What is a border-gate economic zone? The 8 key border-gate economic zones in Vietnam

A border-gate economic zone (BGEZ) is a special economic model in Vietnam, established in border areas to promote trade, logistics, tourism, and export-oriented industries. Serving as a “gateway for cross-border commerce” connecting Vietnam with neighboring markets, BGEZs not only contribute to local economic development but also play a crucial role in driving national growth. This article provides an overview of what a border-gate economic zone is, the priority development system, the orientation toward smart border gates, and the investment incentives available for enterprises.

I. What is a border-gate econimic zone?

A border-gate economic zone (BGEZ) is an economic zone established in land-border areas and their adjacent territories. It is one of Vietnam’s special types of economic zones.

The strategic objective of a border-gate economic zone is to promote cross-border trade, develop logistics services, tourism, and export-oriented industries, thereby serving as a key gateway for commercial exchange and strengthening Vietnam’s connectivity with neighboring countries.

In terms of the legal framework, all management and investment activities within border-gate economic zones are currently governed by Decree No. 35/2022/NĐ-CP, issued on 28 May 2022, which regulates the management of industrial parks and economic zones. The integration of border-gate economic zone management under this unified decree reflects Vietnam’s intention to standardize governance and reduce fragmentation in the administration of special-function economic areas.

II. Eight key border-gate economic zones in Vietnam

According to the Report on the establishment and development of industrial parks and economic zones by the Ministry of Planning and Investment (now under the Ministry of Finance), Vietnam currently has 30 border-gate economic zones (BGEZs). To concentrate resources and create breakthrough efficiency, the Prime Minister has approved a list of 8 priority BGEZs to receive central government budget support during the 2021–2025 period. These areas have demonstrated strong economic performance and hold strategic geographic advantages, include: Mong Cai border-gate economic zone (Quảng Ninh), Đong Đang – Lang Son (Lạng Sơn), Lao Cai, Cao Bang, Cau Treo (Hà Tĩnh), Lao Bao (Quảng Trị), Moc Bai (Tây Ninh), An Giang

This decision reflects the Government’s strategy of targeted, in-depth investment, prioritizing maximum effectiveness over widespread allocation. In 2019 alone, these eight zones contributed more than USD 344 million-accounting for nearly 70% of total budget revenue from all border-gate economic zones nationwide. By directing investment toward high-performing zones such as Mong Cai, Lao Cai, and Đong Đang – Lang Son, the Government aims to form internationally competitive growth hubs while encouraging other zones to proactively attract capital and develop their infrastructure.

III. Smart border-gate systems

Investment in “smart border gates” is a strategic move by the Government, focusing on operational efficiency as the primary competitive advantage instead of tariffs-thereby creating a sustainable form of non-tariff incentives.

Smart border gates will prioritize upgrading to advanced technologies such as facial recognition systems, automated cargo control, and biometric identification technologies. They will apply Artificial Intelligence (AI), the Internet of Things (IoT), and Big Data to shorten customs clearance times, minimize cross-border trade risks, and optimize operational procedures. The development of smart border-gate models not only enhances management efficiency but also provides significant benefits in preventing smuggling and trade fraud.

Quang Ninh is a notable example, currently piloting the smart border-gate model at Mong Cai – Donh Hung to increase clearance capacity, reduce waiting times, and promote cross-border trade. The Móng Cái border-gate economic zone, spanning more than 121,000 hectares, has been designated as a national key border-gate economic zone, directly linked to international economic corridors between China and Vietnam’s major economic centers.

Alongside Quang Ninh, Lang Son has also been assigned by Prime Minister Phạm Minh Chính to lead the development of smart border gates, particularly at Huu Nghi and Tan Thanh-two critical trade gateways with China.

IV. Investment Incentives in Border-Gate Economic Zones

Before 2018, goods and services exported abroad from non-tariff zones within border-gate economic zones (BGEZs) were exempt from VAT, while goods transported from the domestic market into the non-tariff zone enjoyed a 0% VAT rate. In addition, investors in BGEZs were entitled to a 70% reduction in land and water surface rental fees after the initial rent-free period.

However, on January 16, 2018, the Prime Minister issued Decision No. 01/2018/QD-TTg, which abolished Decision No. 72/2013/QD-TTg on special financial mechanisms for border-gate economic zones. Since then, BGEZs have applied investment incentives under the general framework of the Law on Investment 2020 and Decree No. 35/2022/ND-CP on the management of industrial parks and economic zones.

Economic zones in general including border-gate economic zones are entitled to investment incentives applicable to areas with exceptionally difficult socio-economic conditions. Specifically, investment projects in BGEZs are eligible for a preferential corporate income tax rate of 10% for 15 years, a 4-year tax exemption, and a 50% tax reduction for the subsequent 9 years.

Border-gate economic zones continue to demonstrate their strategic role in boosting cross-border trade, developing logistics, and driving regional economic growth. With a focused investment strategy and the shift toward smart border-gate models, these zones will continue to play a crucial role in Vietnam’s strategy for integration and supply chain expansion. Going forward, the effectiveness of infrastructure development, technology adoption, and investment attraction will be key factors determining the competitiveness and momentum of the border economic ecosystem.

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