Ho Chi Minh City’s authorities plan to offer competitive land rents and other incentives at industrial parks (IPs) and export processing zones (EPZs), and earmark more land for building infrastructure to attract investment.
Hua Quoc Hung, head of the HCM City Export Processing and Industrial Zones Authority (HEPZA), said the city would switch to newer models of IPs and EPZs to attract investment, ensuring it has appropriate incentives during the transition process.
There are 17 IPs and EPZs in the city, and they have an occupation rate of 68 percent, according to Hung.
Only 120ha is available to investors in 2021 compared to 500-600ha a year in the last five years.
The city has sought the Government’s approval for a 380ha IP in Binh Chanh District, a specialised one prioritising innovative start-ups and producers and distributors in new industries.
The city is expected to have 23 EPZs and IZs with a total of 5,797.62ha in future.
The infrastructure at many IPs and EPZs fall short of investors’ needs.
Mostly built in the 1990s, many have deteriorated, especially their wastewater treatment facilities, with many central wastewater treatment systems falling foul of environmental regulations.
Many companies seeking to expand cannot find enough land for lease, and rentals are too high compared to EPZs and IPs in neighbouring provinces.
Roads near EPZs and IPs are often too crowded, which leads to higher production costs and hits their competitiveness.
Other problems include a shortage of schools, accommodation and medical facilities for workers and their families, experts said.
The limited availability of skilled IT and management personnel is another problem for the zones.
The city wants all EPZs and IPs to be “green, clean and hi-tech” by 2025 and plans to build new hi-tech zones for supporting industries to attract hi-tech businesses and innovative start-ups.
Priority would be given to current hi-tech investors, especially those adopting industry 4.0, and supporting industries with high value-addition, Hung said.
“Building smart industrial parks and processing zones is a global trend, and the city is focusing on it.”
Enterprises in EPZs and IPs should use high technology to better manage manufacturing processes and improve product quality, he said.
Information technology could change production systems when everything is automated, and help management easily oversee systems, he said.
In future HCM City would have to compete with other provinces, and so its industrial parks would need to improve their efficiency, he added.
More than 591 million USD were invested in the city’s EPZs and IPs in the first 10 months of the year, a year-on-year increase of 7.2 percent, according to HEPZA.
Foreign investment accounted for 270 million USD, a 19.1 percent decline.
Some 89.4 percent of fresh foreign investment, or 81.2 million USD, was in the services sector, and it was followed by machinery, electronics, plastics, and rubber.
Domestic investment increased by 47.6 percent. There were 46 new projects with capital of 5.8 trillion VND (251 million USD).
Hung attributed the decline in FDI to the impacts of the Covid-19 pandemic and the restrictions on travel.
The new investments went mainly into building factories and warehouses for rent, he said.
Many investors had expressed interest in investing in warehouses and high-rise factories, he added.
The city expects to receive a wave of investments post-pandemic when US, European and Japanese investors move their production lines to Vietnam.
Last year it had attracted 8.3 billion USD worth of foreign investment.