Unlock capital flows and create favorable conditions for investors

Dr. Ngo Cong Thanh, Provisional Executive Committee member of the Vietnam Industrial Park Finance Association

What do you think about the occupancy rate in industrial parks today?

Attracting investment to develop industrial parks and economic zones is revealing limit ations that need to be overcome. The planning for the development of industrial parks and economic zones still has some shortcomings, lacks an overall, long-term vision, is spread across administrative boundaries, lacks industry and regional links. Along with that, the quality and efficiency of investment attraction does not meet the requirements of in-depth development; cooperation within industrial parks and economic zones, between zones and between industrial parks and economic zones and outside areas is still limit ed.

Besides, the type of development is slow to be innovated, development is not sustainable and balanced in terms of economy, society, and environment; the efficiency of land use and labor use is not high. Localities and investors developing domestic industrial park infrastructure still prioritize attracting investment to fill industrial parks, not really focusing on the industry structure, technology, environmental and social factors of the investment projects, so the effectiveness of investment in developing industrial parks has not met the requirements. Notably, investors of Vietnam's industrial park infrastructure projects, due to limit ed financial capacity, have the mentality of waiting to find secondary investors before investing in shared infrastructure in industrial parks while foreign investors want to have premises and technical infrastructure immediately before deciding to invest. This struggle and waiting has caused many industrial parks to have low occupancy rates.

What is your opinion on the forecast of the need to attract investment to develop Vietnam's industrial parks until 2030?

According to the national land use planning approved by the National Assembly on November 13, 2021; by 2030 the land area for industrial park development will reach about 210,930 hectares. Thus, from now to 2030 there will be about 120,000 hectares of industrial parks, of which the area of industrial land for rent is about 80,000 - 85,000 hectares.

Currently, the unit price of land compensation, site clearance and industrial park infrastructure construction norms have been adjusted to increase compared to the previous period. According to a survey by the International Investment Study Institute (ISC), the current average estimated investment cost to develop one hectare of industrial park land is about USD 600,000/ha. The need for investment capital to develop the infrastructure of industrial parks planned until 2030 and under construction is about USD 72 billion.

The need to attract investment in production and business projects in industrial parks is very large. If we calculate the average investment rate of USD 6.5 million /hectare of industrial land, the need to attract investment capital to fill the remaining area of Vietnam's planned industrial parks is about USD 600-650 billion. Thus, the total investment capital to develop industrial park infrastructure and investment capital to fill industrial parks is about USD 670-720 billion. In addition, it is necessary to take into account the need for investment capital in technological innovation of enterprises in industrial parks, restructuring and converting 296 existing industrial parks into ecological industrial parks to implement green growth goals according to the commitment of the Government of Vietnam and the international community.

In a recent report, the Ministry of Planning and Investment set the goal of attracting investment in industrial parks and economic zones by 2030 as follows: total registered investment capital reaches about USD 390-460 billion, of which capital in about VND 2.7 million - 3.2 million billion (equivalent to USD 110-130 billion), FDI capital is about USD 280-330 billion; Total realized investment capital reaches about USD 300-370 billion, of which domestic capital reaches VND 1.5 million -2 million billion (equivalent to USD 60-80 billion), FDI capital reaches USD 240-290 billion...

In the context of needing large capital to invest in industrial parks, in your opinion, what is the solution to mobilize capital to fill 210,930 hectares of industrial parks according to the national land use plan approved by the National Assembly?

Investment costs for industrial park infrastructure development tend to increase rapidly, this is a reality. According to ISC's calculations based on the land compensation unit prices of localities, site leveling costs and average construction norms of the Ministry of Construction over the past time, the total investment capital for industrial park infrastructure development until the end by 2022, it will reach about USD 28 billion, of which foreign investment capital will be USD 9.3 billion, and investment capital of Vietnamese enterprises will reach about USD 19 billion.

To mobilize huge capital for investment in industrial parks in the coming years requires fundamental changes in opening up capital flows, creating conditions for investors to access favorable business production factors and innovating investment promotion activities. We expect to accompany businesses and management agencies in finding solutions to mobilize resources to more strongly promote the development of Vietnam's industrial parks and economic zones in the right growth under green and sustainable direction.