IZ Development in Central Coastal Region Needs to Establish Connection between Sectors

People’s Committee of Binh Dinh province recently cooperated with the Coordination Committee of provinces in central coastal region of Vietnam to hold a scientific seminar titled “Experiences of attracting investment and developing the infrastructure of industrial zones in central coastal region”. The seminar created a place where Government’s leaders, sector officials, local authorities, scientists and investment can exchange or propose ideas for attracting investment and developing the infrastructure of industrial zones in central coastal region. It also created an opportunity for Management Board of industrial zones, enterprises and investors to enhance connections, to jointly promote the development of industrial zones.

 

In recent years, localities in central coastal region from Thua Thien Hue to Khanh Hoa have constructed many industrial zones, attracting a considerably large number of projects, offering jobs for local people, actively contributing to the state budget, as well as promoting the economic restructure in the region. Currently, central coastal region was allowed to construct 42 industrial zones with total natural areas of nearly 14,000 ha; 24 industrial zones (5,431 ha) are operating, attracting 943 projects (of which 775 domestically funded projects with total capital of over VND60,613 billion, and 168 FDI projects with total capital of over US$1.3 billion). Moreover, there are 7 industrial zones that belong to economic zones in central coastal region with planned areas of 9,850 ha and are in the process of construction and investment development. In 2011, total industrial production value of industrial zones reached nearly VND36,000 billion, creating 150,000 jobs, gaining export value of over US$1,237 million, contributing VND2,256 billion to the state budget.

 

However, besides achievements, the development picture of industrial zones in central coastal region still has a dark side. The disperse investment of industrial zones has led to scattering of investment capital, the lack of uniformity in the construction of infrastructure has made the efficiency of attracting investment lower than expected. Even in industrial zones with complete infrastructure, the filling rate is still low, therefore they still do not fulfill the role of motivating local economic development. According to the survey of the Consultative Group of Developing Economy of Central Region, the whole region has had only 24 operating industrial zones, accounting for 13.33 percent of total operating industrial zones in the whole country; gaining 10.72 percent of projects; 14.43 percent of investment capital, and especially FDI investment capital accounts only for 2.33 percent of that in the whole country.

 

According to Dr Tran Du Lich, Deputy Head of Ho Chi Minh city delegation of Vietnam National Assembly, Head of Regional Consultative Group, another limitation is that many industrial zones are still uncompleted; their investment attraction capacity is limited, and their contribution to the economy is disproportional with invested resources. In average, each operating industrial zone gains only VND78.2 billion (domestic investment) and US$8.27 million (foreign investment), in comparison with averaged national criteria of VND89.7 billion and US$14.49 million those figures are very low. Especially, employees’ qualification in industrial zones is still low, industrial working style is lacked, which discourage many investors, especially foreign ones. Besides, because each locality in the region possesses similar advantages and economic development conditions, measures and methods of attracting investors of provinces are quite repeated, which causes to the competition in attracting investors between different provinces, as well as between different sectors in the same provinces. This situation most occurs in sectors such as textile industry, footwear, electronics assembly, construction materials, processing of agricultural products, forestry, fishery…

According to Assoc. Prof. Tran Dinh Thien, Director of Vietnam Economic Institute, till now industrial zones in central coastal region are like supermarkets because there are every sector but in lack of quality and specialization. This situation lowers the competition of industrial zones, discourages investment and integration into global distribution system. Mr Thien suggested that the development of industrial zones in provinces should not concentrate on quantity, instead they should base on the “industrial clusters” principal, creating connections (cluster) between industrial zones, economic zones and high tech zones in the region, as well as upgrading the institution in order to improve competitiveness in the international arena, as well as in scope of industrial zones.

 

Mr Nguyen Ba Thanh, Secretary of the Da Nang Municipal Party Committee, Head of Regional Coordination Committee identified that currently, the most important task that industrial zones in central coastal region should conduct is to enhance connection, cooperation to promote the development of product lines and supporting products. Moreover, to eliminate weak points and to improve investment attraction efficiency, provinces should complete planning and management based on evaluating advantages and potentials of each locality and the whole region; connecting closely with land use planning, urban planning and residential planning.

Not only should localities in the region focus on constructing comprehensively internal and external infrastructure of industrial zones, complete land infrastructure connecting localities, they also need to specialize in sectors based on their advantages and practical development conditions of each province. In addition, they should complete mechanism and policies to encourage construction of infrastructure for industrial zones, employees and local people.