Danang, Vietnam’s central hub, introduces unmatched benefits for its Free Trade Zone.

Danang, a vibrant city in central Vietnam, is making headlines with its ambitious push to attract foreign direct investment (FDI) through a new Free Trade Zone (FTZ). This initiative marks a significant turning point in the region’s economic landscape, aiming to transform Danang into a competitive hub for global trade.

The Danang Free Trade Zone was officially established following a prime ministerial decision in June 2025, positioning it as the first of its kind in the nation. The zone spans an impressive 1,881 hectares, covering Hai Van ward, Ba Na commune, and Hoa Vang commune, and is strategically divided into seven unique functional areas, including manufacturing, logistics, commerce, digital technology, IT, and innovation.

One of the most striking features of the FTZ is its streamlined registration process. Foreign firms looking to invest in the zone are exempt from needing an investment license or submitting a project proposal to register their companies. This regulatory flexibility extends to preferential customs mechanisms that facilitate smoother operations, providing a significant advantage for businesses.

The financial incentives are equally compelling. Investors can benefit from a four-year exemption on corporate income tax, followed by a 50% reduction for the subsequent nine years. After that, a preferential tax rate of 10% applies for 15 years. Notably, specialists in artificial intelligence and semiconductors are granted an additional five years of personal income tax exemption—a move designed to attract high-tech talent to the region.

Moreover, exemptions from value-added tax (VAT) and special consumption tax apply, with minor exceptions, further enhancing the overall attractiveness of the investment climate. Infrastructure investors can lease land for an extensive period of up to 70 years, which includes a three-year rent-free period during construction and 11 years of subsequent rent exemptions following project commencement. The city is also open to supporting infrastructure investments that align with budget capacity and overall planning feasibility.

Notably, the FTZ’s special policy mechanisms aim to simplify land allocation processes. Under these new guidelines, priority sectors within the zone can be allocated land without the need for auctions or competitive bidding. This approach is intended to promote efficiency and encourage faster development of essential infrastructure, particularly those linking functional areas to seaports, airports, and international border gates through a public-private partnership (PPP) model.

In an innovative move, projects within the FTZ are fully exempt from land and water surface rental fees for their entire lease duration, barring those related to residential and certain commercial-service sectors. This substantial cost saving is an attractive proposition for both local and foreign investors looking to establish a presence in the influx ramping up in Danang.

The new policies also permit foreign investors to hold up to 49% of charter capital in critical sectors such as airport operations and cargo terminal services, allowing for more significant foreign engagement in essential logistics functions. For international transshipment logistics centers at airports, this threshold is raised to 51%. The FTZ’s framework encourages various business activities, including transshipment and cargo transit, positioning it as a dynamic center for trade in the Asia-Pacific region.

Danang’s commitment to attracting FDI has received praise from prominent figures, including the city’s Party chief, Le Ngoc Quang, who described the FTZ as a breakthrough model. He emphasized its role in trade liberalization and improving Danang’s visibility and competitive standing on the Asia-Pacific logistics map.

Prime Minister Pham Minh Chinh also acknowledged the initiative, indicating that the pilot of free trade zones across Vietnam is a progressive step that requires structured and effective implementation. He underscored the need for agencies to learn from international benchmarks while considering Vietnam’s unique context when formulating policies intended to support these ventures. Ultimately, the goal is to harmonize these initiatives with broader investment environments, ensuring a balanced approach.

In a notable administrative change, on July 1, 2025, Danang and its neighboring province of Quang Nam were merged, forming a newly integrated Danang, further enhancing opportunities for cohesive economic growth and development.