Ho Chi Minh City: export processing zones and industrial parks attract more than $12.3 billion in investment capital

Thousands of domestic and foreign companies have entrusted their investment to the development speed of export processing zones and industrial parks in Ho Chi Minh City.

On the morning of October 27, in Ho Chi Minh City, a conference “Reviewing 30 years of establishment and development of export processing zones and industrial parks in Ho Chi Minh City” was held in order to evaluate the  operation outcome as well as to outline direction and tasks in the next few years.

Milestones during 30 years of establishment and development of export processing zones and industrial zones

In the first stage of implementing the policy of renewal and opening up in the spirit of the Resolution of the Sixth Congress of the Party in 1986, the Government decided to pilot an economic model to promote investment attraction and economic development, contributing to the country’s industrialization and modernization.

Reporting at the ceremony, Mr. Hua Quoc Hung – Chairman of the Board of Directors of export processing zones and industrial parks in Ho Chi Minh City said: with the determination of the Government and the efforts of Ho Chi Minh City, on 25/11/1991, the city established Tan Thuan Export Processing Zone, the first model of an export processing zone of the whole country. During the 4-year pilot period from 1992 to 1996, Ho Chi Minh City also established two more export processing zones, Linh Trung 1 and Linh Trung 2.

From the success of Tan Thuan Export Processing Zone model, export processing zones and industrial zones of Ho Chi Minh City and most provinces of the country have overcome all adversities in the first stage, to develop gradually. After 30-year development, Ho Chi Minh City now has 3 export processing zones and 14 industrial parks with a total area of ​​more than 3,800 ha, accounting for 64% of the planned area of ​​23 export processing zones and industrial parks of Ho Chi Minh City, with approximately 77% occupancy rate.

“The city’s export processing zones and industrial parks basically set requirements on attracting investment capital, developing industrial production, creating jobs, importing technology and enhancing management experience,  professional skills and export value. In particular, enterprises have gradually joined the global production network and value chain, making significant contributions to the state budget and contributing to socio-economic promotion. The city is developing in the direction of transforming into a developed urban industrial zone,” affirmed by Mr. Hua Quoc.

By September 2022, Export Processing Zones – Industrial Parks had attracted 1,674 active projects with a total registered investment capital of $12.33 billion, of which foreign investment accounted for 45%. On average, the Export Processing Zone – Industrial Park attracts more than $260 million in foreign investment, accounting for 58% of Ho Chi Minh City’s foreign investment capital in industrial production annually.

In particular, the average annual export value of export processing zones – industrial zones reaches 7 billion USD, accounting for more than 15% of the total export turnover of the City. At the same time, the average annual payment to the state budget is over VND 22,000 billion, accounting for 6% of the city’s budget revenue (excluding crude oil). Export Processing Zones – Industrial zones provide employment for more than 281,000 workers, accounting for 6% of the labor force of Ho Chi Minh City, 18% of which is in industry and construction sectors.

According to economic experts and managers, one of the most important factors contributing to the development of export processing zones – industrial parks in Ho Chi Minh City and the whole country is the “single-window, at-the-spot” management mechanism. This mechanism was born and put into operation for the first time with the birth and development of Tan Thuan Export Processing Zone.

For the first time, the Prime Minister has authorized  local administrative agency, namely the Management Board of the Export Processing Zone of Ho Chi Minh City and concurrently directed the ministries to grant authority on handling problems arising in export processing zones to its Management Board. Having made a breakthrough in attracting investment in export processing zones and industrial zones in Ho Chi Minh City, the “single-window, at-the-spot” management mechanism has been duplicated and widely applied nationwide, becoming working principles of the Management Board of Export Processing Zones, Industrial Parks and Economic Zones today.

It is necessary to transform export processing zones and industrial parks towards ecological and hi-tech industrial parks

After 30 years of building and developing industrial parks and export processing zones, the city has accomplished certain achievements. From the initial model in Tan Thuan Export Processing Zone, a system of Export Processing Zones – Industrial Parks has been formed and developed in Ho Chi Minh City, contributing to the conversion of underdeveloped arable land into dynamic concentrated industrial production areas, newly developed urban areas, increasing population’s living standards, economic and socio-economic development of Ho Chi Minh City.

Apart from achievements, Mr. Hua Quoc Hung also admitted that the quality and efficiency of attracting investment in export processing zones – industrial parks have not met the requirements of in-depth development. At the same time, many projects with large investment capital, advanced technology, containing high gray matter, added value, and spillover nature have not yet been attracted. It is resulted from the criterion of “full occupancy” in the early stages of development,  to solve unemployment problem, access to technology, capital and management skills from abroad, so investment projects were not properly chosen.  

On the other hand, the attraction of export processing zones and industrial parks in Ho Chi Minh City have decreased in terms of preferential policies, synchronous infrastructure, land sublease prices and human resources; Balancing and clearance work have faced variety of difficulties including large land-fund shortage,…

In addition, the efficiency of land use is not high, with delay in renewal of the development model of the export processing zone, shortage of synchronous infrastructure and   the industrial park mainly focusing on multi-sectors and multi-fields.  Especially, the quality of human resources has not met the needs of restructuring investment.

Besides sustainable development, green and circular economy are becoming global trends; The fourth industrial revolution is taking place at a rapid pace and on a large scale.

HCM City Export Processing Zone – Industrial Park, established in the early 90s, up to now, has been operated for more than half of the project’s 50-year duration, so how could we promote urban industrialization towards modernity, implementing economic structural reform, innovating the growth model, contributing to the development of urban areas into smart, modern service and industrial cities by 2030.

Source: Baomoi