25 May INDUSTRIAL ZONE IN VIETNAM – PROCEDURES AND POINT TO CONSIDER FOR INVESTOR
The industrial zone is a gathering area of large enterprises specializing in producing industrial goods and services, having definite geographical boundaries, no inhabitants and Signed decision established by the prime minister. In recent years, the government has continuously offered preferential policies to encourage investment in industrial zones. Therefore, this is considered as an ideal starting point for domestic and foreign investors wishing to develop their business in Vietnam.
However, choosing which industrial zone to invest is also a complex decision. Investors not only have to pay attention to the price of renting factories but also other important development factors of their business in the future.
This article helps investors have general information about industrial zones in Vietnam, procedures and points to consider when investing in industrial zones:
THINGS TO KNOW ABOUT INDUSTRIAL ZONES
- In terms of space: industrial zones are defined by the boundary of the industrial park. All production activities inside the industrial park are regulated not only by the current law but also by individual legal regulations and many preferences. All technical infrastructure in the industrial park is built for industrial production and service business.
- In terms of operational functions: the main manufacturing sector of enterprises in industrial zones is industrial production and services serving industrial production. In addition, each industrial zone will be planned with specific sectors and objectives to create synchronization and specialization in the production process of enterprises.
- About establishment planning: The industrial zone is not a Spontaneous area. It was established on the basis of a government-approved plan. The state will establish favorable investment environment with synchronous infrastructure, a comprehensive system of mechanisms and policies.
- Orientations for development of industrial zones: Industrial zones can be expanded upon meeting the requirements of approved industrial park development planning.
POINTS TO CONSIDER WHEN CHOOSING AN INDUSTRIAL ZONE
1/ The clarity of the legal record: The first point to note when investors select an industrial park is the type of license that the owner of the industrial park have, the legal records that the owner of industrial park has completed.
- If the business sector of the investor isn’t stipulated in the license of the industrial park, the enterprise won’t be able to carry out investment procedures.
- In addition, the environmental licenses, regulations of noise and waste emission of the industrial park are also things which investors should consider in order to avoid environmental problems that the government agencies are controlling.
2/ Investment procedures in industrial zones:
In general, the procedures for investing in industrial zones are the same. However, in some specific areas and development orientations, industrial zones may require investors to provide additional dossiers. Therefore, understanding the required legal documents before investing in an industrial zone is prerequisites.
3/ Price policies:
- For large scale and global corporations, land rental may not be a big problem for them as it accounts for a small proportion of the capital structure. However, it is a
bignoticeable problem of small and medium investors. An industrial park with a long-term rental policy at a stable price level would be the best option for investors.
- The rental costs that the investor should pay attention to include: land rent, factory rent, management fees, electricity and water supply charges, wastewater treatment charges, etc.
- However, an industrial park that has a complete infrastructure system usually has the rent is equal to the market price, so investors should consider choosing newly formed industrial zones with plans to complete specific infrastructure in the future.
- In addition to the low cost of leasing, the infrastructure and location of transportation infrastructure is one point that investors can’t ignore.
- The transportation infrastructure of the industrial zone includes residential area, national highway or expressway, nearest railway, airport and seaport. An industrial park with complete transportation infrastructure will save
youa lot of money for logistics and import – export activities.
- Infrastructure within the industrial zone includes: main trunk system, internal traffic system, electricity and water network, backup power supply system, security system and wastewater treatment system. , …
5/ Professional Support Services:
One of the concerns of investors when entering Vietnamese market is the cumbersome and complicated administrative procedures. Choosing of industrial parks with support services related to preparing and managing the lease contract, licenses, compliance procedures for administration – personnel, accounting, … will help businesses save much time and money to focus more on business activities.
6/ Other notes:
Beside mentioned points above, investors may consider some other characteristics when choosing an industrial park such as:
- Prioritized business industries of each industrial zone: In order to build industrial parks with high concentration and specialization to attract investments in some specific sectors, each industrial zone will have one or some preferred industries. For example: Cat Lai II Industrial Park gives priority to modern technology fields (without environmental pollution); Tan Tao Industrial Park gives priority to 3 sectors: mechanics – electronics, agro – processing, food and cosmetic – pharmaceutical.
- The number of enterprises in the same industry or country has invested in that industrial park: The presence of many enterprises from the same country operating in the industrial zone will help investors gather useful experiences, cooperate and exchange information to form a strong community.
- Planning for the development of local industrial zones: the selection of a completed industrial zone and the development of a new industrial zone will have its own advantages and disadvantages to be considered.
INVESTMENT PROCEDURES IN INDUSTRIAL ZONES
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