15:18 | 14/04/2017 Investment
(VEN) - There are 325 industrial zones (IZs) and export processing zones (EPZs) in Vietnam covering almost 95,000ha. Of these, 220 IZs and EPZs are operational on 61,000ha, while 105 others are clearing ground on 34,000ha.
According to the Ministry of Planning and Investment, IZs and EPZs have achieved tremendous progress since the Doi Moi (Renovation) was adopted in 1986. More than 70 percent of foreign direct investment (FDI) capital has been poured into IZs and EPZs, contributing to increasing the occupancy rate from 67 percent in 2015 to 73 percent at present.
IZs and EPZs have brought into play their strength in terms of complete infrastructure, greatly facilitating strong growth of enterprises, including multinational groups such as Hyosung, Samsung, LG and Robert Bosch, which have created ample opportunities for domestic businesses to connect to global supply chains. Most enterprises in IZs and EPZs have worked efficiently, generated high revenues, contributed about 30 percent of the country’s total export earnings, and paid a large amount of taxes.
IZs and EPZs currently employ more than two million people.
However, the Ministry of Planning and Investment recently said that shortcomings exist, including low occupancy rates in many IZs and EPZs, lack of proper waste water treatment systems and environmental pollution. In particular, a number of IZs and EPZs failed to attract investors, although the government provided major incentives in terms of the Enterprise Income Tax, export and import tariffs, land and credit.
According to the Ministry of Planning and Investment, reasons for these shortcomings vary, including the improper focus on the development of multi-business models, rather than environmental protection and social issues. In addition, IZs and EPZs have not paid due attention to choosing quality projects and strengthening links between enterprises in their zones and between themselves in order to create large-scale production complexes. Many IZs and EPZs apply complicated administrative procedures, which explain why occupancy rates are modest.
To better attract investors and contribute more to the domestic economy, economists suggest that IZs and EPZs choose several advantageous investment areas and quality projects, rather than developing multi-sector businesses and increasing occupancy.