Ho Chi Minh City Export Processing Zone Authority.—Photo HEPZA

HCM CITY (Biz Hub)— The number of new foreign-invested enterprises leasing land for factory construction in HCM City fell considerably in the first half of the year, while those choosing to lease ready-built plants rose sharply, according to a new report.

The city's Export Processing and Industrial Zones Authority (HEPZA) said that a majority of new foreign-invested projects leasing factories from industrial park infrastructure developers were small- and medium-sized enterprises(SMEs) in support industries.

In the first half of the year, the amount of total land leased to the FDI sector at IPs and export-processing zones in HCM City was only 3.9 ha, a sharp drop of more than 55 per cent year-on-year.

However, the total area of ready-built factory space for lease was nearly 18,200 sq.m, an increase of more than 161 per cent.

Many of these enterprises are still in the process of exploring investment prospects and looking for outlets for their products. Thus, many of them want to only lease space for trial production for two to three years.

If their businesses fare well, they will then expand or build their own plants at a later date.

Most of these SMEs are from Japan, South Korea and Taiwan. However, companies from Germany, Sweden and the Netherlands are active in pursuing support industries such as precision engineering.

The number of FDI companies using ready-built factories in IPs is increasing and many of them have leased factories that were formerly used by local companies that had to close because of the recession.

HEPZA said it would focus on working with companies to develop quality factories to lure more foreign SMEs in the support industries.

The authority said it would cooperate with Japanese infrastructure developers to build quality plants tailored to the needs of Japanese investors at the Hiep Phuoc Industrial Park.

In contrast, the area of land leased to local companies has totalled 11.44 ha this year, an increase of 10.81 per cent year-on-year, while the total area of plants leased by local firms has risen to 2,640 sq.m, tumbling nearly 72 per cent, according to Hepza. — VNS