Vietnam's Southern Key Economic Zone (SKEZ) Continues to Lead Country in Exports and Growth

In the past five years, exports from the provinces and cities in the Southern Key Economic Zone (SKEZ) accounted for more than 70 percent of the country's export revenue, growing at a rate of 21.4 percent per year.

The SKEZ is a term used by the Vietnamese government and is defined as consisting of eight localities. These are Ho Chi Minh City, Binh Duong, Dong Nai, Ba Ria-Vung Tau, Binh Phuoc, Tay Ninh, Long An and Tien Giang provinces.

The SKEZ is considered to be the engine of growth for Vietnam and as important to the whole country. Average economic growth in the zone has been 12.6 percent a year, accounting for 60 percent of the country's industrial production by value, 70 percent of the country's export revenue and 40 percent of the country's gross domestic product (GDP). Per capita income inside the area is VND31.4 million per year. This is 2.6 times the national average. Budgetary revenue from the SKEZ is 66.5 percent of the country's total budgetary revenue. Over the past 20 years, the SKEZ has been a magnet for investment. During this period, 54 percent of the country's investment capital was invested in the SKEZ.

Many observers and officials, have noted that each province or major city in the zone should focus more attention on enhancing its particular areas of advantage in terms of exports and development. Dr. Tran Du Lich, the director of the Ho Chi Minh City Institute for Economic Research in a quote in issue No 2/2009 of Vietnam Economic News said that it is necessary to identify the comparative advantages of each locality in the SKEZ. In his opinion, SKEZ localities must complement each other rather than compete with each other. He went on to note that provinces like Binh Duong, Dong Nai and Binh Phuoc had advantages in manufacturing while Ho Chi Minh City because of its larger urban populace had advantages in services, information technology and higher value added areas.

Weak Infrastructure including crowded roads and a lack of deep water seaports and rising pollution levels remain a concern for the SKEZ, just as they are for the entire country. Despite this, foreign and local investors find this area more entrepreneurial and easier to work with and consequently investment continues to rise.