Customs in the development of the cross border economic cooperation zone between kim thanh (lao cai viet nam) and beishan (yunnan china)

BUSINESS, VNUH CUSTOMS IN THE DEVELOPMENT OF THE CROSS BORDER ECONOMIC COOPERATION ZONE BETWEEN KIM THANH LAO CAI-VIETNAM AND BEISHAN YUNNAN - CHINA Authors: Hoang Kim Thang... ABSTR

v r "h

UPPSALA UNIVERSITET &

UNIVERSITY OF ECONOMICS & BUSINESS, VNUH

CUSTOMS IN THE DEVELOPMENT OF THE

CROSS BORDER ECONOMIC COOPERATION ZONE BETWEEN KIM THANH (LAO CAI-VIETNAM) AND

BEISHAN (YUNNAN - CHINA)

Authors: Hoang Kim Thang

ACKNOWLEDGEMENTS

First and foremost, I would like to express my sincerest gratitude to Prof Dr Lars-Torsten Erikson and Dr Nguyen Anh Thu who, even under pressure of their own tight working schedule, spent the most valued advice and shown generous support on my thesis

I also would like to thank all of faculty members in charge of MA course in Public Management, especially foreign specialists whose solid and extensive knowledge have provided us with interesting and useful lectures throughout 18 study months

The paper may not be prepared, completed and then presented without enormous motivation and facilitation by other instructors and administrators

of University of Economics and Business - Vietnam National University, Hanoi I am so glad to have chance to work together with them

Last but not least, they are my colleagues, my family and friends who help me much to optimize my limited time and then offer their inputs and comments for me to get the thesis completed Of my most grateful words are saved to them

ABSTRACT Title: "Customs in the development of the cross border economic

cooperation zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China)"

Level: Thesis of the master program in Public Management

Authors: Hoang Kim Thang and Cao Sang

Instructor: Prof Dr Lars-Torsten Erikson and Dr Nguyen Anh Thu

Defense day: 18/05/2013

Goals: The cross border economic cooperation zone "one area for two

countries, the closed connection" is a new approach of Vietnam to carry out the goals of expanding the economic corporation among neighbor countries, including China Kim Thanh cross-border economic corporation zone (Lao Cai - Vietnam) and Beishan (Yunnan-China) w^hich is being searched and built is one small piece of the whole picture about Vietnam -China economic relationship Facilitating import and export goods activities, in which the Customs' role and tasks to boost investment cooperation, opening Lao Cai for the national dexelopment when Vietnamese finns are still distressed by aftershocks of the global economic crisis, is now an essential problem The Customs have to seek solutions to facilitate trade as well as tightly control objectives Therefore, the authors decided to choose the topic: " Customs in the development of the cross border economic cooperation zone between Kim Thanh (Lao Cai -Vietnam) and Beishan (Yunnan - China)'' to be the topic of our Master's thesis

Methodology: The authors used the following methods:

Research methodology: The authors used the method of modeline to facsimile the future customs model This method includes: building model develop the model based on analyzing the collected data and examine the results through questionnaire and direct interviews

Collecting data method: researching documents (desk-study method) and

survey method, collecting primary and secondar>' data The study used the secondary data to fmd out the real situation of the Customs model in Kim Thanh cross-border economic corporation zone (Lao Cai-VN) with Beishan (Yunnan-China), simultaneously fmd out the theoretical problems

of the cross-border economic corporation zone In addition, to collect data

to answer the main research questions, the study used primar\' data with practical surveys by questionnaires and cards inter\iewine directlv businesses and individuals to record their comments, suggestions for the model of the cross-border economic corporation zone

Quantitative data analysis method: the research used descriptive statistics

to assess the sense of organizations, businesses and individuals about the cross-border economic corporation zone between Kim Thanh (Lao Cai -Vietnam) and Beishan (Yunnan - China) The thesis also used SWOT model and the feasibility to enhance the efficiency of the model In addition, the multiple regression method were used to assess impacts of researched element groups on effects of the Customs model The analysis was perfomied with SPSS software version 11.5

The qaestiomiaire to collect data: To collect data for answering four

research questions, the writers developed the questionnaire with 20 questions Their content and measurement are in the questionnaire

The inteni'ewing cards to collect qualitative data: Those cards are for the

more objective and comprehensive view about the Customs model and the cross-border economic zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China)

- Method of data collection: From references to the Institute for

International Trade Economic Cooperation of the Ministr>- of Commerce (China) and for International Trade Economic Cooperation, Ministr>- of International Trade Industry and Commerce (Vietnam), the authors had taken addresses and email addresses to send questionnaires to customers and to distribute questionnaires directly to the organizations, businesses and individuals who were doing procedures through Lao Cai Organizations, businesses and individuals completed and sent results via email and by post office Data collection lasted from early Februar>' to mid-April 2013 49 completed questionnaires and 41 direct interview cards were collected The research results are analyzed based on the data

of 49 clients and 41 direct interviews

Results and conclusions:

- The development of the cross border economic corporation zone between

Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China):

Organizations, finns and individual considered the trans-Asia route going through Lao Cai, Hanoi, Hai Phong; adjusted policies; the area for doing procedures as three elements in the order of priority which Lao Cai have already met the demands However, Lao Cai have not fulfilled yet for the reason that investment for building the infrastructure, harbors, warehouses, the areas for land, railway, waterway and airu^ay (in the future) transportation procedures is needed first Moreover, the biggest difficulty is that the policy of two countries did not agree much, so that there are a lot of differences Especially, the infrastructure and machiner\^ have not been invested synchronously and stably yet The most important factor for the model's success to ensure the symmetry of preparation and expenses as well as ensure the benefits of two parties is the interests of the government, ministries, Lao Cai province and China go\*emment

- Building up the Customs model and laws:

We are not able to confirm that the Customs model with policies adjusting goods, people, devices which is almost similar to the eate economic zone and not similar to the gate economic zone is equal

- The Customs procedures:

+ Customs procedures of two countries for people and commodities when going in/out the administrative and service area are different from each other but are managed by the Transnational Board

+ The tax exemption for goods going through the zone which is lower than 500.000 VND/ turn/ person/ day is too little, not suitable and is suggested to increase

+ Customs procedures for commodities when going in/out the Management area to import or export are needed to be stricter for some firnis and passengers take advantages of open policies to smuggle or evade tax, which lead to difficulties in control and management

+ Almost people saw that if they did not have to pay the unofficial expense when doing the procedures, it would be the most attractive way of the Zone and be a way to enhance the Customs management effects

- Evaluations of the infrastructure and current conditions of the Customs

The legal basis, the infrastructure, current conditions of the Customs were chosen in the order of priority which are mainly based on Customs law, 154 Decree with specific adjustments for the cross-border economic corporation zone in the customs field

Especially in two recent years, finns ha\e been seriously affected by the economic crisis, so the most important factor is that innovations in the procedure process and incentive policies to attract enterprises to recover and develop

- Effects of the Customs model in the future:

Three most satisfied factors are open policies, simple customs procedures and not too high costs for harbors and warehouses Besides, when legal documents, the infrastructure, the customs personnel are not synchronous and stable, we need to propagate and educate customs laws for firms, organizations and individuals In the future 71.43% of the inter\'iewed people will definitely take part in import and export activities here and intend

to introduce other to do so

- Suggestions to improve the quality of the custom procedure process and

procedures of the cross-border economic corporation zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yiinnan - China):

The Customs need to arrange the qualified personnel, adequate infrastructure to attract organizations, fimis and individuals out of the province to take part in the zone, avoiding the situation that it is necessary to supplement anything creating troubles for firms Especially, the unofficial expenses are not needed to pay at any station The govemment, relevant ministries and departments issue legal documents for the Customs field which have to be synchronous in order to not be suffered by finns In addition, there must be the aood coordination between the Customs, the border suards the transportation department, the medical and phytosanitar\\ etc

Three solutions which are suggested most are the unification of legal documents by the government; improvement in the customs procedures as well as machinery serving customs operations; and the synchronous, modem and professional personnel

Suggestions for deeper researches:

To perform well its functions in tenns of management in the Customs

between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China) need great efforts of the Customs itself, especially the Lao Cai Customs if they are pointed to do this task Whether the Customs model is successful or not mainly depends on the policies and laws of the govemment, legal documents

of relevant ministries and departments, and guidance of General Department

of Customs, the facilitation of Lao Cai province, the coordination of related branches in the Zone as well as organizations, the firm community, individuals joining in import and export activities here

If the authors or you are planning to do research about this topic, we really want to those suggested problems will be found out more clearly and accurately within a larger scale because the thesis's sample are only

49 questionnaires and 41 direct interview cards

Contributions of the thesis:

The analyzed results show that the thesis describes the feasibility of the Customs model in the cross-border economic corporation zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China) through the primary and secondar)^ database Simultaneously, it also shows difficulties which need to be solved for the zone to perform well when the zone is run

Regarding the research purposes and the analysis of collected data by questionnaires and direct inteiA'iews, the thesis gave answer for the research questions about the cross-border economic corporation zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China) and the customs model in the future Therefore, this will be a usefijl document for policy makers about finance, economy in the customs field as well as the customs itself and the firm community, individuals when issuing policies, managing or joining activities in the zone

If Kim Thanh Customs Department is separately established in order to manage the customs field in the cross-border economic corporation zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China), it is

necessary to implement well and synchronously such solutions that the authors suggested to facilitate trade of goods, the development of firms and improve Lao Cai customs into a new level in the future

Key words:

In this thesis, the writers used many repeated words and phrases

"Result" is repeated 36 times, "model" is repeated 97 times, "customs" is repeated 239 times, "operation" is repeated 65 times, and "synchronous" is repeated 30 times, "efficiency" is repeated 21 times The authors also see that these are research purposes, suggestions of solution package for the

most "synchronous and effective operation of the customs model"./

1.3 Research objectives 5

1.4 Reseach tasks 5

1.5 Scientific understandings and applications 6

1.6 Subjects and the scope of work 6

1.7 Researching results of the thesis 7

II FRAME OF REFERENCE 8

2.1.Research on the model of cross border economic coopertion 8

2.1.6 Types of cross border economic cooperation models 14

2.1.7 Cross border economic cooperation on some regions and countries in

the world 17 2.1.8 Overview on the trans-boundar}^ economic cooperation zone

between Beishan (Yunna - China) and Kim Thanh (Lao Cai - Vietnam)

19 2.2 Researches on customs model 21

2.3 The problem posed for customs cooperation in the cross border

economic cooperation zone 23

III RESEARCH METHODOLODY 25

3.1 Methodolody 25

3.2 Methods of implementing data collection 26

IV COLLECTED PRACTICAL RESLILT 27

4.1 Description of sample 27

4.2 Collected data 28

V DATA ANALYSIS 52 5.1 The development of Kim Thanh (Lao Cai - Vietnam) and Beishan

(Yunnan - China) cross border economic cooperation zone 52

5.2 Building customs model and adjusted documents 53

5.3 About customs procedure 53

5.4 Evaluadon on infrastructure and current situation of customs 53

5.5 Efficiency of future customs model 54

5.6 Suggestion to improve the quality of customs procedures in the Kim

Thanh (Lao Cai - Vietnam) and Beishan (Yunna - China) cross border

economic cooperation zone 56

VI COMMENTS AND CONCLUSION 57

6.1 Measures to improve customs model for the development of across

-border economic cooperation zone- Kim Thanh (Lao Cai-Vietnam) and

Beishan (Yunnan -China) 57

6.1.1 For the State, the relevant ministries and agencies People's

Committee of Lao Cai 57

6.1.2 For customs agencies 59

6.1.3 For interdisciplinary coordination 61

6.1.4 For the organizations, business community and individuals 61

6.2 Recommendation for further studies 62

REFERENCES

APPENDIX I

APPENDIX II

World Trade Organization

World Customs Organization

Greater Mekong Subregion

United States Dollar

Association of Southeast Asian Nations

Statistical Package for the Social Sciences

Cross border economic zone

Office of the Commitee hnport and export

Exit & Entrv Business China Custom Technology and Science The Asian Development Bank

Cross border transportation agreement

Hiep hoi cac quoc gia Dong Nam A

Mot chuorng trinh may tinh phuc vu cong tac thong ke

Khu hap tac kinh t^ xuyen bien giai

Uy ban nhan dan Xuat nhap khau Xuat nhap canh Doanh nghiep Trung Quoc Hai quan Khoa hoc ky thuat Ngan hang Phat trien chau A

Hiep dinh van tai xuyen bien giai

Phraya-Stabilisation and Association Process

The stabilisation and association agreements

European Union Regional Cooperation Council

/ ,

Chien luac hop tac kinh

te Ayeyawady-Chao Phraya-Mekong

LIST OF TABLES

Table 3.1: Six elements of cross border economic cooperation zones 12

Table 3.2 Sysmetric Economic Copperation Model 15

Table 3.3 Linkage model 1^

Table 3.3: Hekou cross border economic cooperation site plan 20

Table 4.1: Characteristics of the sample 27

Table 4.2: The three most thing in the order of priority 29

Table 4.3: The most important factor for succeed of the Zone 29

Table 4.4 The biggest differences between the Zone and the Zone of

Pingxiang-Dong Dang 30

Table 4.5 the biggest differences between between the zone Kim

Thanh-Beishan and the zone Ha Tinh-Bolykhamxay 31

Table 4.6 Analyze the criteria of full convergence of the respondent 31

Table 4.7 Reasons for postponement to operate the zone 32

Table 4.8 Policies in the customs field 37

Table 4.9: Customs procedure to the whole zone 37

Table 4.10: Appraise incentive polices about exemption 38

Table 4.11 Managing imported commodities and entrants to the countr}- 39

Table 4.12 Exploration of the unofficial expense 39

Table 4.13 Infrastructure and the legal basis of the customs in the order of

priority 42 Table 4.14 Evaluation of the need to refomi of the customs 43

Table 4.15 Customers' satisfaction 43

Table 4.16 The model of Customs 44

Table 4.17 The intention of customers to join in operation 44

Table 4.18 Intention to introduce friends, family to take part in when the zone

go into operation 45

Table 4.19 The first task to do of the Customs 47 Table 4.20: Tasks must be done first by the Customs 48

Table 4.21 solutions in the order of priority 50

L INTRODUCTION l.L Situation

Economic cooperafion among the countries sharing national borders has been a loosing knot in term of both economic development over borders and crossing-border transportation for years Economic develoment along border areas should take theirs role as a critical instrument to call for a variet>- of investment in the neighborhood, increase the variet}^ of good and services; a open door to the outside world and a place from where national brandnames and images can easily be introduced and go international The trend of economic cooperation is an important motivation for neighbors to open their markets Therefore, beside normal import and export operations, it requires an economic cooperation zone where can be used for advertising national images, doing import-export business and meeting the needs of goods, services and so

on Due to the need of shifting economic structure to exploit each nation's advantages as well as minimizing the deficiency of goods, technologies and

so that, it requires a place for international culture exchange as well as satisfying all needs above and even the need of the 3*^ nafion for trading The establishment of economic cooperation areas is fonned based on objective requirements of manufacturing and domestic traffic The economic cooperation zone becomes one of the important trend of the world economy today The convenient development of the regional trade cooperation between ASEAN and China is a premise to develop innovative models and continue to keep this as a big step fonvard in area For this reason, the establishment of the cross borders economic cooperation is in conformitN with actual needs Furthermore, the global economic crisis will cause difficulties in future with unpredictable factors: hence the economic and political cooperation between neighbors is quite necessar\- Special economic areas of ''one area two countries, tight cooperation" are becoming a new approach of Vietnam to achieve its target of expanding and strenghtenning economic tights with its

neighbors inclusive of China It is obviously critical to build up one or more trans-bordered economic areas to attract more investments and improve trade balance between Vietnam and China along North - South economic corrider and Greater Mekong Subregion Vietnam shares border lines with three countries which ard People Republic of China, Lao People's Democratic Republic and Kingdom of The total length of border line is 4610 km, in which 1406 kim with China, 2067 kim with Laos and 1137 with Cambodia There are 19 international border gates, 6 international airport gate and 15 international marine gate, etc.^

Lao Cai is a mountainous province in the north and shares the border line with Ha Giang in the east, Son La and Lai Chau in the west; Yen Bai in the south and Yunnan (China) in the north in which the total length of border line is 203 km Lao Cai has 27 ethnics in which Viet people account for 194,666 individuals, Hmong community account for 122,825 people, Tay ethnic has 82,516 ones and Dao people includes 72,543 people Lao Cai is one

of provinces which is continuously on the top of provincial competitive capacity index ranking in recent years In 2011, this province ranks number 1 among other 64 provinces Regarding to land resources Lao Cai has 10 main group of land which could be divided into 30 types These 10 groups are alluvial, marshy soil, black soil, red yellow soil In terms of water resources, Lao Cai has dense river systems which are distributed fairly evenly over the province with two big rivers - Red and Chay River originated from China and thousands of other small rivers and streams This is advantageous conditions for the development of small and medium hydropower factor\\ About forest resources, the wood area of Lao Cai is 278 907 ha which consists of 229,296.6

ha natural forest, 49,604 planted forest, account for 43,87% the whole natural area Furthermore, Lao Cai's forest are ver>' rich in both quantity and species

of typical vegetation There are 442 species of birds, mammals and reptiles, amphibians About mineral resources, Lao Cai has found 150 mines with over

30 types of minerals, in w^hich some are largest in Vietnam and in the region such as Cam Duong apatite mine with reserves of 2.5 billion tons, Quy Xa

iron mine - 124 million tons, Sin Quyen copper mine - 53 million tons O Quy

molybdenum -15.4 thousand tons

Lao Cai is one of the few mountainous province has a network of diverse transportation, including roads, rail and rivers In the period of 2015 -

2020, it will construct Lao Cai aiport and Noi Bai - Lao Cai highway with the total length of 261 km, beginning at the intersection point of the Noi Bai - Ha Long Highway and National road 2, ending at the cut with Kunming - Hekou

in Quang Kim Commune, Bat Xat Districh, Lao Cai province Noi Bai - Lao Cai highway will go through 5 provinces and cities including Vinh Phuc, Phu

TTio, Yen Bai, Lao Cai and Hanoi city Regarding to tourism, Lao Cai is a

mountainous province which still remain fresh and keep diverse environmental landscape This is an important condition for the development

of an ideal tourism points for local and international guests Sapa town is one

of 21 national tourist zone of \TM Noticeably, total import and export value of Lao Cai increased over the years Specifically, total exports and imports in the first 3 months of 2013 reached $ 72 million in which export revenue is USD 27.73 million (increase 230% comparing to 2012) import revenue is over USD 447.7 million The main export commodities are agricultural products (coffee, cashew and rubber) and strip flooring, footwear, furniture

Items mostly imported are coke coal, fertilizer, electricit\\ machiner\' Lao Cai has many main and side border gates such as Lao Cai, Muong Khuong, Bat Xat etc and other many trail crossings This is advantageous condition to fonri cross area economic cooperation zone to heighten the position of Lao Cai in providing transportation ser\'ices, facilitate and support

the development of border trade, contribute to the development of the alobal supply chain

For the time being, a project of setting-up Kim Thanh and Beishan economic area is being analyzed and soon to be submitted; till then, this will become a fragment of an overall multi-angled colorful picture of Vietnam-China prolonged economic relationship Each and everv- step required to take carefully is expected to put such fragment into the right place to maximize its potentials and effectiveness When our disadvantage is laying on the infrastructure system, focusing on highways and railways, transportation fees and consequently the number of tourists to Lao Cai are getting badly and visibly affected Besides, it will be export and import procedures in which mostly refers to customs responsibilities that help to unlock merchandising exchanges, speed up investment cooperation between two countries and widely open the door to the northern east of Lao Cai It is high time and also challenging time for our customs industry to show its better support toward Vietnamese entrepreneurs to facilitate trade exchanges and simultaneously assure of its reasonable controls As a result, I decided on choosing the topic

"77?^ importance of Customs in the development of the cross border economic

zone between Kim Thanh (Vietnam) and Beishan (Yunnan - China)" as a

graduation assignment of my MA

L2 Reseach questions

These are big questions for studying which are included to use some scientific methods to answer and not for the purpose of doing survey Therefore, the purpose of the thesis is to answering the following questions:

Question 1 The project of establishing trans-boundar> economic cooperation zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China) is deploying to study its practicability Furthermore, the

2 4 ^ 2012 In your opinion, what is the efficiency level of the model when being put into operation? What are advantages and drawbacks that the model might encounter?

Question 2: As for the services t>pes within the Economic cooperation zone, which are the most appropriate methods of customs to control the situation of evading taxation, selling smuggled goods and trading forbidden goods especially?

Question 3: In the cross border economic cooperation area, the inspection of imported goods section is the most important In your opinion, what is the most appropriate form for customs to perform customs procedures and inspect commodities in order to facilitate the enterprises and decrease management burden for customs civil servant as well as mistakes?

Question 4: What are expectations and desires of parties to the custom models in the cross border economic cooperation zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China) when being put into operation?

L3 Research objectives

The study objectives are to (1) systematically analyze and evaluate the relationship of trans-bordered economic areas between \Metnam and China; (2) understand and study customs models, its current status and its importance toward the economic development, applied for Kim Thanh and Beishan; and (3) identify advantages, disadvantages, opportunities and challenges we may encounter with the in-coming economic area

Finally, we are trjing to come up with promising recommendations to development directions of customs industry in Kim Thanh - Beishan economic area that hopefully work it out in very near future in an effective way

1.4 Reseach tasks

Based on its objectives, the research tasks include:

Systematically analyze and evaluate the relationship of trans-bordered

•

economic areas between Vietnam and China; together with customs models;

^ Understand and study customs models' current status and its importance

toward the economic development, applied for Kim Thanh (Lao Cai Vietnam) and Beishan (Yunna - China);

-^ Make recommendations to development directions of customs industry

in Kim Thanh - Beishan economic area in the near future

L5 Scientific understandings and applications

Scientific aspects:

The assignment will clarify theories-related aspects of trans-boundary economic cooperation zone and relevant customs models that help to boost up trade balance and logistics, tourism, shopping and financing services of the area

Practical applications:

Theory^ study of its viability and limitations of applying customs models

in reality solutions are expected to lever up the effectiveness of detailed customs models specified to Kim Thanh - Beishan area in next coming years Additionally, the assignment will be the source of infonnation that is informative and applicable to the next similar studies on trans-boundarv^ economic zones along Vietnam borders, specifically in Lao Cai

L6 Subjects and the scope of work

Subjects: They are sv'stematic theories about trans-boundarv' economic

cooperation zones and corresponding customs models under the authors

renovating or issuing new legislation documents Therefore, they are one subject relating to our research

Scope of work

o Location: the study is limited to the area of Kim Thanh - Beishan under

consideration of relationship between customs models and the development of trans-boundary economic cooperation areas in neighborhood of Vietnam Conditions and status of other areas in various countries and regions over the world will be used as study references

o Time: the study focuses on the time from when the project of Kim

Thanh - Beishan trans-boundary economic cooperation zone was built

up till now

L7 Researching results of the thesis

Based on analyzing results of the primar}^ and secondar}' databases, the thesis has presented the feasibility of the customs model in the cross border economic cooperation zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Yunnan - China) It also indicates some limitations that need to be improved and solutions to the current problems for better operation of the economic zone in the future

IL FRAME OF REFERENCE 2.1.Research on the model of cross border economic coopertion

2.1.1 Definitions

Regional economic integration is one of the current important trends in the world It consists of some particular types, such as preferential trade agreements, free trade area, customs union, common market and economic union The concept of cross border economic cooperation zone has not been appeared in these official documents, but the concept of free trade area that WTO use and the one given by the WCO are the theoretical basis for Vietnamese-Chinese across border economic co-operation zone

The concept of trans-boundary economic cooperation zone is extended concept of cross border trade Traditionally, the preferential policies and mechanisms for border trade were dependent on the countrv- itself, but when they presented mutual exchange, means that a party offers incentives and he definitely receives the number of corresponding ones, have gradually created cross border free trade which combines with the basic conditions of the free trade zone to build across border economic cooperation zone to the extent of scope of the two countries

On the other hand, the concept of cross borders economic cooperation zone is the contraction of the concept of free trade between the two countries

It emphasizes the free trade area located narrowly on the borders of the two countries

The definition of cross borders economic cooperation zone is based on WTO rules on border trade through economic cooperation agreements signed between the two countries having across border free trade regions applying specific policies

The reason for using the term "cross border open economic zone"

55/2008/QD-TTg Decision, 115/2002/QD-TTg Decision called "cross border economic cooperation zone " Then, the border provinces such as Ouana Ninh Lang Son, Lao Cai implementing models of economic cooperafion often use

"cross border economic cooperation zone" Each province in land border has border-gate economic zone with its foreign neighbor; some provinces are seeking the pattern of border economic cooperation Therefore, author uses term "cross border economic cooperation zone", the symmetric economic region in Vietnam cooperate with the corresponding region of the neighbor country "in the direction with the general regulations on import and export, entry and exit for passengers, residence that are suitable to the laws of both countries " The concept is mentioned in Decision No 99/2009/QD -dated 29/07/2009 about the scheme developing international border city in Mong Cai ( Quang Ninh) in 2020

Cross border economic cooperation model is also known as "long triangle", a form of economic cooperation having narrow scope in borders of some countries through these countries offer specific policies for the cooperation in the fields of trade, transportation, telecommunications, energy, human resources

Economic cooperation zone between the countries having the same border is the economic zone opening economic space and institutions to create the most favorable conditions for the countries in the economic development

in the integration phase

The model of trans-boundary economic cooperation zone has been developed in many countries around the world, but this is still new to Vietnam The establishment of the border economic cooperation zone is a new step in improving the operation of the economic zone on Directive 02/3/2012 07/CT-TTg of the Prime Minister This action is aimed at developing economic corridors, expanding transportation infrastructure to promote

economic acfivity and connect sub-region to the main market, is an important

part of The Greater Mekong Subregion (CMS) Economic Cooperation

Program, The North-South Economic Corridor and the East - West Economic

Corridor, connecting the focal point of economic development in northern and central GMS, is a pioneer program in the measure to approach economic corridor

In recent years, the govemment has a policy to build pilot economic cooperation zone of Vietnamese, Chinese border provinces, such as economic cooperation zone Dong Dang (Lang Son) - Pingxiang (Guangxi); Mong Cai (Quang Ninh) - Dong Hung (Guangxi), Kim Thanh (Lao Cai) - Beishan (Yunnan), but they all are sfill in the feasibility study phase, there is not any economic cooperation zone officially established

Trans-boundary border economic cooperation zone has great significance in tenns of economic - social development and cooperation, poverty reduction, contributes to narrow down the gap between Vietnam and other countries in the world

2.1.3 Classification of trans-boundary economic cooperation zone

Based on the activeness of parties:

o The bilateral border economic cooperation zone: both parties are willing to work together to agree the common policy options and measures, promote open and strengthen regional border

o The unilaterally cross borders economic cooperafion zone: the

parties do not cooperate to achieve consensus, each part>' is free

to apply its own policies and measures, although there are certain cooperafion on the basis of developing their capacit>- in terms of capital, technology, market

Based on the cooperafion dynamics:

o The top down cross border economic cooperation zone: the cooperation by international organizations or central govemment launched through applying specific measures to implement cooperafion

o The bottom up cross border economic cooperation zone: the cooperation formed on the basis of spontaneously strong economic ties in border areas, the govemment, local businesses and non-governmental organizations suggested the central govemment to support economic cooperation across borders

Based on the international division of production:

o The vertical cross border economic cooperation zone: the cooperation based on the synergy of the production factors, forming a vertical division There are significant differences in the level of economic development between the two parties

o The horizontal cross border economic cooperation zone: the cooperation with each one's strength, thev' trade in intra-industr>% supporting each other to develop cooperation The parties have the same level in economic development

2.1.4 Development model

Due to the difTerences in characteristics beUveen two countries and cross border areas, the fomiation and development of trans-boundarv' economic cooperation models also varies TTiese zones are visualized with 6 elements:

L Advanced border crossings

2 Modem infrastructure linkages

Commercial zones in the context of cross border economic cooperation will

widen considerably the size of current wholesale and retail markets Considering the inclusion of duty-free shopping areas

Enterprises zones also provide supporting facilities and services to promote the

business development from C1una to Vietnam and from other countries as well

Preferential policies are one characteristic of economic and technoloaical

zones These policies are necessary to attract the business and investment activifies into the cross border economic cooperation zones These zones themselves also need other special policies

Joint management of the two countries' local authorities is the 6^ characteristics of

cross border economic cooperation zones It is this distincfiveness that distinguishes between cross border economic cooperafion zones and fi-ee trade areas located entirely within national borders In order to develop the trans-boundary economic cooperation zone in a sustamable manner with the right meaning of ''cross border", there must be the above five elements, especially preferential policies which are managed hannonizing and consistently

2.1.5.Institutional Policy

The Economic Cooperation Zones approve the free trade and investment of market economy The barrier from any party could impede the development When institutional regime is built, it is necessarv- to public in the country, ask the opinion of the business community, because these zones attract produce activities, trade and services, travel Institutional policies are the insurance for high risk, so that enterprises could invest with less hesitance Any change in policy causing damages to business must be reimbursed The flexibility of institutions is completed periodically, and then has unified solution for the changes in international, regional and national investment It avoids passiveness and dependence on each other's economic development It has tendency to actively cooperate with third parties, encourage tourism service, consumption The economic policy changes will be notified to amend the general convention of the economic cooperation

The consistency of the policies and uistitutions of economic cooperation zone is presented bv the ^'cooperation convention " between the parties in accordance with the principle of respecting for each part>'s own law its

independence, sovereignty and territorial security It's actually the best solufion in the presence and flow of cargo, residents and the manufacturing acfivities and services in the economic cooperation zones Therefore, there is no right to impose the regulations of each side, for example goods and people in the cooperation zone have to follow the domestic import regulafions The issue in using the currency in transacfions has to be flexible with the ft-eely convertible currency for businesses and tourists TTie price of electricity, water, transport, inventory' fees, investment fees, portfolio investment trades and fees related to the goods and people could be published and have a general standard

In the world today, the regulation applied for border line, trans-national customs in the cross border economic cooperation zones will be customize depending on each countries, each regions within a countries or each area In Vietnam, the govemment and Lao Cai province are doing research to establish and put this regulations into force To Vietnam and China, there is Vietnam -China land border management regulation dated 18/11/2009: Agreement on border line and gate management regulation for border land dated 18/11/2009, Protocol on the demarcation of China - Vietnam land boundarv' between Socialist Republic of Vietnam and People Republic of China

2.1.6 Types of cross border economic cooperation models

2.1.6.1.Symmetric model

Under the agreement, each party builds its economic cooperation zone with the symmetric functional areas such as the production, trade and service areas, administrative areas and control gates (Figure 1)

Country B

Production Area

National Gate Adnninistration Area and Check-in gate

Commercial and Service Area

Central reservation on the border

Production Area

Administration Area and Check-in gate National Gate

Commercial and Service Area Country A

Table 3,2 Sysmetric Economic Copperation Model

The zone's area: Figure 1 is the center of the zone, there are not any people in the zone, it has barriers to protect security, and the outside is clearly defined to separate policy for infrastructure development and incentives supporting the center

2.1.6.2.Linkage model

The model is based on the agreement betw^een two governments The

central area has protecting barrier and no pennanent population There is a joint national executive Committee managing all activities, one or two companies renting land for developing infrastructure, others renting land for running business, the use of services such as electricirw water is bid or assigned

Production Area

Suhlation Factories

Check the goods to

domestic economy

Enter and exist, pay

only some fees

Exhibition and

Entertainment Area

W^arehouse Administrati

on and Service Area

Market

supemiarket

»

Central resenati

on on

the

border

to plant tree and travel

Warehouse Administration and Serv ice Area

Market

supermarket

commercial

Factories Check the goods to domestic economy Enter and exist, pay only some fees

Exhibition

and

Entertainment

Water supply station

commercial center

-Commercial and Service Area

Table 3.3 Linkage model

2.1.6.3 The four-door linkage model

Each side has a pair of doors for people and goods, they have to pay fees and declare the goods, a door checking the goods imported domestically Visitors coming to the door are able to go neighboring countries The fees for each time consist of: charges to use public services, parking fees, and charges

to the park , personal goods are duty- free When the center is extended into

a special economic zone, it strongly affects the economic cooperation inland Domestic enterprises and third country' companies can do business such as assembly plants, manufacturing factories, or supermarket, bank branches, entertainment center, parks, exhibitions; seminars The enterprises could be

in favor of duty-free zone They do not have to pay land rent, service charge, just pay import tax on the goods being put domestically

2.1.6.4 Coordination

Whether applying symmetry or linkage model to develop economic cooperation zone, there should be an active partner of the parties in accordance with signed agreements, or under the rules of general operating the Board Not only the favorable economic issues, but also issues related to security, environment, and quarantine are very important The coordination needs to willingly complete further when the cooperation zone works The coordination model applies to each countr>' and utilize the advantages of each models to suit the practical situation

Based on the study on above cross border economic cooperation zones

economic cooperation zone is the most suitable because Vietnam shares border line China in the north, Lao and Cambodia in the west, Thailand gulf in the south west, Indochina sea in the east and south with more than 4000 islands, etc Because the west of Vietnam borders with Laos and Cambodia, there are cooperation model with two nations and with on nation such as between Lao Cai and Yunna - China

2.1.7 Cross border economic cooperation on some regions and countries

in the world

2.1.7.1 Thailand

Thailand is an Asia country, sharing border lines with Lao, Malaysia, Cambodia and Myanmar Thailand has cooperation relationship with various neighbor countries in field of trade and direct investment, etc At the boundary regions of Thailand, there are 44 customs agencies, including 8 in the north (also including Chiangmai international airport), 9 in the north east,

7 in the middle and 17 in the south (also including PhuKet airport) Partners in trading transactions in the north are mostly from Myanmar, Laos and Yunnan province - China, from Laos and Cambodia (Chongchom) in the north east, and from Malaysia in the south Thais government has implemented the policy

o f one door'' customs at all clearance venue which was applied firstly in the north since 2006 with Mae Sai and Chiang King The policy of cross border economic cooperation is a key to attract investment and economic development, especially for GMSs countries in the field of goods transportation and CBTA agreement It includes the ^^one door, one stop'' customs checking with imported-exported goods, exit-entr>' passengers and vehicles In the 8**' meeting about GMSs transportation in 2004 all the GMSs countries agreed upon the trans-boundar)' economic cooperation zones: Lao Bao -Dansavanh, Bavet - Moc Bai, Mea Sai - Tachilek, Hekou - Lao Cai, etc However, the processes of establishing and implementing the cooperation

zone of each country are different Thais policies mainly are based on ACMECS - a scheme about trade, investment, agriculture, industries, transportation, human resources development and community health According to ACMECS, goods, people and vehicles at the border will be examined carefully, especially illegal exit-entry workers from neighbor countries into the border commercial area In Thailand, the Chiang Rai cross border economic cooperation zone was developed firsfiy in the relationship Yunnan, Laos and Myanmar

2.1.7.2 Europe

Regional cross border economic cooperation zones like in South East Europe including Albania, Bosnia-Herzegovina and Croatia have developed with the objective of economic development since 90s The cross border economic cooperation zone here complies with SAP program The basis of SAP program includes cooperation agreement establishment SAAs For example, EU signed SAAs in 2001 with FYR of Macedonia and Croatia This agreement appreciates free trade between EU and SEE in the field of transportation in the time of 10 years Regional Cooperafion Council RCC was set on 27/02/2008 During 2009, RCC contributed significanfiy to the economic and social process in South East Europe The strategic role of RCC

in regional cooperation is for the need of development in the region To achieve this objective and unify regional economies, SEE need appropriate policies These policies include:

Establish cross border networks

Transfer technology and experiences

Support finance and technology to countries and factories in the region

Close cooperation among organizations

Promote trade and investment in the cross border economic cooperation zones, customs and non-trade areas

Goods and services trade, capital flow and foreign investment and human resources

2.1.8 Overview on the trans-boundar> economic cooperation zone between Beishan (Yunna - China) and Kim Thanh (Lao Cai - Vietnam)

2.1.8.1 Overview

Cross border economic zone Beishan - Lao Cai will be located in Beishan, Beishan and in Kim Thanh, Lao Cai The total area is 5.35 km*, 2.85 km* of them belongs to the side of the Beishan, China and 2.5 km* sides at Kim Thanh, Vietnam Beishan and Kim Thanh are connected together by a newly built bridge across the Red River Trans-boundar} economic zone will focus on trade and logistics, tourism, finance Cross border economic area Beishan - Lao Cai has been set up at light speed, focusing on the integration between urban areas and therefore will bring openness and focus more on soft infrastructure The construction of the economic zone Beishan - Lao Cai is somewhat slower On the side of Hekou, the total investment for building infrastructure for cross border economic zone is estimated at 1.2 billion }aian (about 185 million U.S dollars) In order to the cross bordereconomic model

is successful; governments should consider the level of preparation and costs

as well as ensure the interests of both parties under the report of cross border economic zone roadmap The ADB research team has pointed out the benefits Vietnam and China from cross border economic zones In my opinion, cross border economic zones play the role as the heart for the development of border areas, and the driving force for commercial activities and for the development of "blood vessels'' in the connected traffic as well Cross border economic zone could be factor attracting investment in border regions The border areas, especially in the belt border in Vietnam have been still facing

many difficulties The mountainous topography is generally unfavorable for development It is also the region with many ethnic minorities and therefore leads to have economical disadvantages The economic cooperation zone Kim Thanh (Lao Cai) - Beishan (Yunnan) will certainly create conditions for Vietnamese and Chinese enterprises to invest in specific projects such as construction of cold storage for perishable cargo, seafood, produce textile materials

« n * «t « fiv [^

Table 3.3: Hekou cross border economic cooperation site plan

Cross borders economic cooperation zone Beishan (Yunnan - China) and Kim Thanh (Lao Cai - Vietnam): an experiment in China and Vietnam for China - ASEAN free trade process It promotes China-Vietnam "Two Corridors and One Circle" cooperation, is a pilot for raising the level of opening up the border area of Honghe Zhou, is an important step for '^develop border economy, improve residents 'living standard" plan Kim Thanh Commercial Industrial Park, corresponding to the Beishan international border gate, is 50 ha in the area, many activities are conducted such as: holding exhibition to introduce commercial products, reprocessing, recycling, packaging, providing entertainment service, hotel, restaurant etc Lao Cai offers special policies for Kim Thanh Commercial Industrial Park

The cross border economic cooperation zone between Lao Cai - Vietnam and Honghe - China is divided into 2 parts: nuclear and the expanded development part; and also use the three stages - implemented process:

Stage 1 - Inception: To become the nuclear area of the cross border economic cooperation zone between Kim Thanh (Lao Cai - Vietnam) and Beishan (Hekou - China) which combines Beishan area of Hekou international border gate and Kim Thanh (Vietnam) commercial area to form

"goods trading area'' To employ the model "one zone operated closely by two countries without the control of customs, free trade and being built to become

a hubs and service centre - a big international gate; reinforce the funcfion of connecting border gates; make use of widening trans-boundarv- and normal trade to promote transit and export trade

Stage 2: Expansion: Spread put the cooperation area to Honghe Zhou and Lao Cai province w^hich include both trade and industrv' for mutual benefits; and typical sectors After stage 1, the cooperation will expand tow^ards some core industries; make use of all condition in temi of infrastructure and mutuality in sectors' development to choose advantageous industries of each party The management of industries' cooperation is implemented according to the model "unified planning, hannonious arrangement, coordination and cooperation on the basis of mutual benefit"

Stage 3- Development: Mainly based on the establishment of Con Ha economic corridor to promote the comprehensive and stable of the zone After stage I and stage 2, the cooperation will be boosted with the coordination regarding to technology, human resources, information and social benefit

2.2 Researches on customs model

Until now, the customs model of Vietnam customs is managed vertically from the central to local with 4 levels: General Department,

Department, Branch and Team General department which is under Ministry

of Finance will perform the function of macro management and make policies

as assigned responsibilifies Local department level manage branches and report to general department The branch level will directly perform the function of state management of customs in resolve customs procedures and prevent smuggling, etc The good declaration through traditional model will

be gradually replaced by e-customs one Although the govemment has the objective of tightening the economic cooperation betw^een boundar>' provinces, there is no cross border economic cooperation zone Therefore we will research in model with the following direction:

Goods, people and vehicles in the cross border economic cooperation zone are free tax Goods from port A Hekou, China and export to port B to Kim Thanh, Vietnam is implemented with simple procedure, we normally declare the number and types of good The immigration procedure only checks immigration license or passport

A double check door - the department functioning immigration management is located at the entrance to the cross border economic cooperation zone

Cifizens of the two countries, third countrv' nationals, goods and vehicles travel freely across borders in cross border economic cooperation zone Our citizens, third-countrv' nationals use legal document recognized by two countries to stay visa-free for 15 days, but they could not be allowed to travel other areas except cooperation area

The goods of the two countries from the inland into cooperation areas are considered as exports, and then they are refund The goods from the cooperation zone into each countrv* are considered as imports with conventional tariffs

Transactions in internal zone are exempt from consumption tax and value added tax

The goods imported for the exhibition is registered with the customs

office Customs conduct supervision and management of security in the form

of bonded warehouse This kind of goods is tax-free and not limited about exhibition time

The goods entered between the cooperation zone with foreign countries

is managed only according to the export quotas

Both parties in cross border economic cooperation zone are under the laws of each country' They operate economic cooperation zone with requirement to comply with the current laws of each country and the international treaties, agreements that two countries signed

Lao Cai and Beishan will establish The Management Boards including functional unites about transportation, customs, police, border guards, quarantine, border management etc Manacement Boards will recularlv exchange with each other to coordinate the implementation of problem solv ing

in the economic cooperation zone

Nuclear area mainly develops commerce with warehouses, fair, market, exhibition, infonnation exchange, and logistics

2.3 The problem posed for customs cooperation in the cross border economic cooperation zone

Advanced infrastructure and equipment for customs officials in processing customs procedures: Invest in modem and typical examining and supervising equipment, imperfect and disorderly monitoring systems

Legislation in the field of customs: The legislation documents need to

be synchronized, consistent and particular Simpler declaration paper; the legal documents should be customized to adjust customs in the zone, have

regime to harmonize the two countries" policies, establish and unify correlated policy to build one stop customs

Human resources: Substandard customs officials, inadequate care about improving their knowledge and professional skills, lack of enthusiasfic attitude when instructing businesses

Dissemination of law: Whether the usage of poster about the fining level, dissemination of law to businesses to understand and execute should be used?

The coordinafion with interdisciplinar>^ agencies and Chinese customs: Regime and forms of coordinating with the interdisciplinarv', information exchange between two countries' customs, cooperafion with Chinese customs

to facilitate the enterprises

III RESEARCH METHODOLODY

3.1 Methodolody

Research methodology: The authors used the method of modeling to facsimile the ftiture customs model This method includes: building model, develop the model based on analyzing the collected data and examine the results through questionnaire and direct interviews

Data collection method: Doing desk-study, survey and collecting secondary data This reseach used the secondary documents to understand the current situation of customs patterns of the cross border economic coperation zone between Kim Thanh (Lao Cai-Vietnam) and Beishan (Yunnan-China), and to make out the theoretical issues about the cross border economic cooperation zone Moreover, to collect opinions to answer key researching questions, this thesis use primary date with the method of doing actual surveys

by questionnaire and direct interviews with the organization, enterprises and individuals to record their feelings and contribution to the model of economic cooperation zone

Quantitative analysis of data: this research used method of statistic

description to evaluate feeling of organizations, businesses, and individuals about the Cross border economic cooperation zone between Kim Thanh (Lao Cai-Vietnam) and Beishan (Yunnan-China), also consider its feasibility to improve the effectiveness of that model In addition, the regression analysis was also applied to assess influence of studied elements upon the effectiveness

of customs pattern All analyses were conducted by SPSS software version 11.5

Questionnaire: in order to collect data to answer all of four questions

above, the author had developed questionnaires with 20 questions Contents and measurement are displayed in detail in the questionnaire