Thua Thien Hue Economic and Industrial Zones: Great advantage - Open Opportunity

3:14:41 PM | 18/8/2017

In recent years, economic and industrial zones in Thua Thien Hue province have attracted increasing interest from investors and housed many effective projects. Mr Nguyen Van Son, Deputy Director of Thua Thien Hue Economic and Industrial Zones Authority, has given an exclusive interview to Vietnam Business Forum Magazine on this issue.

On June 15, 2016, the Prime Minister issued Decision 1070/QD-TTg establishing Thua Thien Hue Economic and Industrial Zones Authority based on the reorganisation of the Chan May - Lang Co Economic Zone Authority and the Thua Thien Hue Industrial Zones Authority. What does that mean for the development of economic and industrial zones in the province, sir?
The reorganisation of the Chan May - Lang Co Economic Zone Authority and the Thua Thien Hue Industrial Zones Authority into the Thua Thien Hue Economic and Industrial Zones Authority is a right decision in accordance with Decree 29/2008/ND-CP of the Government dated March 14, 2008 on industrial zones, export processing zones and economic zones. There is a direction wherein a province or city will have just one body in charge of this.

Functions and duties of the two authorities are quite structurally similar. Therefore, it is rational to reshuffle organisational structures to form a unified body in charge of linking and developing economic and industrial zones and actively solving problems and difficulties for investors. Having one unit also makes it easier for investors to seek and select investment locations in accordance with investment attraction planning and direction of each economic and industrial zone.

How do you assess the performance of economic and industrial zones and their tenants in recent years?
In recent years, the Provincial Party Committee and the Provincial People's Committee have given much concern to operations of economic and industrial zones. In addition to issuing preferential policies, the province also hosts many investment promotion activities to catch the attention of investors and draw investment inflows. In the event of limited State budget, the province has made every effort to mobilise funds and build infrastructure like roads linking national highways to industrial parks, power grids, lighting networks, water supply and drainage systems, post and telecom services and traffic systems.

As a result, operations of economic and industrial zones are more active. Many big, famous domestic and foreign investors have come to study investment opportunities and locate bigger and bigger projects in the province. Typical projects include the VND590.6 billion apparel project invested by HanesBrands Vietnam Hue Co., Ltd; the VND133 billion frit enamel production factory project and the VND560 billion tile production factory project invested by Vitto Phu Loc Co., Ltd; and the VND488 billion Cristobalite material production factory project invested by PHENIKAA Hue Mineral Investment and Processing Co., Ltd. As of June 2017, economic and industrial zones housed 142 projects with VND65,440.9 billion (US$3 billion) of registered investment capital, including 35 FDI projects with US$1,741 million. Investors disbursed VND17,872 billion for their projects, accounting for 27.3 per cent of the total registered capital. The average occupancy rate in economic and industrial zones is currently 39.6 per cent.

Besides, the development of economic and industrial zones still faces certain shortcomings like some projects being carried out behind schedule, low disbursed capital value, low level of applied science and technology, and the majority of labour-intensive outsourcing projects.

Where are differences of Thua Thien Hue province-based economic and industrial zones with their peers in the country, especially in neighbouring provinces like Quang Tri and Da Nang. How has the Thua Thien Hue Economic and Industrial Zones Authority promoted those advantages?
In spite of having certain similarities, economic and industrial zones in Thua Thien Hue province are different from those in neighbouring provinces:

Firstly, they are situated in favourable locations. Chan May deepwater seaport is the nearest point to the East Sea for countries on the East - West Economic Corridor (Laos, Cambodia, Thailand, Myanmar) with Northeast Asian countries and the world. The province also has Phu Bai International Airport, North - South Railway and National Highway 1A. The province has a stable geological structure at an altitude of 12 meters. Economic and industrial zones are flood-free and located in uncultivated areas, making land compensations quite low and infrastructure investment less costly. Internal and external technical infrastructures of economic and industrial zones are synchronous. Labour costs, land rents and factory spending are equal to only 80 per cent in to Da Nang, 70 per cent in Hanoi and 60 per cent in Ho Chi Minh City. Land compensation, ground clearance and land allocation to investors are done within 6-9 months.

Secondly, economic and industrial zones are planned in large-reserve material areas for production and processing such as aquatic and marine resources, forest products, minerals, construction materials, limestone, granite and peat. Currently, the white sand area in Phong Dien district covers an area of 135 square kilometres with a reserve of 127 million cubic metres, with the SiO2 content exceeding 99.5 per cent - suitable for use in high-grade glass and ceramics production. Timber logged from planted forests (in the 2016 - 2020 period) have reserves of 3.67 million cubic metres (734,000 cubic metres a year). Non-timber forest products (NTFPs) include rattan: 1,200 tonnes (240 tonnes a year), thysanolaena latifolia: 500 tonnes (100 tonnes a year), pine resin: 4,000 tonnes (800 tonnes a year), bamboo: 1 million units (200,00 units a year). On fisheries, the province has 128 km of coastline and 22,000 ha of lagoon. Total area of aquaculture is estimated at 7,206.1 ha.

Thirdly, the labour force is abundant. The rate of trained workers is 65 per cent. In addition, many people in Thua Thien Hue province are working in southern developed localities and they are willing to return to work for companies in the province. Furthermore, universities, colleges and vocational schools in the province meet demands for highly qualified, well-trained and highly-skilled human resources. In particular, the labour cost in Thua Thien Hue is low, with an average monthly salary of a common labourer is only VND3 - 3.5 million and a technical worker is VND3.5 - 4.5 million.

Fourthly, the occupancy rate of lease-able areas in economic and industrial zones is still as low as 39.6 per cent on average. So, there are many opportunities for investors.

In addition, the Thua Thien Hue Economic and Industrial Zones Authority drafted a scheme on housing construction for workers in economic and industrial zones, which was already passed by the Provincial People’s Committee. Land funds have been allocated for worker housing construction. Some social housing projects have been positively carried out. For example, Scavi Hue Company built two housing blocks for 400 workers. It is currently constructing an internationally standardised kindergarten and aims to build a Scavi-branded education system from preschool to tertiary levels. The Minh Tam Market construction project has been put into operation to serve workers in Phong Dien Industrial Park.

Advantageously situated in the central key economic zone, Thua Thien Hue province is aiming to attract investment capital for major industries like industrial zone infrastructure development, new urban area development, manufacturing, electrical and electronic equipment production, information technology, garment and textile in local economic and industrial zones in order to promote exports and develop labour-intensive, high-tech fields.