On the morning of August 24, the National Assembly passed the Urban Development Law with 465 votes in favor, equivalent to 93% of the total number of National Assembly deputies. The new law establishes a legal framework for policies aimed at promoting urban development while strengthening transparency, power control and the responsibilities of local authorities during implementation. Notably, several mechanisms are designed to create greater development flexibility for special urban areas such as Ho Chi Minh City, as well as other cities, special economic zones, free trade zones and offshore urban development projects.
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Before the vote, Minister of Justice Hoàng Thanh Tùng presented the report on the review, explanation and revision of the draft law based on feedback from National Assembly deputies and conclusions of the National Assembly Standing Committee.
One of the revised provisions concerns the pilot implementation of mechanisms and policies that are not currently provided for under the Urban Development Law or other legislation issued by the National Assembly and its Standing Committee.
Under the new provision, any government decree introducing such pilot mechanisms must receive approval from the National Assembly Standing Committee. The scope of pilot programs is also limited to specific requirements related to state management, economic management and social management.
The provision is intended to strengthen oversight of policy experimentation while improving transparency and consistency in implementation.
The law also clarifies several concepts, including the classification of free trade zones as a type of "functional zone" and the definition of "competent authority" to reduce differences in interpretation during implementation.
For free trade zones and integrated logistics zones, the law introduces additional provisions concerning banking activities and financial management.
The Governor of the State Bank of Vietnam will be responsible for specifying requirements and conditions for transaction offices of foreign bank branches operating within free trade zones. The objective is to strengthen foreign exchange management, prevent money laundering and control potential risks arising during operations.
The Government will also establish procedures for the recognition, extension, suspension or termination of preferential customs regimes applicable to free trade zones and integrated logistics zones.
The law also introduces provisions aimed at establishing a more comprehensive legal framework for the International Financial Center in Vietnam.
The new mechanism is intended to create more favorable conditions for international financial activities. The municipal People's Council will have authority to stipulate certain conditions, procedures and processes related to licensing banks that conduct investment banking activities and issue international financial products, subject to opinions from the Ministry of Finance and the State Bank.
Members of the International Financial Center may provide financial and related support services within the scope of their licenses. Their activities must comply with regulations on foreign exchange management, anti-money laundering, counter-terrorism financing, public debt management and other relevant legal requirements.
Another notable provision concerns the development of offshore urban areas.
The revised law adds a separate article outlining policies to promote this type of urban development. The provisions cover investment, construction and development principles; requirements for strategic investors; incentive and support policies; as well as investors' rights and obligations.
The law also sets out authority for deciding certain economic and technical indicators, land-use indicators and mechanisms for exploiting minerals for project implementation in accordance with regulations.
These provisions are expected to provide a clearer legal basis for coastal and offshore urban development projects while defining the responsibilities, authority and obligations of participating parties.
With regard to special economic zones, the law no longer retains the provision allowing local People's Councils within such areas to decide on controlled pilot programs.
Revenue generated from carbon credit transactions will be classified as provincial budget revenue, with 100% retained by the provincial budget. The People's Council of the province where the special economic zone is located will determine how these revenues are used in accordance with regulations.
Meanwhile, provisions concerning the development of artificial islands and isolated small rock formations have been removed from the draft for further study and consideration under specialized legislation governing the sea and islands.
This approach is intended to allow these issues to be assessed more comprehensively, particularly in relation to sovereignty, national defense, security, foreign affairs, marine resources and environmental protection.
The passage of the Urban Development Law provides Ho Chi Minh City with a stronger legal foundation for implementing development policies applicable to special urban areas.
Together with provisions on decentralization, planning, free trade zones, international financial centers, special economic zones and offshore urban development, the law is expected to help address regulatory bottlenecks and create greater flexibility in mobilizing resources for urban development in the coming period.