Infrastructure obstacles hold back development of enterprises

Transport infrastructure assets will be inventoried in the general inventory of public assets. Illustration photo: collected

High costs hinder production expansion

In fact, a good infrastructure for investing in equipment and technology will help enterprises achieve higher business value and move towards sustainable development.

According to Mr. Nguyen Doan Thang, Party Secretary and General Director of Rang Dong Light Bulb and Thermos Joint Stock Company, in the past, to generate 1 billion in revenue, the company lost nearly 0.5 tons of oil equivalent. But when converting to modern technology, 1 billion in revenue only lost about 0.146 tons of oil equivalent.

Not only that, the company also invested in electric arc glass furnaces, with heat efficiency reaching over 75% while oil-fired furnaces have efficiency of only 25%, not to mention that glass furnaces have no chimney, no CO2 emissions, and no dust emissions into the environment, ensuring green production criteria for products supplied to the domestic and export markets.

Rang Dong's leaders said that the company had transformed from a traditional industrial factory producing light bulbs and thermoses into an electronic industrial factory with modern production lines. In the first 9 months of 2024, the company's revenue growth reached more than 27% compared to the same period last year.

Currently, Rang Dong Company has 2 factories in Thanh Xuan District, Hanoi and in Que Vo Industrial Park, Bac Ninh.

In order to expand production, in the development goal, in addition to the growth rate towards revenue of US$ 1 billion in the vision to 2030, from 2021, the company has been approved to invest in a factory to produce high-tech electronic products in Hoa Lac High-Tech Park with a total investment capital of more than VND 2,334 billion.

According to the plan, this project will complete construction in the second quarter of 2024 and be put into operation from the third quarter of 2024 to the first quarter of 2025.

For small, medium and micro enterprises, infrastructure problems are still very difficult. Sharing about this issue, Mr. Nguyen Xuan Thang, Director of TYG International Company Limited (TYGICO) said that the production and storage area of ​​the Company at Ninh So Industrial Park (Thuong Tin, Hanoi) is cramped, not meeting the needs of expanding production and business of the company, so the company wishes to move to an industrial park with better infrastructure, more spacious area and more convenient transportation.

But according to Mr. Thang, land rental prices in new industrial parks are often high, not suitable for their financial capacity.

According to statistics from the Vietnam Real Estate Association (VNREA), the demand for rental is always high and tends to increase, pushing up land rental prices in industrial parks, with a stable growth rate of 8–12%/year.

Enterprises also reflect that with land rental costs of up to US$ 100-150 per m2 in large industrial parks, many enterprises cannot expand production or have to look for less favourable production locations.

In addition, a survey of enterprises in the Provincial Competitiveness Index (PCI) Report 2023 published by the Vietnam Federation of Commerce and Industry (VCCI) in May 2024 showed that although only 6% of surveyed enterprises encountered difficulties in infrastructure, this was an increase compared to the rate of 4.5% in 2022.

Obstacles in accessing land continue to increase due to procedural barriers, including longer processing times for documents and administrative procedures than prescribed...

Notably, nearly 73% of surveyed enterprises said they had to delay or cancel their business plans in 2023 due to difficulties in carrying out administrative procedures related to land, significantly higher than the survey results from 2 years ago.

Need for synchronous planning and financial incentives

The above issues show that enterprises need not only resources but also time to expand infrastructure.

According to Mr. Hoang Huu Thang, Chairman of the Board of Directors of Vietnam Engineering and Industry Group Joint Stock Company (Intech Group), management agencies need to prioritize the development of industrial parks and industrial clusters dedicated to industrial production and innovation enterprises with appropriate land costs and preferential policies to increase opportunities for them to participate in global value chains.

Mr. Thang said that in reality, the cost of land, the cost of finding and building land for many enterprises, is still difficult and can even make it difficult for domestic enterprises to compete and lose many advantages compared to FDI ones.

In addition, enterprises believe that the construction of industrial parks, industrial clusters, export processing zones... needs to take into account synchronous planning, along with investment in traffic infrastructure, water supply and drainage, electricity and environmental treatment. This requires coordination between management agencies, industrial park developers and enterprises during the implementation process.

To reduce the burden on enterprises, especially small and medium-sized enterprises, enterprises recommended considering support mechanisms for industrial land rental costs.

Mr. Nguyen Xuan Thang said that there should be a policy to support land rental reduction in new industrial parks, creating conditions for enterprises to convert production premises to help them stabilize production and business activities.

In addition, according to enterprises, localities need to be more effective in providing information on planning, land rental policies, financial support and legal consulting services… to help speed up project implementation and access to infrastructure.