Operating for 24 years, Nhat Long Mechanical Trading Co Ltd specializes in manufacturing industrial machine components and spare parts. With a small scale and 30 workers, the company’s workshop is located in a residential quarter in Tan Phu ward in Thu Duc City.

Nguyen Ngo Long, president of Nhat Long, said in addition to the lack of capital, the problem that small and medium enterprises (SMEs) are facing is the expansion of production bases. 

It is not easy to get orders from large partners, because, in addition to the requirements on product quality, suppliers have to satisfy requirements on the scale of production workshops.

There are more than 400,000 enterprises in HCM City, but industrial zones (IZs) can provide production bases to only about 50,000 enterprises. The others are located in residential quarters.

“The regulations on building production bases in residential quarters are unclear. If enterprises ask for construction licenses, they can only get licenses for separate housing construction, while housing is quite different from a production workshop. If production workshops cannot be upgraded, enterprises won’t be able to ensure labor safety as well as requirements on fire prevention and control,” Long said.

Thinh Phat Precision Mechanical Co Ltd is an SME. Its production workshop covers an area of 1,000 sqm in a residential quarter in district 12.

Hua Huu Thinh, president and CEO of Thinh Phat, said the workshop of the company is located on leased land. In order to expand production scale, in 2018, he decided to rent 2,700 sqm land in Hiep Phuoc IZ in Nha Be district.

“To date, we still have not got the land-use right certificate for the land plot. Therefore, we cannot use the land as collateral for bank loans. Besides, we have missed a lot of business opportunities. If we can build a factory in the IZ, we will be able to gain partners’ confidence,” Thinh said.

The representative of Thinh Phat said the company plans to build a factory in Hiep Phuoc IZ with owner’s equity. However, competent agencies have temporarily stopped handling the dossiers applying for construction licenses and the land plot still has been left idle.

Hoang Tho Vuong from the HCM City Industry and Trade Department, the land bank for enterprises in supporting industries remains limited, which is a factor explaining why the enterprises still cannot develop well.

HCM City now has 3 IZ and high-tech parks that have sub-zones reserved for enterprises in supporting industries.

According to HCM City Industry and Trade Department Director Bui Ta Hoang Vu, the production value of enterprises in IZ just accounts for 35 percent, while the other 65 percent comes from enterprises outside IZs.

Tran Chung