Regardless of going through a number of challenges from the sophisticated developments of the COVID-19 pandemic, Vietnam continued to have optimistic indicators from overseas funding in 2021.
In keeping with the Ministry of Planning and Funding (MPI), in 2021, Vietnam had 1,738 newly licensed FDI tasks, down 31.1 % within the variety of tasks in comparison with 2020, however the registered capital of latest tasks reached US$15.2 billion, a rise of 4.1 % in comparison with the earlier 12 months.
Notably, financial zones and industrial parks nonetheless attracted 539 FDI tasks and 615 home funding tasks with newly registered capital of US$12.8 billion USD, a rise of 15 % in comparison with 2020.
Lately, Vietnam has always provided preferential insurance policies to encourage funding in industrial parks. Thus, industrial parks are a really perfect funding car for traders desirous to begin enterprise operations within the nation.
What are industrial parks?
Industrial parks (IPs) or industrial zones (IZs) are licensed by the federal government for funding in keeping with the scheme submitted by the MPI. An industrial park is an space with an outlined geographical boundary, specializing within the manufacturing of commercial items and provision of companies for industrial manufacturing.
The principle manufacturing area of enterprises within the IPs is industrial manufacturing and companies for industrial manufacturing. As well as, every IP might be deliberate with its personal industries and targets to create synchronization and specialization within the manufacturing means of enterprises. Firms establishing their manufacturing amenities inside the commercial parks take pleasure in preferential insurance policies akin to company revenue tax exemption and discount and land rental exemption.
An export processing zone (EPZ) is a concentrated industrial zone specializing within the manufacturing of export items, provision of companies for export items manufacturing, and export actions, and in addition has specified geographical boundaries. There are solely 4 EPZs in Vietnam, out of which two are totally occupied.
Companies manufacturing 100% for export don’t have to be established in an EPZ to be an export processing enterprise (EPE). Inside industrial parks, there could also be industrial sub-zones for EPEs. These areas are usually separated from the skin by fence techniques, they could have ports entrance and exit doorways, and fulfill necessities regarding supervision and management by customs authorities and associated useful companies.
Lengthy Hau IP
An financial zone (EZ) is a particular zone mannequin in Vietnam. An EZ is characterised by a positive funding scheme of a neighborhood/regional authorities inside a specified geographical space. This zone could also be organized into useful areas, together with non-tariff areas, bounded areas, industrial areas, leisure areas, tourism areas, residential areas, administrative areas, in addition to an export processing space.
There may be many IPs established in an EZ and finding in these IPs could assist manufacturing companies take pleasure in a decrease stage of tax. Examples of EZs embody Dinh – Vu Cat Hai Financial Zone which covers IPs akin to Deep C and VSIP and the Chu Lai Financial Zone in Quang Nam province which covers the THACO Chu Lai IP and the Tam Thang IP.
By the tip of 2021, Vietnam had 564 IPs included within the planning with a complete space of 211,700 hectares; 398 IPs have been established with a complete space of 123,500 hectares, of which, 292 IPs have been put into operation and 108 IPs are underneath building. Vietnam has 18 EZs established in 17 provinces and cities with a complete land and water floor space of 871,500 hectares.
Giant offers in IPs in 2021
The fourth wave of the pandemic had a major impact on companies. The manufacturing and enterprise state of affairs of IPs and EZs decreased in comparison with 2020. Complete manufacturing income was down 27 % in comparison with 2020, whereas export turnover was down 11 % in comparison with 2020.
To help enterprises get better their enterprise actions, the federal government launched a number of help packages, akin to a 30 % company revenue tax discount utilized to all companies that had income of lower than US$8.8 million in 2021. Different help measures had been issued within the type of land hire reductions, social insurance coverage, unemployment insurance coverage advantages, and one-time funds.
The next is a quick on some largest investments in IPs in Vietnam for 2021.
Kraft Vina invested in a US$611 million kraft manufacturing unit in Vinh Phuc
The biggest challenge to be registered in 2021 in Northern Vietnam is positioned in Vinh Phuc province. Thai firm SCG Packaging and Japan’s Rengo Firm collectively invested US$611.4 million in a paper packaging manufacturing unit, which is anticipated to supply 800,000 tons of merchandise a 12 months.
The challenge holds greater than 60 % of Binh Xuyen Industrial Park and has introduced Vinh Phuc to the highest three localities main Vietnam in attracting new FDI tasks within the processing and manufacturing sector in 2021.
LG Show to lift its funding in Hai Phong by over US$2 billion
South Korea’s digital big LG raised its funding within the Northern port metropolis of Hai Phong by US$750 million in February and by US$1.4 billion in August, which has elevated the LG Show whole funding in Vietnam to US$4.65 billion.
Deep C IP Hai Phong
The funding will enhance the corporate’s OLED show output on the Hai Phong manufacturing unit, positioned in Trang Due Industrial Park, from the present 9.6 million to 10.1 million models per 30 days, to 13 million to 14 million models per 30 days.
Amkor Know-how chosen Bac Ninh for manufacturing unit growth
The US semiconductor supplier Amkor Know-how will make investments US$1.6 billion between now and 2035 to develop a producing, testing and assembling plant on a website of 23 hectares in Yen Phong II-C Industrial Park positioned within the electronics cluster Bac Ninh province.
US$520 million might be disbursed till 2025, which is able to give attention to the manufacturing, meeting, and testing of semiconductor supplies for the world’s main semiconductor and digital manufacturing corporations. The plant is anticipated to be put into operation by the tip of 2023.
LEGO to construct a US$1 billion manufacturing unit in Binh Duong
Danish toy manufacturing firm LEGO Group signed a memorandum of understanding with the Vietnam – Singapore Industrial Park (VSIP) to construct the brand new manufacturing unit in Binh Duong province, which is its first-ever carbon impartial manufacturing unit. This might be Lego’s sixth manufacturing unit globally and second in Asia with the hope to assist Lego broaden its international provide chain community.
BW Industrial in Binh Duong province
The challenge has a complete funding of greater than US$1 billion and is anticipated to be deployed within the second half of 2022 with operations commencing in 2024. The funding is inclusive of photo voltaic vitality technology and is anticipated to generate 4,000 jobs over the following 15 years.
Lengthy An licenses US$3 billion LNG energy plant
The southern province of Lengthy An has licensed a 3,000-MW liquefied pure gasoline energy plant to be constructed by South Korea’s GS Power and fund administration firm VinaCapital. It is going to be constructed on the Lengthy An Southeast Asia Industrial Park on a 90-hectare space, together with two combined-cycle energy vegetation, Lengthy An I and II.
The Lengthy An I and II energy plant tasks have been authorised since 2016, utilizing imported coal gas. Nonetheless, the usage of coal for energy technology shouldn’t be authorised by the native individuals committee and authorities as a result of issues about environmental air pollution. The Individuals’s Committee of Lengthy An province has then proposed to regulate the Lengthy An I and II challenge from utilizing coal gas to liquefied pure gasoline gas.
Views for 2022
Due to aggressive labor prices, preferential tax and funding insurance policies, and its geographically strategic location, Vietnam has turn out to be one of many go-to locations for multinational corporations’ manufacturing and meeting wants.
Within the 12 months forward, Vietnam is anticipated to get better to pre-COVID development. Vietnam’s position as a low-cost manufacturing hub is anticipated to proceed to develop, helped by the additional growth of current main business sectors. Additional, current infrastructure tasks will create extra handy site visitors connecting industrial parks with seaports. The demand for land rental and ready-built factories is anticipated to extend sharply in 2022.
Vietnam Briefing is produced by Dezan Shira & Associates. The agency assists overseas traders all through Asia from workplaces internationally, together with in Hanoi, Ho Chi Minh Metropolis, and Da Nang. Readers could write to email@example.com for extra help on doing enterprise in Vietnam.
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