Lifting obstacles to develop industrial parks

VCN - Attracting investment and developing industrial zones (IZs) and economic zones (EZs) is one of the important contents to implement the policy of developing a multi-component, open, attract investment and resources from all economic sectors to develop the country. In addition to the results achieved, there still limitations that need to be removed to draw investments to develop industrial parks and economic zones, including financial problems for industrial parks.
Trending towards green industrial parks for capital attraction Trending towards green industrial parks for capital attraction
Binh Duong to have 10 more industrial parks by 2030 Binh Duong to have 10 more industrial parks by 2030
Lifting obstacles to develop industrial parks
To date, there have been over 21,600 investment projects in industrial parks. Photo: Internet

Inconsistent, unstable and unpredictable incentive policies

Currently, the whole country has 416 industrial parks in 61/63 provinces and cities, with a total area of nearly 127 thousand hectares; more than 1,000 industrial clusters with a total area of more than 31 thousand hectares. Among the established industrial parks, 296 industrial parks have come into operation with a total natural land area of about 92.2 thousand hectares and an industrial land area of about 63 thousand hectares. The total area of leased industrial land in industrial parks nationwide reached about 51.8 thousand hectares, reaching an occupancy rate of about 57.7%. Given the industrial parks under operation alone, the occupancy rate is about 72.4%. Enterprises in the industrial park have a huge contribution, about 50% of the total export turnover of the country, contributing significantly to budget revenue.

Mr. Phan Huu Thang, Interim Chairman of Vietnam Industrial Park Finance Association:

To promote the industrial park investment, we are currently developing a set of project evaluation criteria with funding from the Australian Government. This tool enables to shorten the time to evaluate and approve projects especially is able to remove current complex policy regulations in evaluating and approving projects... This set of criteria will specify detail requirements for each type of projects must and specified in any document with specific terms.

Dr. Le Minh Nghia, Chairman of the Vietnam Financial Consulting Association (VFCA), said that to promote the development of industrial parks, many solutions have been proposed, including financial solutions.

According to the Institute of Financial Strategy and Policy (Ministry of Finance), the financial policy system applied to Vietnam's industrial parks generally includes 5 policy groups: tax and fee policies; investment policy; credit policy; land policy; and other policies. However, in practice, the main implemented policies only include tax policies, land policies, investment incentive policies and other local support policies; Meanwhile, the role of credit policy is still relatively obscure.

Along with that, industrial park development also reveals many shortcomings. For example, lack of financial resources for industrial park technical infrastructure development results to incomplete infrastructure and long delays in the construction process, making it difficult to attract investment. Besides, overlapping investment incentive regulations by location hinder industrial parks to fully access to preferential policies. Especially, there is no preferential financial policy for businesses and secondary investment projects in industrial parks...

Regarding investment in industrial park development, economic expert Can Van Luc said that: the direction of investment capital flow is not effective, some investment incentive policies are still general, and incentive policies are not synchronized, overlapping, lack of stability and difficulty in predicting, complex preferential access procedures...

Regarding site clearance work, Mr. Luc emphasized that there are still many difficulties, most of which are behind schedule. This is because the land fund is increasingly limited, people have not agreed on the compensation unit price, the compensation plan is not reasonable, satisfactory, and transparent, along with that, the involvement of local authorities is not decisive enough and not straightforward to the problem. Moreover, some people are indecisive that affect the needing agreement and consensus of 100% of households.

Also according to expert Can Van Luc, in recent times, investment and construction costs have fluctuated and still stand at a high level. According to the General Statistics Office, the price index of construction materials in 2021, 2022 and 2023 increased by 6.4%, nearly 7% and 0.05% respectively compared to the previous year.

This expert also said that capital for industrial park development still depends heavily on external capital sources. Currently, the state budget capital to support the development of industrial park infrastructure arranged to support the development of industrial park infrastructure only meets 53% of the need. According to expert Can Van Luc, due to prolonged investment and payback durations, industrial park investment depends heavily on credit capital and corporate bonds, so the need for medium and long-term loans is huge.

Investing in eco-industrial parks is facing challenges and difficulties

Many opinions also said that Decree No. 35/2022/ND-CP regulating the management of industrial parks and economic zones has supplemented regulations for the type of eco-industrial Park to contribute to implementing the commitment to achieve net emissions zero by 2050. According to the orientation of the Ministry of Planning and Investment, by 2030 there will be 40-50% of localities planning to convert existing industrial parks into ecological industrial parks and 8-10% of localities will plan to build new ecological industrial park. However, in reality, capital resources for green economic development in general and eco-industrial parks in particular are still very limited.

As of December 2022, the total outstanding green credit debt in Vietnam only reached 500 trillion VND, accounting for about 4.3% of the total outstanding bank credit debt for the economy. Up to now, almost no more preferential credit policies are prescribed to promote capital access for eco-industrial parks. Without timely investment capital, it is very difficult for the eco-industrial park model to develop in reality, and this may cause Vietnam to miss the "green investment wave" that is becoming an increasingly important trend of international investors.

From a legal perspective, Lawyer Bui Van Thanh, Vice Chairman of the International Investment Research Institute Co., Ltd. (ISC) said that reality shows that investing in eco-industrial parks is facing challenges at all three levels. In details, provisions of relevant laws are unsynchronized and contradictory; the promulgation, interpretation, and application of regulations and legal documents are unclear and ambiguous; implementation also depends on the understanding and interpretation of civil servants. Up to now, many legal issues regarding the formation and development of eco-industrial parks and conversion of existing industrial parks into eco-industrial parks have not been specifically guided. For example, according to Decree 35/2022/ND-CP, eco-industrial parks are industrial parks in which businesses participate in "cleaner" production activities and efficient use of resources, have linkages, and cooperate in production to carry out industrial symbiosis activities to improve the economic, environmental and social efficiency of businesses.

Meanwhile, according to the provisions of the Environmental Law, only when businesses meet environmental standards, can they organize production and business activities in industrial parks.

Expert Bui Van Thanh considered about the “cleaner” criteria when a business enters an eco-industrial park and converts it into an eco-industrial park. This expert also said that according to regulations, the construction of industrial zones must be included in the planning. However, in the Planning Law, the section on regional planning does not mention eco-industrial parks and does not regulate high-tech parks. So when an enterprise applies for approval of the investment policy to establish a high-tech park or eco-industrial park, what should it do? Should it be necessary to amend or supplement the approved regional planning? This is still a question

Lawyer Bui Van Thanh said that implementing ecological models is very expensive, so special preferential policies are needed in implementing this model, otherwise, they cannot attract businesses; there are no special preferential policies for the development of eco-industrial parks. Therefore, it is necessary to supplement specific preferential policies on access to land, planning, investment capital and science and technology...

To facilitate the development of industrial parks, especially for industrial park investors, Mr. Luc emphasized that policy recommendations should be correct, successful and have accompanying solutions. It is necessary to drastically restructure operations and products; diversify capital sources towards more transparency and professionalism; pay attention to risk management, better meet the requirements of environment, safety, industrial park ecosystem...

By Hoai Anh/ Thu Phuong

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