the BOT’s collection activities that day.

Netizens were quick to point out that the robbery happened during the biggest holiday in the country where traffic flow through the main highways and expressways decreased dramatically in Vietnam, leading people to believe that the usual amount this particular BOT booth collects during a regular day would have been a lot higher.

The BOT’s owner – Vietnam Expressway Services Engineering Joint Stock Company (VEC E) – tried to diffuse the situation in an interview with Tuoi Tre newspaper on February 8, 2019, the day after, stating that the amount taken was collected from eight different shifts, not one.

But by then, the amount taken by the robbers was no longer the public’s primary concern.

Instead, people started to demand answers on the validity of the very existence of the toll booth. According to the Facebook page of journalist Ngo Nguyet Huu, the information on how long this particular BOT could continue to collect toll fees seemed to be missing.

Quick math on the average amount of money the BOT booth could generate daily raised more concerns over the potential sum that could have been taken illegally from the commuters if it indeed, did not have the authority to collect.

Some people had pointed out that the BOT booth in question has been operating long enough for it to recover the costs of construction and make enough money in return, casting more doubts on the legality of its existence.

To add fuel to the fire, on February 11, 2019, people on social media went livid when VEC E announced that it would refuse services to two particular vehicles at their Ho Chi Minh-Dau Giay BOT booth indefinitely, alleging the drivers of these cars “had incited disorder behaviors.” Its decision would have the effect of not letting these two cars use the expressway where the BOT booth is located.

Almost immediately, netizens started to call VEC E’s action “unconstitutional,” violating the people’s freedom of movement. Others questioned the company’s authority to enforce their decision. Although considered as a “quasi” government enterprise in Vietnam due to its investment structure, whether VEC E could act under “state action” is still debatable.

The people’s anger has caused the Transportation Department to immediately reassure the public on February 12, 2019, that it will not allow VEC E to refuse services and that all violations at BOT booths should be dealt with according to Vietnam’s administrative procedures.

Allegations of corruption involving BOT booths have been raised in numerous cases in Vietnam recently, and some saw VEC E’s announcement as evidence of BOT’s investors acting under the “protection” of the authorities.

A group of drivers acting as Vietnam’s freedom riders has been protesting against some BOT booths where they openly questioned the legality of some of these booths.

Their works faced intimidation, false imprisonment, and physical assaults by masked men in civilian clothes when they protested at or near the locations of these BOTs.

When these drivers tried to complain to the authorities but only received a slow, and sometimes even no response from the local police forces, the public began to suspect shady business deals between the owners of the BOT projects and the officials.

One of the latest incidents of intimidation happened just last Saturday night, February 9, 2019. A driver names Nguyen Quang Tuy alleged that he was physically assaulted and suffered significant injuries after getting involved in a minor dispute over payment types at Ben Thuy BOT in Nghe An Province.

More Vietnamese people have become vocal and voiced their complaints and discontentment about the BOT fees because they see these as unreasonable additions to the transportation taxes already imposed on them by the government for roads maintenance.

During the past two years, with more than 60 booths stationed throughout the country’s main highways and expressways, BOT is a social and political problem that could only get more severe with time.

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Vietnam: When Workers’ Rights Face Resistance From A Socialist Government

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Vietnamese factory workers. Photo courtesy: Betterwork.org

Vietnam’s dismal human rights records in 2017 and 2018 could play a role in delaying the ratification of the much anticipated European Union-Vietnam Free Trade Agreement (EV-FTA) this year.

A group of MEPs from across the EU Parliament’s political spectrum has repeatedly demanded that Vietnam improves its human rights conditions before they would vote on the trade deal.

The latest demand was a joint letter to President Nguyen Phu Trong on February 1, 2019, sent by nine MEPs on the case of Hoang Duc Binh, an environmental and labor rights activist who was sentenced to 14-year-imprisonment in 2018.

Releasing political dissidents and activists would indeed be a sensitive issue for the communist regime to compromise, even for the sake of clinching the ambitious EV-FTA deal where Vietnam could expect a 15% GDP gain.

But there has always been another human rights condition which one would assume that it should have received natural cooperation from the socialists in Hanoi: the ratification of the remaining three ILO (International Labor Organization) conventions.

That, however, has not been the case.

Vietnam, while rejoined the ILO since 1993, to date, has yet to ratify the following three conventions:

  • ILO Convention No. 87 – Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87)
  • ILO Convention No. 98 – Right to Organise and Collective Bargaining Convention, 1949 (No. 98)
  • ILO Convention No. 105 – Abolition of Forced Labour Convention, 1957 (No. 105)

In late 2018, Vietnam ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP) where a specific clause (Article 19) also addresses similar conditions regarding labor and workers’ rights.

On the ground, the Vietnamese government is proposing a roadmap that could take almost five years to get all three ILO conventions ratified.

It is not fast enough for the EU’s MEPs, and as of right now, these ILO conventions continue to be part of the obstacles to move the EV-FTA forward.

Vietnam maintains that its current Labor Code and legal framework would protect the rights of workers in the country while waiting for the Draft of the amended Labor Code to be reviewed and passed by its Congress later in 2019, paving the way for the ratification of the ILO conventions to take place between now and 2023.

In reality, impracticality contradicts the government’s claim.

For example, it is not meaningful to discuss the right of association and the protection of the right to organize according to ILO Convention No. 87 when Vietnam, to date, has refused to pass laws on the freedom of association and the right to assemble and demonstrate although their Constitution of 2013 guarantees these rights to all of its people.

Participation in demonstrations, moreover, could likely lead to arrest, detention, and conviction for “inciting public disorder” in Vietnam.

In June 2018, mass protests broke out in a few major cities against the then pending draft bills of the cybersecurity law and the development of three special economic zones in Vietnam. In response, the police arrested and detained hundreds of people.

One of the “hot spots” considered by the police of Ho Chi Minh City as reported by state-owned media at the time, was near the Taiwanese Pou Yuen factory in Binh Tan District where some workers did join in the protests between June 9 and June 13, 2018.

According to the organization The 88 Project, more than 60 people were arrested, tried, and sentenced to between 24-36 months imprisonment due to their participation in those demonstrations. Some of them are believed to be factory workers from the outskirts of Ho Chi Minh City.

The legal system continues to create hurdles in the registration processes for independent organizations. It is an issue which the UN Human Rights Committee has brought up with Vietnam before its upcoming CCPR (Covenant on Civil and Political Rights) review in March 2019.

At the end of 2016, Vietnam had attempted – but failed – to pass the Law on Association when it faced a defiant opposition from civil society organizations, both registered and unregistered.

One of the reasons which caused the majority of NGO workers in Vietnam to go against the proposed bill then, was because it attempted to criminalize the receiving of foreign funding and gave preferential treatment to GONGO(s) (Government-organized non-governmental organizations).

The Vietnam General Confederation of Labour (VGCL) – the only labor union in Vietnam right now – is not only a GONGO but also takes directives from the Vietnamese Communist Party.

During his speech in front of the National Assembly on November 2, 2018, the Vice-Chairman of the VGCL, Ngo Duy Hieu, cautiously reaffirmed that the ratification of the CP-TPP requires Vietnam to recognize independent unions while tried to cast doubts on their credibility.

At the same time, the government has yet to legally recognize any organization – large or small – formed by private citizens that could remotely represent an independent union for workers.

Vietnam, in 2017, reported an estimated population of approximately 26M workers in a variety of different industries.

The possibility of getting arrested and jailed under the current legal scheme, however, did not seem to deter a portion of these Vietnamese workers from exercising their rights.

Protests organized by workers continued to happen in Vietnam regardless, with the most common reason often linked to improving wages and working conditions – which ILO Convention 97 on collective bargaining could help.

Indeed, the government probably has already anticipated that the ratification of the ILO conventions would encourage even more workers to come together and organize themselves, independent from the VGCL in the future, once the legal landscape changes.

It is a slippery slope that Hanoi fears as it may spread to other sectors in society, which could explain the cautious approach in their proposed roadmap for the ratification of the three ILO conventions.

Accordingly, Vietnam proposed that they will present the National Assembly with the Draft of the amended Labor Code in May 2019 and expected the new law would pass at the next congressional meeting in October 2019. Also in 2019, the President will present ILO Convention No. 98 to the National Assembly for ratification. Next, it would be ILO Convention 105 in 2020, and finally ILO Convention No. 87 to be presented in 2023.

The proposed roadmap by the Vietnamese government, however, seems to have failed to convince the EU Parliament that workers’ rights are being protected, enough to move the EV-FTA forward.

The European Council has delayed their vote for EV-FTA last month. With the deadline for amendments also get postponed indefinitely, it is unlikely that the current EU Parliament will vote on the EV-FTA before their upcoming election in May 2019.

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Vietnamese Communist Party Turns 89, And The People May Have Had Enough

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Hanoi during the VCP's anniversary celebration in 2017. Photo courtesy: Zing VN

February 3, 2019, the Vietnamese Communist Party celebrates its 89th anniversary.

In a recent speech to commend the auspicious event, Secretary General Nguyen Phu Trong wrote: “The Party stays strong, the country prospers, the people concur.”

However, on Facebook, the people’s reactions to both Trong’s writing and other propaganda, do not seem to show a public consensus as to the VCP’s leadership role in Vietnam.

Today, the users’ reactions to a posting on Facebook seem to suggest the Party’s legitimacy is being called into question by the very people it tries to lead.

A Facebook page names Vietnam’s Politics (Chính trị Việt Nam) identifies itself as a source for government’s news and uses a webpage domain of www.nguyenxuanphuc.org – which also is the name of the country’s current Prime Minister.

The website posted a piece of writing entitles “Our Party” (Đảng Ta) in celebration of the anniversary.

The writing did not deviate far from other propaganda materials in past decades, praising the accomplishment of the VCP, reaffirming its leading role in society for years to come, and confessing the love of the Vietnamese people for the Party.

However, Facebook users were not willing to let that slides and quickly took the opportunity to express their distrust and unhappiness with the way “Our Party” has been leading society and the country in the comment section.

A few hours after its posting on Facebook, the piece received over 400 reactions from Vietnamese users, about one-fourth of them was the “laughing” icon.

Not stopping at that, the majority of the people who commented also raised a series of issues, such as corruption and nepotism within the VCP. They also questioned the legality of the recent National Assembly’s election result and pointed out the wealth discrepancy between the VCP’s members and the non-member citizens.

The overall picture of the people’s reactions on the post shows an alarming sense of distrust in the VCP, leaving doubts to the other readers as to whether the VCP could still maintain the position of the leading and only political party in the country indefinitely.

Other reactions from the Vietnamese people to the political events in another country during the past few weeks may cause the leaders of the VCP more worries.

The recent political turmoil in Venezuela has been receiving a lot of attention in Vietnam with the majority of the people supporting Juan Guaidó, the leader of the opposition front. When Nicolas Maduro used the example of another Vietnam to warn against an American invasion, he probably did not know that the majority of Vietnamese are strong supporters of the Trump administration’s decision to back his political opponent.

Back to the comments on this posting, it is not difficult to detect that the support for the VCP among its non-member citizens is waning. While the VCP certainly can continue to enjoy the political monopoly for being the only political party in the country, even its top officials may not be sure of its future – if and when a political opposition surfaces.

The lacking of confidence that it still has the mandate to maintain the legitimacy among the majority of Vietnamese people could explain the VCP’s enhanced oppression against political dissidents in recent years.

Most recent was the Party’s effort to silent online criticisms with the new cybersecurity law of 2018.

Vietnamese internet users appear to be very well aware of the purpose and intention of the government in passing such law.

One comment on the post did mention the potential application of the new cybersecurity law against internet users in cases like this: “The page administrator purposely posted this (writing) to incite the people to react and then (the government) threatens us with the cybersecurity law.”

At the same time, there are no clear signs that online activism in Vietnam has been slowing down since the new law takes effect earlier this year although it is true that just in January 2019, there have been reports of two confirmed arrests of Facebookers and one incident of police questioning a university student over his Facebook’s activities.

Vietnam has been increasingly repressive in the past two years. Not only the number of arrests have been steadily on the rise, but the sentences in political cases also became a lot harsher compared to a few years ago, often in the range of one to two decades behind bars.

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