New IP looks to Korean investors

The Chu Lai Economic Zone is hoping that Korean investment can boost the area

In a document recently sent to Deputy Prime Minister Nguyen Xuan Phuc, Chairman of the Quang Nam Provincial People’s Committee Le Phuoc Thanh argued that the proposal would help put the industrial park (IP) on the radar of large South Korean companies looking for investment locations in Vietnam.

“The establishment of a South Korean-centric IP and township to which the province can attract industrial manufacturing and processing projects, supporting industries, infrastructure and tourism projects from South Korea, is completely suitable with global investment trends and the development plan of the Chu Lai Economic Zone,” said Thanh.

In 2012, the provincial committee first drew up plans for a Vietnam-South Korea Chu Lai IP within the existing Chu Lai Economic Zone. The province signed an agreement with a South Korean developer C&N Vina-South Korea to develop a 1,600 hectare project comprising 700 hectares for an IP, 350 hectares for a township and 550 hectares for tourism.

While much of the plan remains on paper, in April 2013 C&N Vina-South Korea obtained an investment certificate to develop the 200 hectare Tam Anh IP within the proposed Vietnam-South Korea Chu Lai IP, at a cost of $25 million.

According to the province’s documents, ten foreign investors have agreed to set up projects in Tam Anh.

“The project is small scale,” said Thanh, implying that it is difficult to attract big foreign investors to the park.

The proposal of Quang Nam shows that this province is trying to improve its investment climate in the fields of industrial manufacturing and processing, especially from South Korean companies.

According to statistics from the Ministry of Planning and Investment’s Foreign Investment Agency, South Korea is the third largest source of foreign direct investment to Vietnam in terms of committed capital, following Japan and Singapore. But in terms of project numbers, South Korea ranked top with 3,546 projects as of the end of 2013, proving that Vietnam is a popular destination for South Korean companies.

The Quang Nam Provincial People’s Committee proposal also indicates that the province does not want to lag behind its neighbouring Quang Ngai province in the race to lure new foreign direct investment. Though Chu Lai was the first economic zone in Vietnam, Quang Ngai province’s Dung Quat Economic Zone is by far the busiest in the country. This economic zone is now home to an oil refinery, a manufacturing complex of South Korea’s Doosan Heavy Industries, and an IP and township complex of VSIP – the country’s leading industrial park developer. In addition, Japan’s JFE Steel is planning to build a $4.5 billion steel manufacturing complex there, Singapore’s Sembcorp Industries is studying to build a $2 billion thermal power plant and US’ ExxonMobil in association with state-run PetroVietnam is studying the feasibility of a gas treatment and thermal power complex.

Meanwhile, the biggest project in the Chu Lai Economic Zone is the auto assembling complex of Vietnam’s Truong Hai Auto Corporation. Foreign investors have mostly overlooked Chu Lai for large scale projects.

“In this period, we need some big projects to make Chu Lai a dynamic and effective economic zone,” said Thanh.