Local authorities want dollars to be used in Phu Quoc Special Economic Zone
Kien Giang provincial authorities’ proposal to allow the dollar to be used in Phu Quoc Special Economic Zone (SEZ) has stirred controversy.
In an effort to attract foreign investors, Kien Giang authorities have offered many preferences.
Expats who work in Phu Quoc for three months or longer will be able to buy and sell properties in the SEZ with permanent ownership suggested for house and villa owners and 99-year ownership for apartment buyers.
Kien Giang may allow the dollar to be put into circulation in the SEZ and permit conversion of other currencies into dollars. Those who gamble at casinos in Phu Quoc may be allowed to bring money out of the SEZ without a State Bank license after they pay taxes.
Under current law, Vietnam dong is the only currency which can be used in payment transactions in Vietnam.
Bui Kien Thanh, an economist, said that SEZs operate with their own rules which have no relation with laws of the country. He noted that Phu Quoc needs to be governed with specific laws.
Meanwhile, other economists disagree with the view that Phu Quoc needs a separate monetary system. Nguyen Tri Hieu, an economist, said this was ‘not a good proposal’ which ‘doesn’t deserve application’.
“Kien Giang provincial authorities just try to think of the interests for Phu Quoc SEZ. But remember that the thinking for Phu Quoc will influence other SEZs in the future,” Hieu said.
He said that it would be better not to compare Vietnam’s Phu Quoc with China’s Hong Kong, because Hong Kong plays a big role in the international financial system, while Phu Quoc focuses on tourism.
He warned that if the dollar is used in Phu Quoc, this will be contrary to Vietnam’s policy on fighting dollarization.
CIEM’s (Central Institute of Economic Management) former head Le Dang Doanh also disagrees with the proposal, emphasizing that the policy, if applied, won’t have any positive impact on creating a different Phu Quoc.
“I think a special economic zone has to obey the country’s monetary policy,” he said, adding that the circulation of the dollar and the property permanent ownership will bring more negative than positive impact.
Doanh is concerned about the role of the dong in Phu Quoc in the future. “If foreign currencies are used for big transactions, will the Vietnam dong be used only for pho and coffee?” he asked.