Vietnam's Duty-Free Port Model: A Strategic Leap in Global Logistics

Vietnam is poised to revolutionize its logistics industry with the introduction of a duty-free port model. This ambitious initiative is expected to lower logistics costs, attract foreign investment, and enhance Vietnam’s position as a global trade hub. By drawing insights from successful Free Trade Zone (FTZ) models in Asia, Vietnam can create a competitive edge in international trade and supply chain management.

The Need for a Breakthrough Model

Vietnam’s logistics sector has strong growth potential but faces persistent challenges, including high costs and underdeveloped infrastructure. According to logistics expert Le Duy Hiep, Vietnam’s logistics costs remain significantly higher than the global average, reducing the country’s competitiveness. The lack of an integrated and synchronized logistics infrastructure further exacerbates these issues, highlighting the urgent need for an innovative approach.

The concept of a "duty-free port," as emphasized by General Secretary To Lam, aligns with globally recognized FTZ models. If properly implemented, this initiative could transform Vietnam’s logistics landscape by offering a streamlined, tax-free environment for international trade. This would not only attract foreign direct investment (FDI) but also enhance Vietnam’s integration into global supply chains, stimulating economic growth.

Key Benefits of Duty-Free Ports

Duty-free ports are designated areas where goods can be imported, stored, processed, and re-exported without incurring customs duties or domestic taxes until they enter the local market. These zones are instrumental in fostering trade, encouraging investment, and driving economic expansion. The primary advantages of implementing this model in Vietnam include:

• Reduced Logistics Costs – Companies can store, process, and distribute goods more efficiently, lowering operational expenses and improving profit margins.

• Enhanced Trade Facilitation – Simplified customs procedures and reduced administrative barriers expedite cargo movement, making Vietnam a more attractive destination for global businesses.

• Stronger FDI Inflows – Favorable tax policies and trade incentives would attract multinational corporations to establish regional distribution centers in Vietnam.

• Industrial and Export Growth – Manufacturers operating within duty-free ports can process and assemble goods for export without incurring import duties on raw materials, boosting industrial output.

• Integration into Global Supply Chains – Strategic location advantages can help Vietnam become a key transit point for regional and international trade flows.

Le Duy Hiep emphasized the importance of reducing bureaucratic red tape, particularly in customs and taxation, to ensure the successful implementation of duty-free ports. Streamlined regulations and efficient administrative procedures are critical to making Vietnam’s logistics sector more competitive and attractive to global investors.

Lessons from Asia's Free Trade Zones

Vietnam can draw valuable insights from successful FTZ implementations in Asia. Countries like Singapore, China, and South Korea have leveraged FTZs to transform their economies and boost international trade.

• Singapore: Since 1969, Singapore has developed seven FTZs, including six for maritime trade and one for air cargo. These zones facilitate the storage, processing, and re-export of goods with minimal customs intervention, making Singapore a major transshipment hub.

• China: Starting with five Special Economic Zones (SEZs) in the 1980s, including Shenzhen and Hainan, China has since expanded its FTZ network to 22 zones. These zones contributed to nearly 18.4% of China’s total import-export value in 2023, reflecting their critical role in economic development.

• South Korea & Malaysia: Unlike Singapore’s nationwide approach, these countries have designated smaller, strategic areas as FTZs to support targeted industries. South Korea, for example, has focused on high-tech manufacturing and logistics to enhance global trade connections.

>>> Read more: Top 15 Busiest Major Ports in China (CN) - List Update 2025

Ho Chi Minh City's Potential as a Duty-Free Hub

Ho Chi Minh City (HCMC) presents an ideal location for Vietnam’s first duty-free port, given its robust logistics infrastructure and strategic position in Southeast Asia. Key factors supporting this initiative include:

• Cat Lai Port – One of the largest and most modern ports in Vietnam, handling 86% of HCMC’s container throughput and 34% of the country’s total container volume. A duty-free zone at Cát Lái would significantly enhance Vietnam’s trade capabilities.

• Hiep Phuoc Port System – With vast land reserves and modern facilities, Hiệp Phước is well-positioned to support logistics and warehousing operations, making it an attractive destination for investors.

• Can Gio International Transshipment Port – A $4.8 billion project aimed at establishing a key maritime trade hub in Vietnam. The development of a duty-free zone in this area could integrate seamlessly with regional and global supply chains.

>>> Read more: List of Major Ports in Vietnam: Gateways to Global Trade

Steps to Ensure Successful Implementation

For Vietnam’s duty-free port initiative to succeed, several key actions must be prioritized:

• Infrastructure Investment – Develop world-class logistics facilities, including high-capacity seaports, advanced warehousing solutions, and efficient road and rail connectivity.

• Regulatory and Policy Framework – Implement clear and investor-friendly tax policies, customs regulations, and trade incentives to attract global businesses.

• Digital Transformation – Adopt smart customs procedures, blockchain-enabled trade documentation, and AI-driven supply chain management to streamline operations.

• Strategic International Partnerships – Collaborate with major trading partners to establish direct trade routes, ensuring seamless cargo movement and improved market access.

• Talent Development – Build a skilled workforce specialized in logistics, trade compliance, and supply chain management to support the evolving needs of the industry.

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Conclusion

Vietnam’s push toward establishing duty-free ports represents a significant step toward becoming a leading global logistics powerhouse. By leveraging successful FTZ models from other Asian economies, strategically developing port infrastructure, and implementing business-friendly policies, Vietnam can enhance its competitiveness in international trade. If executed effectively, this initiative could position Vietnam as a key player in global supply chains, driving economic growth and fostering long-term industrial development.