Vietnam IPs and EPZs - Synchronous Development Needed
By late September 2004, Vietnam had 106 industrial parks (IPs) and export processing zones (EPZs) on a total natural area of 20,380 hectares with nine of them built since early this year. Total area of lease land for industrial production is put at 13,800 hectares, or 190 hectares per IP. The filling rate is put at 59.8 per cent nationwide.
Vietnam has now 124 other small and medium-sized industrial complexes in 19 localities with a total area of 65,000 hectares. So far, 68 IPs have become operational while 40 others, under construction or waiting for site clearance. IPs and EPZs have so far attracted 1,442 foreign-invested projects, capitalised at US$11.39 billion, from 40 countries and territories. Compared with total number of projects and investment capital, the number of projects attracted to IPs and EPZs accounts for 36.2 per cent and their capital, 29 per cent. Also, the IPs and EPZs have attracted 1,422 projects from domestic investors with a total investment of VND72,612 billion (about US$4.601 billion).
Initial successes
Over the past 13 years, IPs and EPZs have made a great impact on the industrialisation and modernisation process in Vietnam. In the first nine months of 2004, IPs attracted 167 more projects with a total registered capital of US$707.5 million, accounting for 60 per cent of foreign investment capital of the whole country. The number of projects has dropped by 12 per cent over the same period last year, but total investment increased by three per cent. Dong Nai, Binh Duong and Ho Chi Minh City attracted most projects to IPs, accounting for three quarters of total number of new projects and investment capital. Also, 264 projects increased their investment by US$706 million, equal to 70 per cent of total added investment in Vietnam. Foreign-invested projects in IPs and EPZs in Dong Nai, Binh Duong, Long An and Ho Chi Minh City increased most investment with the Tanna Fabric Company of Taiwan, increasing by US$95 million; the Canon Company of Japan, US$100 million; the Pouchen Vietnam of Taiwan, 20.9 million and the Ching Luh of Taiwan, US$52 million. This means that the number of projects saw a rise of nine per cent over the same period last year while total investment capital increased 3.9 fold. Total investment capital of new projects and projects adding more capital reached US$1.413 billion in 2003. This year, Vietnam is expected to attract US$1.7 billion in foreign investment.
Enterprises in IPs and EPZs have stabilised their production activities with increased effectiveness. Total value of their products had reached US$6.659 billion by this September, or an increase of 10 per cent from one year earlier. Total export turnover has seen a high year-on-year increase. The nine months' figure was put at about US$3 billion, up by 20 per cent and equal to 55 per cent of export turnover of the foreign-invested sector and 13 per cent of that of the whole country. Total import value was put at US$3.153 billion, up by 15 per cent. The development of IPs and EPZs has produced an impact on the development of localities, particularly on increasing the proportion of industrial production in the economic structure. Localities which have been successful in attracting investment to IPs and EPZs include Dong Nai, Ho Chi Minh City, Binh Duong, Hanoi and Vinh Phuc. Among Vietnam's key economic regions, the southern key economic region has favourable conditions in infrastructure to meet investors' requirements, so that the region has so far attracted 1,080 projects, capitalised at US$8.6 billion. Foreign invested projects in IPs and EPZs mainly concentrate in industrial production and production services, accounting for 21.5 per cent of total registered capital of licensed foreign-invested projects in Vietnam. Production industries, except oil, real estate and services, account for 40 per cent with assembly industries, electronic assembly and food industry with high technology. Some IPs has attracted high-tech projects, such as Rorze Robotech Company in the Nomura IP in Haiphong, the Fujitsu Company in Bien Hoa II IP in Dong Nai, and Canon in the Thang Long IP in Hanoi.
Development solutions
The building and development of IPs and EPZs has not only provided a high socio-economic effectiveness but also helped the government from the central to local levels to gain experience. With great effort by the Government, ministries and local governments to improve the investment environment, business and production activities of enterprises have become easier.
In early November, 2004, a seminar entitled 'Development of IPs and EPZs in Vietnam during international economic integration' was held in Dong Nai province. The seminar focused on discussing the best solutions for the development of IPs and EPZs in the coming time. Over the past 13 years, IPs and EPZs have developed with their own specific features, creating a lively picture. However, their development has yet to combine with regional and industry master plans. Professor Le Huu Nghia said that it was necessary to synchronise the development of social, economic and technical infrastructure facilities in and out IPs. Careful attention should be given to the development of master plans to ensure feasibility, and the effectiveness of IPs and EPZs in combination with economic restructure and urbanisation, agricultural and rural development, and environmental protection.
The solution for area filling and the improvement of the effectiveness of projects in IPs is to identify locations, scale and the use of land fund in IPs, which produce direct impacts on the quality and effectiveness of activities of IPs. According to experience of other countries, IPs should combine with consumers, material supply, support service, human resources and capital markets. In Vietnam, the location of an IP depends on features of business activities and production structure. A IP management method 'one door at one place' should be perfected with increased decentralisation, giving more power to IP management boards, so that they would be able to perform State management well. Also, they should be given more power in terms of capital, labour, and environment.
Human resource development has become the 'hottest' issue for managers and investors in IPs. By June 2004, Vietnam had 60,000 direct and one million indirect workers at IPs and EPZs, with Dong Nai having 160,000; Ho Chi Minh City, 130,000 and Binh Duong, 100,000. Thanks to their ability to get access to modern management skills and technologies, Vietnamese workers in IPs and EPZs have good skills. However, human resources development has so far been carried out by enterprises themselves. Vietnam still lacks a training system for human resource development for enterprises. Also, further attention should be given to the quality of human resources, incomes, housing and living standard for workers.
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