Industrial zones need a rethink: experts

Monday, Apr 18, 2016 08:24

Binh Chieu Industrial Zone in HCM City. — VNA/VNS Photo An Hieu

HA NOI (Biz Hub) — Experts have said it is time for Viet Nam to develop a master plan for its industrial zones (IZs).

The rapid integration of the Southeast Asian country with the global economy, coupled with its impressive economic recovery, had highlighted the need to develop industrial real estate in the IZs to easily attract foreign capital.

Leading property consultancy firms, such as Savills and Cushman & Wakefied, said real estate in industrial zones would benefit from the free-trade agreements, specifically the Trans-Pacific Partnership (TPP), as there was a possibility of member countries increasing investments in Viet Nam and moving production here to take advantage of the trade deals and the low cost of labour.

The demand for housing and industrial land for building factories and warehouses was, therefore, anticipated to soar with the profitability of investments in the developing IZs.

Statistics revealed by the Ministry of Planning and Investment showed that there were 87 under-construction industrial zones throughout the country.

Several companies were pouring money into developing new IZs recently, such as the Becamex Binh Phuoc JSC with a VND21 trillion (US$940 million) investment in an urban-area industrial park in Binh Phuoc Province, the Thailand-based Amata Group with a $282 million investment in the IZ in Long Thanh and the Singapore-headquartered Mapletree, which pledged to invest $1 billion in developing IZs, office buildings and apartments in Viet Nam, the Dau tu Bat Dong San (Property Investment) newspaper reported.

Although industrial real estate was becoming more attractive than ever before, there existed problems that could only be solved through appropriate planning to ensure long-term development, the experts said.

In a report to the National Assembly at a meeting in March, the Ministry of Natural Resources and Environment said Viet Nam had 212 IZs in operation, with a total area of some 60,000ha. However, the average occupancy rate remained low at 65 per cent, although it was up from the 45 per cent in 2001.

Viet Nam planned to have a total of 200,000ha of industrial land by 2020, up from the current 103,000ha, including both in-operation and under-construction IZs. Localities wanted more industrial land with a total proposed area of 203,000ha in the next four years.

There was an imbalance in industrial land planning, according to Nguyen Hoai An from the property service firm CBRE Ha Noi. "Not every IZ is operating efficiently, with low occupancy rates," the newspaper quoted her as saying.

An example of this was the Ha Noi - Dai Tu Industrial Zone in Long Bien District, which had recently got the Prime Minister's approval to be converted into an urban zone since the IZ had failed to attract investment.

The IZ had a modest occupancy rate of some 36 per cent, despite being established nearly two decades ago.

An said the development of IZs in Viet Nam lacked the detailed planning that was necessary to ensure connectivity among the IZs across the country, leading to an overlap, instead of supplementary benefits.

This could be seen in the case of developing IZs that specialised in the garment and textile industry. They were forced to wait in queue for capital inflow following the TPP among many provinces and cities, such as Long An, Dong Nai, Binh Duong and HCM City.

Competition is good, but it is essential to plan first, An said. — VNS

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