Resources being wasted at stalled IZs
Resources being wasted at stalled IZs
While many localities are struggling to find ways to expand industrial land and welcome new investments, numerous industrial zones in convenient locations with well-developed infrastructure currently have no tenants or have even been abandoned.
Only 30km from the centre of Hanoi, the location of Hanoi Southern Supporting Industrial Park, known as Hanssip, developed by N&G Group JSC, is a favourable one. This zone, in Phu Xuyen district and next to Cau Gie-Ninh Binh Expressway, is 640 hectares in area and has been ready to move into for six years.
However, its price is too high to compete with other industrial zones (IZs) – especially ones in the neighbouring province of Ha Nam, a few kilometres from Hanssip. Despite being nearby, the rate in Hanoi of about $180 per square metre is twice as high as in Ha Nam.
La Hai Dang, director of Itecco Ltd., is looking for an area to expand his business and factory, and is ready to move 5-10km further to save what could be up to $1 million that could be spent on equipment instead. “I have finally decided to base the new factory in a Ha Nam’s IZ across the expressway, which is only a 30-minute drive to the centre of Hanoi,” said Dang.
Another disadvantage of Hanssip IZ is that the total area is too small to lure big investors, according to Dang. As a result, the zone lies vacant, with overgrown grass and wasted space.
Not far from Hanssip IZ in Hanoi’s Thuong Tin district, Phung Hiep IZ – developed by Simco Song Da JSC – had been in the works for many years. But due to the merging of the administrative boundaries between former Ha Tay province and Hanoi, the project was halted while the capital’s master plans were adjusted.
Due to the poor performance and slow development of Simco Song Da, Hanoi People’s Committee decided to terminate the project altogether. Now, the location shows no sign of development, investment, or infrastructure, because of problems with land compensation and site clearance.
Several abandoned IZs have been seen across the country, and not only near Hanoi. The near-290ha Hoang Long IZ project, developed by FLC Group, is still only a vacant lot in the central province of Thanh Hoa’s Hoang Hoa district. According to the investment certificate, the project should have completed most initial procedures in 2016. Instead, documents remain unsent, land clearance is still murky, and the company itself has asked to shift the venture to an urban township.
In the central province of Nghe An, Hoang Mai 1 IZ started construction in 2008 at almost 290ha in area, developed through Hoang Mai Industrial Zone Investment JSC. Infrastructure was carried out over six years ago, but the occupancy ratio is still very low. The project was transferred to Hoang Thinh Dat Corporation at the end of 2017, but little has changed since then.
In nearby Nghia Dan district, only one project operates in Nghia Dan IZ, which was created by May Forestry JSC, and around 210ha is still abandoned after almost 10 years of planning. There are also hundreds of hectares vacated in VSIP Nghe An – with a very low occupancy rate compared to the potential, advantages, and ideal conditions for secondary investors in the region.
Le Ngoc Hoa, Deputy Chairman of Nghe An People’s Committee, said abandoned IZs are a waste of land and do not help with the fact that many local workers need jobs.
“We have had a lot of meetings with relevant shareholders to find out solutions for every case. Investment attraction has been a strategic development in the province for a long time, and we have organised a lot of conferences and workshops to call for investment, in addition to promoting IT application and simplifying administrative procedures to facilitate investors,” said Hoa.
However, many investors said the infrastructure of some IZs is not good enough, and some have struggled with site clearance for many years, as well as transport links, water supply, and the changes in policies and master plans. Nghe An’s challenges in particular come from undeveloped infrastructure and logistics that cannot meet the demand of businesses.
“The local authorities have yet to remove woes for businesses and ourselves,” one investor told VIR. “Unless obstacles regarding investment mechanisms and policies are cleared, IZs will remain idle there for even longer.”
Abandoned IZs are also causing trouble in southern provinces such as An Giang, Can Tho, and Soc Trang. Hung Phu 1 IZ (occupancy at 12 per cent), Hung Phu 2A IZ (40 per cent), and Xuan To IZ are just some that have been around for up to a decade with little advances being felt.
Le Thanh Quan, director general of the Department of Planning Management under the Ministry of Planning and Investment, said the country’s resources are being wasted by the number of unfilled IZs. “During amendment of Decree No.82/2018/ND-CP, we are considering tightening some regulations related to the approval process of establishing new IZs and strengthening post-inspection to remove obstacles and avoid such a waste of land resources,” Quan said.
