VietNamNet Bridge - Industrial zones (IZs) are no longer offering tax and land rent incentives to attract investors, but are following new business strategies to attract investors to set up factories in IZs.

IZs are following new strategies to attract more investors

An IZ can easily attract investors if it is located in an area with good business environment and infrastructure, offers attractive investment incentives, and is near seaports and airports.

However, nearly all IZs have these characteristics and the competition among them to attract investors is getting more cutthroat.

Some IZs in HCMC have to apply new strategies to adapt to the new circumstances as local authorities have shifted to encourage investments in hi-tech industries instead of labor- and land-intensive ones.

The Tan Thuan Export Processing Zone (EPZ), for example, is no longer attracting investors, though it is located next to the seaport and the central area of the city. The IZs in nearby Long An and Dong Nai provinces offer more incentives and lower rent.

The developer of Tan Thuan EPZ said it would be difficult to make a profit if it continues to lease land in large lots. It decided to build 3-8-story workshops with the floor area of 1,000 square meters. In other words, one land lot for leasing could accommodate nearly 10 enterprises. 

With this method, Tan Thuan hopes it can attract small and medium enterprises which have limited investment capital but want to have ready-made workshops with full facilities.

According to Tan Thuan’s management board, with the model, the occupancy rate in the EPZ has been increasing rapidly. It had improved investment efficiency and increased the number of enterprises on every hectare of land.

The average rent in Tan Thuan has increased to $15 million per hectare, double the previous rate. One hectare of land now could be exploited by up to 12 enterprises instead of one as in the past.

The business strategy has been applied by many other IZs. Hiep Phuoc IZ, for example, now focuses on leasing land plots with the area of between 750 and 1,000 square meters, trying to lure small and medium enterprises and startups.

Analysts said that targeting small and medium enterprises is a wise strategy because they all are in need of premises.

With the new solution, Hiep Phuoc has attracted 34 projects and leased 44 land plots with the total area of 20 hectares to provide production premises to mechanical engineering, food processing, cosmetics, pharmacy and electronics enterprises.

According to the Ministry of Planning and Investment (MPI), Vietnam had 325 operational IZs by the end of 2017, with an average occupancy rate of 51.5 percent.

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