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REGIONAL LINKAGE: Solutions for sustainable development of central coast industrial parks

Regional economic linkage actually is the linkage between different economic actors in one region, with main regard to economic benefits, to promote the comparative advantage and then bring the region with higher economic comparison. Although, the Central Coastal region is the area prioritized for Vietnam’s Strategy of marine economy, the area has encountered natural disasters annually and various challenges during the process of development. Thus, until now, this region has still suffered from the difficulty in socio-economic development. In spite of the development of Industrial Parks (IPs) and Economic Zones (EZs) in the region in order for promoting the growth of economy, the economic potential has not been utilized and a wide range of problems still have existed which need solving.

The necessity to link the development of IPs of Central Coastal region

In the current context of integration, the economic linkage is one of the leading factors that results in the success of nations, localities and enterprises. For the Central Coastal region, the establishment of economic linkage between 09 provinces, including: Thua Thien Hue, Da Nang, Quang Nam, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Ninh Thuan, Binh Thuan, is one of the particularly key issues of current Strategy of socio-economic development.

In recent years, above-mentioned provinces have made the effort to exploit natural, social advantages in order for attracting investment to improve the economic growth. However, only if do each province just rely on its own conditions for economic development without the coordination between other provinces, it hardly enhances its competitiveness and conducts the economic restructuring associated with the conversion of growth model. From the viewpoint, the localities in the region have agreed on the necessity of constructing mechanisms, policies to build up the development linkage of the region in the direction of quick and sustainable development. In practice, the localities have taken positive, active steps of coordination in order to assess the development status, analyze the strength, weakness, opportunities and threats, and simultaneously promote the establishment of: Coordination Team; Operation funding; Consultant Team for regional linkage to exploit the potential and produce a proper orientation for effective regional linkage in the future.

The Central Coastal region possesses the strategic meaning about North - South and East - West economic exchanges; close connection with Central Highlands, Cambodia, Laos. It is also considered as the gateway to sea of the East - West economic corridor connected to the international maritime routes across East Sea, the Pacific and North Asia nations; is easy to exchange economically with Hong Kong, Taiwan, Russia and Japan… Especially, the Central Coastal region is in the center of Southeast Asia so it has the advantage for economic exchange amongst intra-ASEAN countries…

Besides, the region also possesses considerable advantages in transport infrastructure with a variety of types of road, rail, waterways and air transport both domestically and internationally. It also has the long coastline of 1,430 km, accounting for 43.8% the entire national coastline; intensive density of seaports; huge source of seafood; dozens of islands and archipelagos; potential for oil and gas on the continental shelf; various natural resources; a range of universities, colleges and vocational schools… Especially, the East-West economic corridor with the length of 1,450 km connecting Myanmar, Thailand and Laos is the pivotal gateway to East Sea for countries of opened Mekong-sub region that are in Northeast and Southeast Asia. This proves the strength of the region on development of marine economy and IPs; on the role of Vietnam in the international economic relationship and on the role in protecting sovereignty of the country.

The practice of development linkage of IPs in the Central Coastal region in the recent years

By the end of 2015, the whole Central Coastal region had 52 IPs that already had the establishment decision with 10,446.5 ha of natural land, of which 29 IPs with a total area of 3,649.6 ha have been put into operation. The number of investment projects was 986. The average size per IP was 200.9 ha, lower than the national average of 268.5 ha. The occupancy rate was low, reaching 34.9%.

The locals with the largest quantity of IPs in operation were Da Nang and Quang Nam, especially Da Nang had 100% IPs in operation and the highest area of IPs. The provinces with the low number of IPs in operation were Khanh Hoa, Ninh Thuan which also had low area of IPs. The total industrial production value of the whole region reached 90,221.9 billion VND, representing more than 12% of that of the whole country. The provinces with the highest industrial production value were Khanh Hoa, Quang Nam, Quang Ngai, Da Nang and the remaining provinces with the lowest value were Binh Dinh, Phu Yen, Thua Thien Hue, Ninh Thuan, Binh Thuan. The difference between the provinces with the highest and lowest value was over 3 times.

About the industrial production value of IPs, the whole region reached the value of 40,665.7 billion VND, representing over 14% of that of the country. The local with the highest value was Da Nang (13,352 billion VND), the next was Quang Nam (7,073 billion VND) and the last was Ninh Thuan (1,507 billion VND). The highest industrial production value doubled the second-highest value and was larger 08 times as much as the lowest value. This proved that the development and effectiveness of IPs have been uneven, mainly relying on each province’s own strength without the development coordination among the provinces. The number of projects investing in the locals in general and in IPs in particular was still unreasonable. The province with the highest volume of projects was Da Nang (347 projects), the second was Binh Dinh (191 projects), and the last was Ninh Thuan (5projects). The difference between the local with highest and lowest number of projects was roughly 70 times. This was the significant gap leading to substantial differences in investment, attracting labors, developing infrastructure and contributing to economic growth for the locals. The localities with high investment were Quang Nam (30,511 billion VND), Da Nang (25,974.1 billion VND), whilst other localities with lowest figure were Phu Yen (2,735 billion VND) and Binh Thuan (2,007.9 billion VND). The difference between the localities with highest and lowest investment was closely 15 times. The analysis of data indicated that there were shortcomings in the planning and distribution of IPs; effectiveness of investment; mechanism, policies for IPs... especially the shortage of cooperation between the locals to exploit the potential and advantages, as well as support each other in the factors and conditions of manufacturing business.

To assess properly the practice of IPs’ operation, it is necessary to evaluate the situation of operation of enterprises within IPs in terms of various aspects. Regarding the type of business, the survey data indicated that most of enterprises were in form of limited liability Company, comprising 43.7% and those in form of Joint Stock Company were 33.8%. The data reflected the private sector accounted for a large proportion while the state sector constituted the low rate and the sector with foreign direct investment occupied the average rate.

The business activities of enterprises were diverse. Due to the nature and strength of the region with high development of agriculture - forestry - fishery, there was a wide range of enterprises processing seafood, animal feed, timber and other agricultural products... These firms occupied 42.5%. Besides, other companies were really diverse but accounted for low proportion such as the construction sector accounted for 8.8%; production and distribution of electricity, water constituted 3.8%; the remaining sectors comprised 1-2%... On the scale of business, the majority of enterprises were Small-Medium Enterprises. Firms with the capital of over 100 billion VND constituted 9.3%; others with the capital from 50-100 billion VND occupied 26.3%; under 01 billion VND was 1.3%; from 01 to 05 billion VND was 9.2%; the remaining firms with capital of over 50 billion VND and under 05 billion VND accounted for low rate.

In the past years, due to the crisis, the global economic downturn and the macro-economic uncertainty within the country, the business activities of enterprises in IPs have shrunk and reduced investment whilst attracting investors into IPs has suffered from difficulties. In terms of assessing factors influencing the investment in IPs of Central Coastal region, the enterprises indicated that the most important factor was preferential tax and land policies (80.6% respondents), next was the factors related to geographical positions and cheap labors (76.4% and 77.5% in turn), the subsequently were the quality of infrastructure (73.2%), product consuming market (63.9%), the quality of labors (62%) and the last was natural resources (39.7%).

However, the above-mentioned policies as well as policies related to capital mobilization; promoting sectors and industries to invest in IPs have still suffered from the scarcity of coordination, linkage amongst IPs in the region in particular and in the locals in the region in general. Many surveys showed that the local authorities have competed with each other in issuing preferential policies and investment support (such as the reduction in enterprise income tax, cost for land rent and usage…), which leads to the movement of resources from IPs of one local to those of another local. This has caused the investment to become less sustainable and create difficulties in the process of planning and anticipating the development of IPs of the region.

The competitive situation to attract investment and the scarcity of master planning in the whole region is an unanswered question. Due to lack of general planning of the region, the local authorities in the region possessed their own planning and produced policies attracting investment regardless of a clear and concentrated orientation. The IPs had the same activities of planning and investment, in which the traditional industries, namely footwear, textiles, agriculture - forestry - fishery were common, whilst other modern industries with high value added which are considered as the motivation to develop IPs were not concentrated to attract.

The general attribute of the region’s IPs is to attract investment in spontaneous manner. Thus, the activities of investment have suffered from the shortage of support and coordination between each local on the basis of economic linkages between IPs, between IPs and other economic units outside IPs, between IPs in the same local and localities in the region. This leads to the duplication and overlap but the deficiency of linkage and coordination to exchange information, technology, materials, market of exporting as well as the shortcomings in competitiveness… In fact, the share of enterprises in IPs which have employed products and materials whose origins are from the region for production of finished products is very low. According to the estimation from IPs, the rate is just roughly 20% in terms of quantity and 15% in terms of value. Due to lack of links, cooperation in production and business, the local, in its own, has to make use of limited and small-scale resources for manufacturing on-site, causing the industrial products of the Central Coastal region to possess low productivity, quality but high price, therefore leading to the low competitiveness of the region.

Thus, in addition to achievements, the construction and development of IPs in the region are the problems that need the attention and solutions: the number of IPs in operation was low; the scope and attraction of investment in projects were limited; the industrial sectors attracted into IPs were still overlapping, the attraction policies were asynchronous and less cohesive; the content of science and technology within projects was low; the environmental protection was inadequate; the human resources were insufficient in terms of quantity and quality required by IPs; the mechanism and policies remain problematic and need continuing to improve, especially the lack of cohesive, mutual coordination between IPs and enterprises in IPs of the region.

Orientation and solutions for the sustainable development linkage between IPs of the Central Coastal region in the future

First, solutions to the system of infrastructure should be implemented; training, employment and development of the labor market should be associated with the planning, development of sectors, scopes and types of enterprises.

First and foremost, completing the process and management of planning of IPs should be based on the assessment of potential and advantages of each local and of the entire region associated with the planning of infrastructure such as the planning of land usage, urban planning, residential planning…

For IPs whose infrastructure is relatively comprehensive, it is vital to focus on adjusting the planning in the direction of attracting the projects with modern technology and large scope, employing on-site materials, supplying raw materials and purchasing products for other IPs in the region in order for coordination to improve manufacturing, business, exporting and connecting the global value chain. Several IPs which are selected for development of the processing industry should be associated with the regional planning of developing the industrial sectors of the region and play the role in attracting, promoting industrial investment projects with large scale which the localities in the region cannot attract without the preparation in advance.

Second, the linkage should be established through producing the mechanism, policies of attracting investment into IPs in the region.

To prevent the uncontrolled promulgation of local policies to attract investment currently, the policies should be studied and issued synchronously to the whole region, especially preferential and supporting policies on attracting investment into IPs in the region, including: incentives for projects with large scope of investment and a huge number of workforce; incentives for sectors which are in line with the regional strategy of socio-economic development, especially for the development of industry and service; incentives for the beneficial investment forms, focusing on the forms of foreign investment (FDI, ODA, NGO) and BOT, BT…, of which FDI is the form of capital mobilization with important role.

Specific supporting policies should have the sense of consistency and synchronism for attracting investment in IPs in the region namely: free usage of infrastructure during the first time from 01 to 05 years; supporting enterprises in advertisement, infrastructure construction, application of science - technology and registration of quality and trademark; supporting partly the cost of participating in the fairs of introducing products of enterprises to domestic and foreign markets; supporting the conversion of agricultural labor to other sectors and the development of urban areas associated with IPs; supporting the cost of training labors on-site of each locality in the region… Especially, the linkage of preferential and supporting policies on attracting investment into IPs should be consistent with general policies of the region on promotion of investment.

The localities in the region also need to issue consistent policies on stabilizing socio-economic environment and reforming the administrative procedures on attracting investment into IPs in the region. Reforming the administrative procedures has to enhance the sense of liability and qualifications of civil servants for handling investor-related issues, difficulties the investors suffer from during the process of implementing projects. Every administrative procedure should be reformed to facilitate the investment into IPs. Securing the simplification, publicity and transparency of the administrative procedures is profoundly vital.

Third, technical and social infrastructure of IPs in the region should be constructed synchronously.

Linkage and synchronization of infrastructure and society in IPs and areas planned for construction of IPs in the region are the requirement and vital solution for the development of IPs in particular and socio-economic development in general. It can be said that the exchange and coordination between enterprises are not limited within each local but also expanded in the regional, national and international scopes.

Especially, it is crucial to concentrate on improving the quality of infrastructure construction of IPs in order to guarantee the sustainable employment, avoiding quick deterioration, financial waste for the investors.

Infrastructure of the region has to ensure the sense of consistency between localities in the region and between technical infrastructure and public facilities, utilities to serve IPs. Apart from that, it is needed to focus on developing synchronously the system of social infrastructure to meet the need and the ability to serve in the long-term such as schools, hospitals, markets, public works and services. The central economic-cultural role of such big cities in the region as Thua Thien Hue, Da Nang, Quy Nhon, Nha Trang, Phan Thiet should continue being constructed and improved.

On the other hand, it is vital to strengthen inspection and monitoring of the implementation of the environmental laws in IPs as well as handling the violations in strict manner. Concurrently, the adjustment of sanctions to ensure deterrence against violations of environmental laws should be taken into consideration. The capacity of environmental management for each IPs management unit at provincial level should be improved in terms of human resources and equipment in order to administer the environment more actively. It is needed to ensure the consistency and coordination between IPs, the localities in the region.

Fourth, it is important to take step-by-step to facilitate the system of logistics of the region in order for the development of IPs and fostering the competitiveness of the region.

Currently, for Vietnam in general and 09 localities of the Central Coastal region in particular, the system of logistics has not developed, suffered from the lack of synchronism and effectiveness. This has caused the difficulties in developing IPs and EZs in the region.

Logistics system consists of the overall institutional framework, logistics-supplying enterprises, logistics-employing enterprises and the system of infrastructure. For the Central Coastal region, first and foremost, it is needed to concentrate on constructing and developing synchronously the logistics infrastructure and training the human resources for logistics. Up to now, the whole region had 13 deep-water seaports, 06 airports, 07 EZs and high-tech zones, 52 IPs and the system of road (including 09 national highways), railways, airways, waterways… is distributed and extended along the coast, comprising closely 44% the length of the country…

For the roads, national highway system and provincial routes, it is needed to build at the proper technical level, expand and construct new highways with high capacity of transport, towards to building a system of highways, provincial and inter-province highways connected to IPs in the region. Besides, it is also needed to develop means of transport matching with types of commodities and customers. For the railways, the existing system of railways in the region should be upgraded and renovated, new railways connecting to the seaports, IPs should be constructed. For marine routes, the current system of seaports of the region is in small scale, having the out-of-date technical infrastructure and less effective management, exploitation. Thus, a reasonable system of seaports should be constructed on the basis of the internal-region coordination and connection with the whole country as well as ensuring the sense of modernity and meeting the need of developing IPs in the region. Additionally, it is important to invest in the development of shipping fleets and marine industry in some reasonable localities.

Training the human resources for the system of logistics of the region is considered as the vital and sustainable factor of the logistics industry. Hence, the whole region has to build up the detailed strategy of training human resources with apparent steps in order to meet the need of development of the system of logistics in the region.


Today, the economic linkage is becoming an objective trend for locals, regions and nations. In recent years, 09 localities in the Central Coastal region have actively fostering the linkage between each other for development. The localities in the region have established the Boards of Coordination, the Operation Funds and commitment of operation for the development of the region. In fact, numerous solutions have to be implemented synchronously, of which the development of linkage between IPs is the crucial solution. To develop the linkage between IPs effectively, the solutions to adjust the planning and allocation of labors in the regional scale should be conducted to provide the basis of allocating investment; the linkage could be strengthened through producing mechanisms, policies to attract investment in the development of IPs in the region; the technical and social infrastructure should be constructed synchronously; and the system of logistics should be facilitated step by step to develop IPs and enhance the competitiveness of the region and the country.


PHAM PHU MINH & HOANG VAN CUONG - Central Institute for Economic Management (CIEM), Ministry of Planning and Investment of Vietnam

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