Can Tho proposes IZ site change to boost investment efficiencies

Lu Thanh Dong, director of Can Tho Export Processing and Industrial Zones Management Authority

Why do we need to change the site of these industrial zones (IZs)?

Since Can Tho city in the Mekong Delta became a first-grade centrally-governed urban centre in 2009, the price of land in the city’s inner districts has jumped sharply each year. As Can Tho IZs are mostly located in inner districts and accommodate many residential homes, it takes a hefty sum to arrange compensation, land acquisition, and find a suitable land plot for resettlement of affected people.

This has significantly driven up the leasing cost that may triple those at other IZs in neighbouring localities. Besides that, it is quite complex to develop seamless infrastructure networks as long as IZ investment remains patchy.

In addition, as these IZs are located in areas regarded as having favourable conditions for social and economic development, they are not entitled to benefit from corporate income tax incentives.

What is the current state of the three IZs being proposed for a site change?

They are the 600-hectare O Mon IZ, the 400ha Bac O Mon IZ (both in O Mon district), and the 600ha Thot Not IZ second phase in Thot Not district. All three were approved by the prime minister for inclusion in Vietnam’s IZ development planning to 2015 with a vision towards 2020. These IZs, however, have yet to deploy detailed planning or grasp their own infrastructure developers.

As for O Mon IZ, this area incurs high compensation and land acquisition costs because it hosts many residential homes. In addition, the area is close to a cement plant and power grid network of coal-fired O Mon thermal power plant, doing harm to the environment, so it has failed to attract investors despite many visiting for surveys over recent years. Bac O Mon IZ suffers the same fate as its planned location is close to O Mon IZ.

In regard to Thot Not IZ’s second phase, the planned site runs parallel to the Vam Cong Bridge’s approaching road heading to the region’s Kien Giang province and National Highway 91 heading to An Giang province. This is close to Thot Not district centre, therefore, the land price and acquisition costs have remained high, failing to attract investors. Furthermore, Thot Not district urban development would pose growing pressure to IZ development in an environmental aspect.

What do the site removal proposals of the three IZs involve?

After careful survey, the Can Tho Export Processing and Industrial Zones Management Authority (CEPIZA) plans to remove O Mon IZ and Bac O Mon IZ to a new position contiguous to provincial road 922 heading to Thoi Lai and Co Do districts, crossing the Soc Trang Highway project leading to Can Tho, An Giang, and Cambodia as well as merging these two IZs into a single one with a scale of 1,000ha.

The new planned site sits parallel to newly-launched provincial road 922, crossing rice fields and mixed-use gardens with few residents. The compensation cost, therefore, would not be large. In addition, Can Tho currently has about 750ha space of agriculural land that could be turned into industrial land.

Simultaneously, Thot Not IZ’s second phase, currently belonging to Thot Not and Vinh Thanh districts, is planned to be moved deeply into Vinh Thanh district in order to curtail investment costs.

What will be the effects of the proposed IZ site removals on Can Tho’s investment attraction and socio-economic development?

The IZs moving to new positions can bring numerous advantages to local investment attraction. Along with this, the new sites are located in areas with unfavourable conditions for development, so they will benefit from corporate income tax incentives. Furthermore, land prices there are relatively low, just one third compared to the inner districts, making future IZs more competitive in land rental to attract tenants.

Not only that, these new proposed sites are contiguous to highways and newly launched roads with good infrastructure, providing impetus to facilitate goods flow of businesses and woo investors. New IZ development would help push up the pace of urbanisation in these rural areas, creating more jobs, and increasing the proportion of industry, trade and services, and from there driving the development of the whole region.

What is the current pace of legal setup related to IZ site relocation?

Can Tho People’s Committee has assigned the CEPIZA to work with relevant departments and localities to complete the project and a statement for submission to the Ministry of Planning and Investment seeking approval to the Can Tho IZ revised planning proposal.

Meetings were also held with IZ infrastructure firms to revise the implementation of licensed projects, land lease, and re-lease situation at IZs in the city to report to the city authority, from there assessing the actual demands of businesses and the areas that should receive priority for development. This particularly regards to green businesses that can take the initiative in developing material areas to feed IZ development requirements.