Strengthening Industrial Park Infrastructure Connectivity in VEHEC Region

3:59:08 PM | 9/23/2023

The Vietnam Eastern Highway Economic Corridor (VEHEC) is a strategic region that encompasses Hai Phong, Quang Ninh, Hai Duong and Hung Yen provinces. By connecting the industrial park infrastructure in these provinces, a large and dynamic economic space can be created, with a new vision for development and a competitive advantage to attract major investment projects.

A dialogue among stakeholders on how to enhance industrial park links in Hai Phong-Quang Ninh-Hai Duong-Hung Yen region 

Labor-intensive and high tax-contributing

According to Mr. Pham Tan Cong, President of the Vietnam Chamber of Commerce and Industry (VCCI), there are currently 87 economic zones and industrial parks in the VEHEC region. Hai Phong City has the Dinh Vu-Cat Hai Economic Zone and 25 industrial parks, covering a total area of 12,702 ha. Hai Duong has 24 industrial parks, spanning 4,508 ha. Quang Ninh has five economic zones (including three border gate economic zones and two coastal economic zones) and 16 industrial parks, with a total area of about 388,671 ha. Hung Yen has 17 industrial parks, occupying 4,395.43 ha.

The industrial parks in the four VEHEC provinces provide employment opportunities for a large number of workers. As of the end of 2020, the industrial parks in Hai Phong City and Hai Duong province employed 157,967 workers and 102,014 workers, respectively.

Moreover, the industrial parks have made significant contributions to the budget revenue and the economic restructuring of the region. The projects in the industrial and economic zones have supported economic growth, created new industries, products and markets, and accounted for nearly 80% of the industrial production value and over 70% of the export value. They have also helped increase the budget revenue, expand the markets, and enhance the competitiveness and international integration of the region.

Current challenges

The development of industrial parks in the VEHEC provinces has also faced some challenges, despite the notable achievements. The region, which is a key industrial driver of the country, has experienced slow development and a low occupancy rate of the industrial parks. Some of the industrial parks have failed to provide high-quality industrial services and technical infrastructure for the tenants.

The statistics show that the occupancy rate of the industrial parks in the subregion is currently only about 50%, with Hai Phong City leading with approximately 60% (as of 2021). Hai Duong province attracted 348 projects (as of June 30, 2023), but the average occupancy rate is about 51%. Quang Ninh province has eight industrial parks with an average occupancy rate of 43%, which is lower than the national average, and has attracted US$4.1 billion from FDI investors and VND21 trillion from 40 domestic investment projects. Hung Yen province has 261 projects with a total investment of US$4.43 billion in the industrial parks, which have a median occupancy rate of just 47.8%.

Most of the industrial parks have struggled to attract big and professional developers and have lacked initiatives to appeal to secondary investors. The targeted industries in the industrial parks are quite similar, which reduces their attractiveness and increases their competitiveness. Moreover, National Highway 5, which is the main traffic route with many industrial parks along it, is currently being degraded. The regional linkages in the value chain are still weak, with a low availability of local material supplies. Furthermore, the land fund for industrial development is limited, especially for building large industrial zones.

The four VEHEC provinces have great potential for industrial development and logistics services, but their import and export performance has not met the expectations. The logistics services are not well synchronized in the supply chain and lack regional connectivity. Quang Ninh and Hai Phong have the advantage of having land, sea and air border gates for trading with many countries, but they mainly focus on the Chinese market and other northern localities for importing and exporting goods, including agricultural and aquatic products.

The industrial parks along the VEHEC corridor are developed in a fragmented way, without effective connectivity or a common vision for greenness and sustainability. The developers of the industrial park infrastructure still face many challenges in site clearance and investment attraction, and lack good strategies to leverage the local strengths.

A notable issue is the lack of social infrastructure for the industrial zones, such as worker accommodations, schools, hospitals and research centers. Most of the social infrastructure is provided by the surrounding residential areas.

Establishing effective collaboration and connectivity

On May 28, 2022, the Government issued Decree 35/2022 ND-CP on “Regulations on Management of Economic Zones and Industrial Zones”, which provides “guidelines and plans for developing the systems of economic zones and industrial zones; infrastructure investment, establishment, operation and policies on development and management of economic zones and industrial zones”. The decree regulates the construction of economic zones, industrial zones, industrial-urban-service zones and eco-industrial zones, with an emphasis on reducing energy consumption, greenhouse gas emissions, focusing on social responsibility, and adopting a digital management model. This is a new trend in industrial zone development in Vietnam today.

The VEHEC provinces have planned to develop 139 industrial parks by 2030, which is 60 more than the current number, with a total area of 59,441 ha, which is almost double the current area of 23,930 ha. The total available area of the industrial parks is 15,913 ha, of which 8,028 ha has been rented by tenants, with an occupancy rate of 50.45%. Mr. Pham Tan Cong, President of the VCCI, said that this would be a big challenge for the localities to ensure the effective use of land resources. Moreover, the labor source and the infrastructure conditions need to be clearly identified to enhance the investment efficiency in the industrial parks.

Mr. Hoang Trung Kien, Director of the Quang Ninh Economic Zones Authority, said that the localities need to coordinate with each other to prepare and publish common investment promotion documents for the industrial zones and economic zones of all four localities and to organize joint investment promotion events to create unity and ensure the performance and connectivity of the industrial zones and economic zones.

Mr. Pham Truong Tam, Director of the Hung Yen Industrial Parks Authority, also said that the localities need to continue to cooperate closely and actively share the planning information and the development investment plans and effectively promote the local advantages, especially the coordination of the industrial park authorities in the four VEHEC provinces. They also need to agree on investing in uniform and synchronous traffic infrastructure systems to ensure smooth connectivity across the VEHEC region.

Mr. Nguyen Trung Kien, Director of the Hai Duong Industrial Zones Authority, said that the localities need to continue to advise the Ministry of Planning and Investment to build institutions for linking the northern key economic region and the VEHEC axis in the Vietnam Regional Connectivity Institutions Project for the 2021-2030 period, which will be submitted to the Prime Minister for approval. The central authorities need to delegate and empower the industrial zones authorities to perform the specialized state management tasks to ensure the effective operation of the single-window divisions. To enhance the effective connection of the industrial park infrastructure development, it is necessary to formulate the industrial zone and economic zone development plan for the 2021-2030 period, with a vision to 2050. This plan needs to specify the number, the area and the progress of the industrial zones and economic zones and aim to utilize the resources and strengths of the neighboring localities. Each locality needs to strengthen the human resource training and development, share and connect the investment promotion to make the industrial parks more attractive to investors.

Mr. Bruno Jaspaert, General Director of DEEP C Industrial Zones Complex, said: To attract sustainable projects, besides making good use of land and space incentives, it is necessary to use tax tools effectively. The provinces need to have common regulations on reasonable use of land and wastewater, because they will not be able to further develop without proper treatment measures in the future. It is necessary to develop industrial parks into eco-industrial parks, and develop synchronous railways and inland waterways to boost the industrial park infrastructure development and operation. They also need more initiatives, similar to the VEHEC development initiative.

By Anh Mai, Vietnam Business Forum