BUSINESS ARTICLES

Invest in industrial parks in Vietnam

Invest in industrial parks in Vietnam
Invest in industrial parks in Vietnam

The Central Committee of the Communist Party of Vietnam has recently implemented Resolution No. 23-NQ/TW on the orientation of building national industrial development policies to 2030, with a vision to 2045. The structure of industries has changed positively and industrial parks have made strong developments. Besides, elements of transport infrastructure and logistics infrastructure such as supply chains, warehouses, seaports, administrative procedures… have been significantly improved. New industrial parks are built more synchronously, modernly, with overall depth, which attracts both domestic and foreign capital to pour in, especially large companies and corporations in many business sectors.

Within the scope of this article, we will introduce to the investors some basic information related to investment options in industrial parks in Vietnam.

1. Types of industrial parks

Industrial park means an area that is enclosed by definite boundaries, specializes in the production of industrial goods and provision of services satisfying the industrial production needs and is established in conformity with conditions, procedures and processes prescribed by the law. Industrial parks include:

1.1 Export processing zone

Export processing zone means an industrial park specially intended for the manufacture of exported goods, rendering of services meeting the needs of production of exported goods, and is established in conformity with conditions, processes, and procedures as applied to industrial parks in accordance with the Decree No. 82/2018/ND-CP.

The export processing zone is separated from the outside area according to regulations applicable to non-tariff zones specified in the law on import tax and export tax. The export processing zone has a geographical boundary defined in the Decision on the establishment of an export processing zone but is isolated from the territories outside the export processing zone by a fence system.

2.2 Auxiliary industrial area

Auxiliary industrial area means an industrial park specializing in manufacturing auxiliary industrial products and rendering services satisfying the needs of this business line. The maximum area of land leased or re-let to develop projects on investment in auxiliary industries shall account for 60% of the area of rentable industrial land within the boundaries of an industrial park.

The auxiliary industrial area has an important meaning in the production of auxiliary products, providing auxiliary services for industrial products, thereby linking the system of industrial parks, facilitating production concentration, diversifying, meeting the needs of using or assembling products; increasing the competitiveness of industrial products as well as the level of the initiative of an economy.

2.3 Eco-industrial park

Eco-industrial park means an industrial park in which enterprises get involved in cleaner production, make effective use of natural resources and enter into manufacturing cooperation and affiliation in order to tighten industrial symbiosis and promote economic, environmental and social efficiency in these enterprises.

This industrial park model is aimed at long-term, sustainable development, balance between immediate/local interests and common/long-term interests on the basis of ensuring that production activities must be with measures to minimize adverse impacts on the environment, limit waste discharge, rational use goes hand in hand with the conservation and preservation of energy and natural resources.

2. Characteristics of the industrial park

Regarding the space and infrastructure, Industrial parks all have a specific boundary, which separate them from residential areas and other areas by the fence system of the industrial park. All production activities will be confined to the inside of the industrial park. The entire technical infrastructure in the industrial park is built to serve the industrial production and related services. Accordingly, the infrastructure is planned in a comprehensive and synchronous manner, helping the production and related activities run seamlessly.

Regarding the establishment and development, the industrial parks are established through the careful review of the state agencies on the basis of the planning approved by the Prime Minister. Accordingly, the State will base on socio-economic development strategies and national master plans, land use planning, conditions for industrial park development to make decisions on setting up industrial parks. From these bases, established industrial parks must create favourable investment environments with a comprehensive system of mechanisms and policies, synchronous infrastructure, meet the needs of investors and attract investment for economic development. Industrial parks can be expanded if they meet the requirements related to industrial park development planning, land fund, responsiveness of infrastructure, ability to attract investment as well as create jobs for employees.

Regarding the function of the industrial park, each industrial park will be planned and developed to serve certain industries or prioritize groups of investors with specific nationalities so that there is high synchronization and specialization, and timely support, creating a continuous supply chain in production.

3. Why should invest in industrial parks?

The industrial park has a favorable geographical location. The space of the industrial park has a predetermined boundary and is separated from the residential area, and has a unified planned system of roads and works, often close to the seaports, transhipment points, or have convenient transportation systems to transport goods to these points.

The industrial park has a synchronous and modern infrastructure system. It is synchronously planned, and the road system inside the industrial park includes the main road, internal road system, and associated traffic system around the industrial park are completed. Moreover, the electricity – water network including backup power supply system, water and waste treatment system are operational. The system of communication, security, fire prevention to the wharf system… is well invested and perfected.

Industrial parks have many investment incentives and open management policies. With the policy of attracting foreign investment in industrial parks, the State of Vietnam has issued many preferential policies on tariffs, exemption or reduction of land rent, investment conditions, investment order, price support for foreign investors investing in industrial parks. Therefore,Vietnam offers foreign investors a wide range of options to make a perfect choice and find the most suitable industrial park for their business activities.

Industrial parks have many utilities and ancillary services. In addition to the location, infrastructure, and investment incentives, investors when investing in industrial parks also enjoy many benefits from the supporting industry and available resources, such as having support of departments in terms of procedures, policies, administration, accountant. There are companies dedicated to support businesses in stages such as raw materials, packaging, printing; taking advantage of available resources on the chain, experience from previous companies for cooperation and information exchange…  

Based on the characteristics and advantages of the types of the industrial parks that PLF provides above, investors can consider and choose a suitable location to invest in Vietnam, generating maximum profits and creating value.

The article is based on applicable law at the time noted as above and may no longer be appropriate at the time the reader approaches this article as the applicable law has changed and the specific case that the reader wishes to apply. Therefore, the article is only for reference.