Outstanding outcomes of IPs’ development
IPs and EPZs have been established and improved in the context of innovation and economic integration which have derived from the correct policy of the Party and Government on building up a breakthrough model of attracting investment, enhancing the industrial growth, restructuring the economy towards the direction of industrialization and modernization.
Through 25 years of establishment and development, the practical benefits of IPs and EPZs have been determined vividly with crucial contributions to the domestic economic development, which have been presented in terms of the economic, environmental and social fields such as: IPs and EPZs have assisted to mobilize the eclectic volume of investment from domestic and foreign economic entities, supporting the industrialization and modernization. Annually, the quantity of foreign direct investment (FDI) into IPs, EPZs and EZs comprises 35-40% total additional registered FDI of all countries; the industrial sector solely accounts for 80%. IPs and EPZs have also created a relatively complete system of infrastructure, assisting to modernize the infrastructure system of the whole country. Particularly, IPs, EPZs have made the significant contribution to the growth of manufacturing sector, raising the export value and the economy’s competitiveness; restructuring the economy of each local and the entire country towards the direction of industrialization and modernization.
According to Ministry of Planning and Investment: The GDP accumulated up to September, 2016 is anticipated to accelerate by 5.93% compared to the same period last year, continuing the upward trend of quarterly GDP (The first quarterly GDP increased by 5.48%; the second one augmented by 5.78% and the third one is forecasted to escalate by 6.40% which is still lower than 6.53% of the same period of 2015.
Accumulating to September, 2016, the whole country possessed 324 IPs (including: 44 foreign IPs and 280 domestic IPs) with the total area of natural land of 91.8 thousand ha; 16 EZs with the entire area of land and water surface of approximately 815 thousand ha. Of which, 220 IPs have been already in operation with the total area of natural land of 59.6 thousand ha and 104 IPs in the process of compensation for site clearance and construction with the whole area of natural land of 29.7 thousand ha. The entire area of leased industrial land of IPs is 31.8 thousand ha, the occupancy rate of the total IPs comprises 50%; IPs which have been already in operation solely have the occupancy rate of 73%.
The IPs have been established in line with both the national planning of IPs’ development and the local planning of land usage and industrial development. In terms of the allocation of IPs, the Southeast region of Vietnam had the largest number of IPs of 109 (constituting 34% total IPs), accompanied by those of Red River Delta and the Southwest region of Vietnam with 83 IPs (comprising 26% total IPs) and 52 IPs (accounting for 16% total IPs) respectively.
The total area of released land to implement investment projects in coastal EZs reached well over 30.000 ha, constituting 40% total area of land which is used for industrial manufacture, tourism and services in the coastal EZs.
Of 324 projects of constructing and facilitating the infrastructure of IPs in the whole country, there were 44 projects with FDI and 277 ones with domestic investment whose total registered investment obtained 3.46 billion USD and 240 thousand billion VND correspondingly. The whole disbursed investment in the infrastructure of IPs had already reached 1.51 billion USD (equivalent to 44% total registered FDI) and 93.5 thousand billion VND (equivalent to 40% total registered domestic investment).
The whole registered investment in the infrastructure of the coastal EZs was 155 thousand billion VND, of which the domestic investment reached 133 thousand billion VND (constituting 84% total investment) and the FDI obtained 1.1 billion USD (comprising 16% total investment).
Obviously, the guidelines and policies of the Party and Government and the effort to manipulate and operate the process of manufacturing and business of enterprises in IPs have resulted in positive outcomes, critically contributing to the economy as regards the economic growth, export improvement, state budget revenue, job creation and solutions to social concerns. Besides, IPs have supported to strengthen the process of industrialization and modernization; economic restructuring and make our country as an impoverished and less-developed nation become the country with low-average income.
Some drawbacks of developing IPs, EPZs
The dramatic development and substantial contributions of IPs are undeniable. The process of developing IPs in the past time, however, experienced some disadvantages such as:
First, the scale of IPs was not compatible with the general development orientation. The condition to improve the IPs has not been completed conveniently, leading to the reduction in the development effectiveness of IPs.
The development planning of IPs possessed the orientation of industrial space layout on the basis of the major orientations for the promotion of sectors on the local and national scales. The development of IPs in each local (from planning to implementing), nevertheless, mainly resulted from practical requirements of attracting investment of locals and enterprises, not from the feasible needs and capabilities of development (with specific conditions) under the planning/orientation of developing relevant sectors. The planning of IPs’ development has not gone along with the planning of evolution for urban, residential areas, social infrastructure; paid less attention to maintaining the feasibility between the planning of each IPs and the planning of houses, public buildings serving the lives of workforce in IPs… This has caused the destructive influences to the sense of sustainability in IPs’ development. In various cases, the investment in IPs has not come along with the development of other prevalent sectors, contracting the efficiency of IPs.
The preparation for the establishment of IPs also suffered from inconveniences in terms of: the deficiency of skilled administrative officials; the scarcity of skilled workforce who could require the business requirements in IPs; the shortage of preparation for calling for investors. The implementation of construction of infrastructure in IPs under the approved planning has not been monitored strictly, leading to the fact that locals and investors did either not fulfill the obligation to comply with the planning or not construct the adequate number of work items planned (such as waste water treatment system…).
Second, IPs have not built up the linkage clusters of industrial manufacture, not attracted supporting companies for the key industrial sectors. The sector attracting orientations of IPs have been determined similar (processing of agricultural products, garments, mechanics, electronics...) and the sense of diversity and specialization in each IPs received less attention… Thus, when businesses go into production, the products will be the same, leading to the unnecessary competitiveness, while the supplier industries for the key industrial sectors have not attracted a series of companies.
Third, the system of technical infrastructure has been inconvenient. The fact that the infrastructure in IPs requires the huge amount of investment, direct economic benefits are not enormous, the duration of construction often last long… has caused the decline in the sense of compatibility (regarding space and time), leading the low effectiveness of infrastructure and then directly influencing negatively the development of IPs.
Fourth, the work of resettlement and livelihood possibility of individuals who experienced the land acquisition for the establishment of IPs have suffered from difficulties.
The compensation and site clearance have experienced the obstacles, complexity due to objective and subjective reasons namely: the delays in the dissemination of planning and land usage to the people, leading to complaints and disputes on land, subsequently to affecting the progress of compensation for site clearance and overall progress of the project; or because of the overlap of planning (planning of electricity, transport,...), causing the confusion among state agencies in the implementation of planned IPs…
In some areas where the farmers have lost their land and encountered unemployment, the unemployment is not mainly because of the land acquisition for IPs. In real, the operation of IPs has created a significant number of jobs of about 2.6 million directly and indirectly. The main reason is that IPs and urban areas require young labors with highly-qualified technical expertise which most farmers with land acquisition cannot satisfy. The companies often recruit young staff who already just graduated from high schools and possesses qualified professional training.
The work of resettlement and livelihood situation after land acquisition for IPs has still encountered many difficulties. People with land acquisition often encounter the shortage of productive land, unstable lives... especially, a part of whom cannot secure suitable jobs or receive help from local authorities. Due to the scarcity of land for agricultural production, the individuals have tended to deposit the compensation money in banks or spend it constructing houses; purchasing unprofitable assets… This could cause some farmers to suffer from difficult circumstances.
Fifth, workforce issues in IPs. The supply of labor for businesses in IPs has been experiencing the conflict. Meanwhile, there is the shortage of skilled labors; the number of employees who needs jobs is still profoundly redundant. To address this situation, the business owners have to recruit labors from other destinations or organize training courses for workers to meet business requirements. Not only has this caused difficulties for enterprises but this also has provoked complex concerns for local governments in labor migration.
The general situation in most of the country's IPs is not to tackle housing issues for workers, influencing the labors’ psychological, health and environmental conditions (social security and protection…). Workers from other provinces often rent accommodations around IPs for residing with inadequate living conditions. Due to the large scale of investment, slow capital recovery and low efficiency of investment, few companies are willing to participate in constructing residential areas for workers.
Some enterprises in the IPs are not serious in complying with the policies, legal regulations on labors; problems of labor contracting, extending the probationary period, long working time in days, slow changes in the salary policy… This has had the negative impact on the living conditions and livelihood possibility of workers and their families.
Sixth, the environmental protection in IPs has not improved. Numerous IPs have not satisfied the environmental standards prescribed.
IPs are the concentration of industrial companies of other sectors where will certainly experience the discharge of hazardous solid, liquid, gas wastes. The waste treatment in various IPs has been unqualified and not fulfilled the standards of waste classification according to the treacherous degree. The types of hazardous industrial waste have not been thoroughly treated. Especially in some factories manufacturing packaging, chemicals, plastics ..., solid waste, mainly plastics, solid chemicals, plastics, rubber, is persistent substance, jeopardizing the environment of water surface and ground water which has not been administered, classified and treated thoroughly. Besides, a large amount of construction waste released within the process of building the infrastructure of IPs and production factories has not also been processed synchronously.
Seventh, the legal framework still suffers from shortcomings. Despite having varied positively, the state management has still experienced the confusion, significantly affecting the development of IPs and the individuals’ livelihood possibility. The policies on IPs’ development in order to create favorable climate for investment and business production for domestic and foreign enterprises are slow to be renovated to suit the new situation...
Some solutions for sustainable development of IPs in the future
To develop sustainably IPs in the future, it is of necessity that solutions below should be conducted simultaneously.
First, it is needed to review, update and then supplement and adjust the approved planning of IPs. In the process of reviewing, supplementing, adjusting the master planning, it is essential to first consider the national benefits and aim at enhancing national competitiveness. With such a viewpoint, it is needed to focus on areas or regions with adequate conditions and obvious advantages.
In the master plan, it is crucial to pay special attention to the development capabilities of IPs because these are IPs which can utilize the land resources with the highest effectiveness; to orientate the classification of IPs as to select the different supports; to orientate to develop specialized IPs, reduce general IPs.
Second, the mechanism and policies to develop IPs should be continued to complete with the orientation of strengthening the decentralization, authorization from the Central to local levels in strict line with the mechanism of allocation of responsibilities and clear, transparent coordination between central agencies and localities. Simultaneously, strengthening State management system in the central and local levels to ensure sufficient authority and resources to moderate the IPs in the direction of a door, a clue, helping to satisfy the compatibility with the increasing role of IPs in the process of industrialization and modernization of the country.
In particular, the investment incentives and the income tax for businesses who invest in IPs in disadvantageous areas should be consistent and clear to attract and create the reliance for investors; simultaneously ensuring to fulfill empty areas in IPs and promote the quality of investment in IPs by policies of stimulating projects to create products which possess the sense of competitiveness and sustainable development.
Third, the quality of infrastructure in IPs should be enhanced in the direction of synchronizing the system of technical infrastructure and public utilities serving the IPs; associating the infrastructure inside and outside the boundary of IPs. Apart from, it is critical to diversify financial sources to invest in the infrastructure of IPs, facilitate maximally the attraction of FDI.
Fourth, the occupancy rate of IPs should be gradually raised. The localities should strictly implement the provisions of Decree No. 164/2013/ND-CP dated November 12th, 2013 on amending and supplementing some articles of Decree No. 29/2008/ND-CP dated March 14th, 2008 of the Government on IPs, EPZs and EZs, the conditions to expand the IPs is that the IPs have to satisfy the minimum occupancy rate of 60%. Moreover, it is needed to review the whole planning of IPs in the recent years with the aim of minimizing the establishment of new IPs to focus on promoting investment, removing difficulties for companies in IPs.
The localities also need to offer assistance after licensing, supporting the procedures of leasing land. Besides, the attention should be paid to help enterprises with legal supporting services. Enterprises should also actively attract investment, such as improving marketing, market promotion...
Fifth, the quality of attracting investment in IPs should be improved. It is needed to prioritize the attraction of industrial sectors which possess high technical content, eco-friendliness; other sectors which are determined as key and advantageous sectors to Vietnam and in accordance with the process of restructuring economy and investment of the country. Strengthening the sense of sectoral linkage in the development of the IPs; the establishment of sectoral linkages helps improve the operation effectiveness of IPs, then gradually forming the supporting industries to contribute to the restructuring of the local economy.
Sixth, the authorities need to further strengthen the work of inspection and testing legally the environmental protection in the IPs and sentence strictly enterprises which break the laws as well as suspend the operation of businesses under the legislation. The performance of assessing the environmental strategies and environmental impacts on strategy, planning, projects should be improved. Simultaneously, the construction of factories should be approved after the completion of infrastructure facilities and environmental protection facilities.
Besides, it is needed to amend and supplement the Decree No. 140/2006/ND-CP dated November 22nd, 2006 of the Government on the environmental protection at stages of formulation, appraisal, and approval as well as organize the implementation of strategies, planning, plans, programs and development projects towards clarifying the application object, strengthening supervision and inspection, testing and sanctions. In addition, it is vital to further develop the role of the authorities, political-social organizations, unions and local communities in monitoring the implementation of policies and laws on environmental protection in the local.
Seventh, it is necessary to ensure the livelihood possibility for people with land acquisition.
For authorities at all levels, it is needed to impose policies that support people in transferring the livelihood possibilities such as employment policies, the social welfare policies... In particular, the issue of job creation for employees after losing productive land is critical. With workers who are still available for recruitment, there should be preferential policies for career change and recruitment priorities so they can secure jobs in IPs. With those who are too old for recruitment, there should be the orientation to assist them to choose business plans and employ the compensation money effectively. All these policies will need performing prior to the land acquisition so employees can switch careers and households can change livelihood possibilities in a sustainable way right after land acquisition.
For businesses, there should be policies of training and attracting local labors to work in enterprises in IPs and these enterprises should link together to organize training courses for local people and then get them to work in their businesses. Besides, there should be policies for people to contribute capital by using the land usage rights. With this solution, the households with land acquisition could utilize the compensation money to contribute capital to enterprises which are constructed on their lands. Thus, they become shareholders of the businesses and receive benefits such as being easy to secure jobs in enterprises with stable salary and other allowances namely: physical insurance, health insurance; gaining income from the contribution of capital for companies. The enterprises also benefit from the site clearance, shortening the construction time, quickly putting the business into operation, preventing the case of delaying projects due to no achieved agreement on site clearance with residents; supplementing the additional mobilization channel for businesses.
In short, it is undeniable that the development of IPs, EPZs and EZs in Vietnam last time has created a new motivation for the country's economy. To add, attracting capital and advanced technology from enterprises, corporations of the developed countries, the development of IPs EPZs and EZs also have contributed significantly to economic restructuring, growth, value of export-import, job creation...
However, the over-growth and over-development without the convenient attention to the platform conditions linking between the development of IPs, EPZs and EZs and sustainable socio-economic development of country have created significant limitations which are needed to be tackled in the near future. For sustainable development, it is critical to implement synchronously solutions from the central to local levels, and eventually from companies in IPs. Developing quickly and utilizing benefits IPs bring out are necessary but the development of IPs should be put in line with the long-term development strategy, sustainable development of country should be prioritized.
1. The report of Department for Economic Zones Management, Ministry of Planning and Investment, Vietnam (2015): The situation of developing IPs, EZs 2015
2.The report of Department for Economic Zones Management, Ministry of Planning and Investment, Vietnam (2016): The situation of developing IPs, EZs October, 2016.
3. Ministry of Planning and Investment, Vietnam (2010): The strategy to socio-economic development 2011-2020.
4. Resolution No. 13-NQ/TW of Plenum 4th of the Party Central Committee XI.
HOANG VAN CUONG, PHAM PHU MINH, VAN THIEN HAO