Understanding the characteristics of each area and type of industrial park will help investors make the decision that best suits their production needs and business strategy.
Vietnam is a country with a current population of approximately 100 million people, an abundant labor force of more than 50 million people. Vietnam's economy is on the rise, with GDP growth this year targeted at 8%, higher than last year's 7%. Per capita income is also expected to increase from 4700 USD in 2024 to 5000 USD this year.
With the figures presented at the workshop “Establishing companies and factories in Vietnam”, Mr. Ly Nghia Dung – managing attorney of Li Sheng Law Firm assessed that industrial parks (IPs) play a central role in attracting investment, creating jobs and promoting production.
Vietnam does not have just one type of industrial park, but has up to ten different types of industrial parks. These types include: traditional industrial parks, export processing zones (EPZs), supporting industrial parks, specialized industrial parks, ecological industrial parks, high-tech industrial parks, coastal economic zones, border economic zones, specialized economic zones, and industrial clusters. Of these, the most popular are traditional industrial parks, industrial clusters, and export processing zones. In particular, the Vietnamese Government is currently paying attention to and promoting the development of high-tech industrial parks. This stems from the orientation of developing key areas such as semiconductors, software and component manufacturing.
According to Mr. Ly Nghia Dung, for foreign investors, choosing a suitable industrial park is extremely important. It is necessary to conduct a survey of the industrial park or check information about the land to ensure that the planning of the industrial park allows the expected industry and products to be produced. "If the industry or product is not suitable for the planning, basically, the application for an investment license will not be approved by the Government," said Mr. Dung.
Industrial zones in Vietnam are unevenly distributed among regions. According to the data, the North has 147 industrial zones, the Central region has 11, and the South has up to 175 industrial zones. The concentration of industrial zones in the South is due to the fact that the industrial zone development process started early in this region according to Vietnam's plan. The occupancy rate in the South is also higher because this region developed very early.
Although industries can be located in all three regions, choosing the right industrial park and the right geographical location to set up a factory is very important. The South has many manufacturers of electronics, automobiles, high-tech products and machinery. Meanwhile, the North mainly makes plastics, rubber, and machine components. The Central region is food processing and textiles.
Average wages also vary by region. The South has higher wages. This is related to the fact that industrial zones in the South have developed to the stage of producing high-tech products, requiring more skilled workers, leading to higher average wages.
Land rental prices also vary. The South currently has quite expensive land rental prices. Land rental prices in the Central region are the cheapest, followed by the North, and finally the South with the highest prices. The prominent locations for industrial parks in the South are mainly concentrated in Ho Chi Minh City, Binh Duong, Ba Ria - Vung Tau, Dong Nai and Long An.
According to him, the North has the advantage of lower labor costs. However, the labor quality may not be as good as the South. The transportation system in the North is quite developed, especially highways, because the State has focused on developing a number of industrial parks in the North in recent years.
The Central region has a good geographical location and many investment incentives. However, the disadvantage is that there are often storms several times a year, which can affect the company's production activities.
The South has developed very early and the supply chain is quite complete. Currently, the State is focusing on developing transport infrastructure in the South, with 6 to 8 expressways expected to be completed by 2030 to meet the development of the region. As mentioned, the labor force is more skilled and the labor cost and land rent are also higher.
Therefore, Mr. Dung noted, when investors come to Vietnam to set up a company or factory, they need to pay attention to the drainage level of the industrial park and infrastructure conditions because these factors will affect operations.
“Understanding these characteristics of each region and type of industrial park will help investors make the most appropriate decision for their production needs and business strategies in Vietnam,” said Mr. Dung.
Source: Business Forum
