Industrial and export processing zones urged to upgrade to attract FDI

Hanoi - Vietnam's industrial parks and economic and export processing zones need to overcome weaknesses to attract further high-quality foreign direct investment, experts have said.

Vietnam has established 335 industrial parks (IPs) on a total area of 97,840ha, of which 260 are already operational with an occupancy rate of over 76 percent, while 75 are under construction, according to the Department of Economic Zones Management.

The country is also home to 17 economic zones (EZs), covering nearly 850,000ha.

These zones have thus far attracted over 9,780 foreign-invested projects with a total registered capital of 194.69 billion USD, and 109.79 billion USD of the sum has been disbursed. At the same time, they also lured 1,387 domestically-funded projects worth over 1.46 trillion VND, and 533 billion VND have been implemented.

According to Chairman of the Vietnam International Arbitration Centre (VIAC) Vu Tien Loc, as Vietnam moves towards industrialisation and modernisation, IPs and EPs have played an important role in attracting investment in manufacturing and contributing to the State budget.

However, their development has many weaknesses, such as a lack of large zones and a shortage of adequate infrastructure to develop key industries and modern services, making it difficult to attract major investors from Europe and North America.

Many localities thought that their IPs, EPZs and EZs only needed to provide businesses with premises and factories rather than offer them an ecosystem and international standard business support area, Loc said.

Dang Hung Vo, former deputy minister of Natural Resources and Environment, said the majority of investment into Vietnam's IPs and EZs mainly came from Singapore, Japan, the Republic of Korea and Taiwan instead of from Europe and North America as there were still too few large-scaled IPs which would comprise mixed-use industrial-urban-service areas, in the country.

Vo said many large IPs in the world had mixed-use industrial-urban-service areas. For example, the Shanghai Xinzhuang Industrial Park (SHXIP), in which half of the investors came from Europe and North America.

Bui Le Anh Hieu from Long Hau JSC, which owns the Long Hau Industrial Park in Long An province, said many IPs had been planned with the empty ground or rudimentary factories and lacked the necessary connections and services for production. Hieu also outlined investment location, logistics infrastructure, time, and rental costs as three significant issues investors care about.

He suggested that more institutional reforms were needed, especially on upgrading services to create better conditions for investors to attract high-quality FDI in IPs and EPZs.

Furthermore, experts said that difficulties in access to investment information and matters surrounding human resources also gave investors a headache.

Kenji Usuda, General Director of the Japanese Kyouwa Co, told a conference in Ho Chi Minh City last week that Vietnam had to improve the quality of its human resources to attract more foreign investors to its IPs and EZs.

Earlier this year, several IPs in many localities across the country received approval from Prime Minister Pham Minh Chinh to establish and expand, vneconomy reported.

The PM approved a plan to develop the expanded Hoa Phu IP infrastructure in Bac Giang province. The 85ha project requires an investment of over 1 trillion VND, including 166 billion VND from Hoa Phu Invest Co.

In Hai Phong City, Tien Thanh IZ JSC received an approval to build 411ha Tien Thanh IP, which is expected to cost more than 4.59 trillion VND. At the same time, Plastic Chemicals Group JSC was allowed to develop the expanded Dong Van I IP in Ha Nam province with a total investment capital of 540 billion VND.

The PM also gave green light to the Hoa Phat Hung Yen Industrial Park Infrastructure Development Company's plan to develop the expanded Yen My II IP. The project covers 216ha in Hung Yen province and requires an investment of over 2.68 trillion VND.

Meanwhile, the development of Phu Thuan IP was also approved by the PM. To be built at a cost above 3.58 trillion VND, the IP spans 232ha in Ben Tre province's Binh Dai district.