The leaders of nine provinces, Becamex IDC Corporation, and Vietnam Singapore Industrial Park (VSIP) signed an MoU at a ceremony on industry development organised in the southern province of Binh Duong on March 25.

According to the agreement, VSIP and the participating provinces will shift their development model to industry-urban-smart services to help investors quickly deploy smart factory models.

The collaborations seek to enhance the socioeconomic development of the provinces through higher-value manufacturing, job creation, and development of new urban areas.

Smart industry slant to boost foreign capital attraction, photo source: visip.com.vn

The nine provinces are Binh Phuoc and Tay Ninh in the south; Thua Thien-Hue, Binh Thuan, and Khanh Hoa in the central region; Ha Tinh and Thanh Hoa in north-central; and Thai Binh and Nam Dinh in the north. Feasible projects will progress to a cooperation agreement and are subject to the awarding of investment registration certificates from the central government.

Provincial leaders are interested in expanding the urban-service-IP model in their localities. Hoang Trung Dung, general secretary of Ha Tinh Party Committee, said, “The province worked with VSIP to bring their venture to the area. It also added this model to its planning. Ha Tinh is determined to accelerate approval of procedures to create good conditions for such projects.”

Both leaders of Thai Binh and Nam Dinh said that they arranged a land plot of over 1,000 hectares for the venture to welcome investors. Thai Binh planning features over 30,000ha within its coastal economic zone for the establishment of IPs. The province is accelerating construction of transport to foster inter-regional links to connect the province’s IP with surrounding areas.

Developing thoroughly industrial parks will be an advantage for these provinces in attracting investors in the context the supply sources of industrial parks are exhausted.

John Campbell, associate director and head of Industrial Services at Savills Vietnam said that at present, many businesses feel difficulty in finding the land fund for developing IPs as the occupancy rate is always high. Specifically, in some southern provinces such as Binh Duong or Dong Nai, the occupancy rate is always above 95 per cent. Meanwhile, in the north, the fulfill ratio of Bac Giang and Bac Ninh are up to over 96 per cent.

“The high occupancy ratio at IPs will impact on the rental of large-scale land area, creating challenges for real estate developers who have plans to establish new IPs,” Campbell said. “In the context the supply source is modest, the appearance of new IPs, especially green and smart ones, will contribute to quenching the thirst of the market.”

“An urban-industrial symbiosis when developing IPs to make them sustainable with good living and working environments for workers will become a trend in Vietnam,” said Dao The Anh, chairman at consulting firm Redsunland Investment.

“When selecting a destination, along with studying available land, and the procedures, the investors pay attention to the accommodation and utilities for their workers. Thus, with services and urban living components, IPs will become better support the interests of workers,” Anh added.

Completing industrial infrastructure to attract investors is one of the key missions of provinces, including Thai Binh. Since 2021, this province has been targeting backers for five IP infrastructure projects.

The Lien Ha Thai urban service IP from Green iP-1 is one example. Project planning was approved in February 2021 with a total area of 589ha. Within 10 months, the province assigned departments and related authorities to cooperate with the investor to complete the land clearance of 500ha, a miracle in land clearance terms. As of late February, 98 per cent of the clearance was complete.

The localities’ moves show an acknowledgement that some provinces need to improve the business environment to attract foreign-led capital. For example, Binh Thuan province is currently only 31st and Ha Tinh province 36th on a list of 44 localities with foreign capital in the first quarter of this year.