Spellbinding Vietnam’s Industrial Parks

 

The opening up of the market as WTO entry commitments by the Government of Vietnam, growing population, rising income, expansive market consumption and other factors are the reasons why many leading companies are interested in investing in Vietnam and adding momentums for the development of industrial zones and export processing zones. According to the Ministry of Planning and Investment, companies in industrial parks contribute some 20 percent of the country’s export value and create over one million jobs.

 

At the end of 2009, the country had 249 industrial zones with a total area of 63,173 hectares of natural land, including 38,858 hectares of rentable areas, or 61.5 percent of total natural area. Of the sum, 162 industrial parks went into operation with a total area of 38,804 hectares and 74 industrial zones are under way with a total area of 14,792 hectares. Industrial zones have been built in 61 provinces and cities in the country, mainly located in dynamic economic regions like the Southeast region, the Red River Delta and Mekong River Delta. Investors have registered to rent 48 percent of the area.

 

According to statistics, by the end of 2009, industrial parks housed over 3,600 foreign invested projects with a combined registered investment capital of over US$46.9 billion, accounting for 30 percent of projects and 25 percent of capital investment of this block in the country, and 3,200 Vietnamese invested projects worth VND254 trillion (US$13.4 billion). Companies in industrial parks have created jobs for more than 1.34 million workers. Many world-leading corporations like Cannon, Samsung and Formosa have located their production facilities in Vietnamese industrial quarters and they mainly turn out products of high quality and value for export. Technologies used by investors in industrial zones also increased, from low labour-intensive technology to advanced clean technologies.

 

In 2009, companies in industrial parks generated US$12.2 billion and VND67.9 trillion (US$3.7 billion) of revenues, attained US$12.3 billion and VND2.6 trillion (US$104 million) of export revenues and paid US$689 million and VND4 trillion (US$216 billion) to the State Budget. In some provinces and cities, industrial zones are playing crucial roles in creating jobs and accelerating socioeconomic development.

At an international conference on Vietnamese industrial parks, called VietIP 2010, held in Ho Chi Minh City in early May 2010, Deputy Minister of Planning and Investment, Dang Huy Dong, pointed out four new directions for industrial zones in Vietnam. Accordingly, the development of industrial zones must firstly ensure the formation of a system of uninterrupted industrial zones, commonly called as the cluster, to lead the national industrial development and locate industrial parks in more regions to avoid uneven appearance of industrial quarters. Secondly, industrial zones must be developed intensively and effectively, with growing proportion of modern projects like information, mechatronics and biotechnology and industrial parks must house more processing projects using local material sources instead of outsourcing projects using foreign materials to increase value and enhance competitiveness. Thirdly, industrial parks will not be built together with residential zones or on good agricultural soil. Environment-polluting companies will be reallocated out of urban zones into industrial parks. Finally, the development of industrial parks must go together with environmental protection, proper care for working conditions, living standards and housing facilities for workers and strict implementation of labour laws.

According to Mr Dong, to realise the above four points, the Ministry of Planning and Investment is drawing maps of Vietnamese industrial zones. Once completed, investors only need to click mouse pointers on computers to view detailed information of targeted industrial parks across the country. The ministry expects FDI enterprises to participate in building the digital map because a two-direction approach will help minimise problems in the future.

 

Together with development orientations and increased efforts to enhance the attractiveness of industrial parks from the Ministry of Planning and Investment, the prospect of attracting investment capital into industrial parks is brightened with the formation of VietIP Investment Promotion Centre at the VietIP 2010 conference. This can be regarded as a lever to bring up investments into Vietnamese industrial parks and export processing zones. The VietIP Investment Promotion Centre will gather all industrial park and export processing zone management boards in the country and more than 75 domestic and international business associations to focus on promoting, marketing, consulting and brokering investments in industrial parks and export processing zones in a long-term professional way.