Problems in land access and administrative procedures continue to exist, making it difficult for industrial real estate to develop over the long term, experts say.
Dang Hung Vo, former Deputy Minister of Natural Resources and the Environment, said at the 2020 Vietnam Industrial Real Estate Forum that the current management of IZs is unreasonable, with too many procedures required.
One IZ needs three Prime Minister’s signatures and four submissions to relevant ministries and branches.
The State believes that IZs play an important role in economic development, and that it is necessary to put them under strict control to develop well. However, this does more harm than good: the stricter the control, the more the IZs shrink.
“Besides, the Vietnamese legal system is not well prepared enough to ‘receive eagles to come to the nest’, he said.
‘Eagle’ is the word used by some economists when talking about big investors with powerful financial and technological capability that Vietnam wants to attract.
“The Investment Law, PPP Law and Construction Law have been amended, but the Land Law remains unchanged. How can Vietnam create confidence among foreign investors and persuade them to invest in Vietnam?” Vo said.
|Problems in land access and administrative procedures continue to exist, making it difficult for industrial real estate to develop over the long term, experts say.|
He believes that the state needs to program the development of IZs, and that other things will be determined by the market.
Nguyen The Chinh from Viglacera said that because of the regulation on the minimum time of two years for ministries, branches, and local authorities to select IZ developers, investors miss a lot of opportunities.
Chinh stressed that businesses need stronger support from local authorities in site clearance, the key that determines the progress of IZ infrastructure construction.
According to Do Nhat Hoang, director of the Foreign Investment Agency (FIA), Vietnam needs to prepare land resources to attract the world’s leading investors. However, the land fund has shrunk and land rent is on the rise.
“Previously, the rent of $100 per square meter was considered high. But I have just heard that the rent has soared to $150,” Hoang said, adding that this will affect the attraction of new foreign investors to IZs in Vietnam.
VnExpress quoted Le Trong Hieu from CBRE Vietnam as saying that Vietnam has little land area left to attract foreign investors in the short term. The supply of industrial land in positions with good infrastructure conditions, near important ports and large urban areas, is very limited.
“The high occupancy rate of over 90 percent in IZs in important industrial areas has pushed the land rent up,” Hieu said.
Besides, there are few infrastructure projects, especially.highways and transit ports. As a result, businesses have to pay more for transportation and storage.
Industrial real estate is expected to be a highlight in Vietnam, especially after the EU-Vietnam Free Trade Agreement comes into being, analysts have said.
Large corporations from different business fields have begun injecting money into Industrial Zone projects as they can see great opportunities from an expected FDI wave in Vietnam.