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Dai An Industrial Zone (IZ)

A few weeks ago, the northern province of Hai Duong proposed to transform Dai An Industrial Zone (IZ) into an industrial urban township, which is being looked at by the ministries of planning and investment, construction, and natural resources and the environment. The current occupancy of Dai An IZ is 85 per cent and if expanded, about 60,000 jobs will be created in the IZ and a further 40,000 in a services zone.

The transformation into an industrial urban township is being considered to realise the concept of establishing a services zone in the IZ, run by Japanese engineering construction service provider Fujita Corporation since 2018.

That year the government issued Decree No.82/ND-CP on management of industrial parks and economic zones, including industrial-urban-service areas. These are designed to have functions such as support and provision of public utilities. The transformation of the IZ in Hai Duong is demonstrating the change in mindset of developers and localities regarding industrial property.

In addition to Dai An IZ, northern industrial property group Kinh Bac City Development Holding Corporation met with and proposed to Nghe An People’s Committee to introduce land for developing an industrial and urban area in the central province to provide more services.

In the southern provinces a few months ago, Tan Thanh Long An Investment Development JSC started construction of a 1,800-hectare industrial complex combined with urban development area in Long An province. It will offer work-live-play opportunities and enhance social interaction and liveability of residents and workers.

Talking to VIR, Le Thanh, chairman and CEO of Tan Thanh Long An Investment Development, said that the project is targeting to seize investment flows expected to return to Vietnam after the coronavirus pandemic. “The US-China trade war and the pandemic have greatly influenced foreign investment inflows. This is an opportunity for Vietnamese businesses to co-operate and receive such flows from leading and international partners,” Thanh said.

He added that the development of IZs has also been leading to the demand for residential accommodation. “That’s why we reserve one third of the total space for residential development,” he shared.

Le Thi Huyen Trang, head of market research and consultancy at JLL Vietnam, said that the model has been developing for a long time worldwide, and is suitable for countries interested in exporting. In Vietnam, after many years of evolving IZs, this is a good chance for models combining industrial and urban areas.

Currently one of the biggest players in this regard is a joint venture in the form of Vietnam-Singapore Industrial Park (VSIP). The alliance between Becamex IDC and Sembcorp Development (Singapore) has successfully deployed industrial-urban-services complexes over several years in numerous provinces across the country, including VSIP 1 Binh Duong (500ha), VSIP 2 Binh Duong (2,045ha), VSIP 1 Bac Ninh (900ha), and VSIP Haiphong (1,600ha).

In Vietnam over the years, as shown by the VSIP facilities, international developers have been leading the way in this area, and now Vietnamese developers are beginning to recognise the potential and value of the model, with numerous projects being carried out.

The largest one yet is set to be the Binh Duong Industry-Urban-Service Complex from Becamex IDC Corporation, located on nearly 4,200ha – including 1,800ha for industrial, 613ha for high-end service area, and 1,662ha for urban and resettlement areas. It is hoped construction of the venture will be completed this year, with operation to follow next year.

Another project from the corporation, approved in-principle in February, is the Becamex Binh Dinh Integrated Township and Industrial Park, which is expected to mobilise $2 billion of investment into the industrial sector. Phase 1, which will last until 2022, covers an area of about 1,425ha of industrial land, residential, and resettlement areas, while the following two years will cover 883ha for urban, services, and commercial areas.

Despite not including high-end services like those in the IZs of Becamex, the north’s largest industrial property developer Viglacera Corporation has developed a service centre and workers’ dormitory in Dong Van IV IZ in Ha Nam province, as well as Yen Phong IZ in Bac Ninh province.

Vu Cong Tru, an expert in industrial property and investment promotion, said that the model is not too popular because very few developers can carry them out.

During the evolution of this sector, previously industrial areas were always far from residential areas and concentrated in IZs. When those zones filled up, local employees are not able to meet demand and recruit have to be brought in from other provinces. And so, Tru explained, industrial urban townships are now being established, including worker dormitories and other services.

Tru confirmed the model is suitable for Vietnam’s economy, and that this model along with its advantages will attract investment from overseas. However, developers should mobilise enough money and resources to follow such huge projects.

“This will generate a lot of added value to developers, and improve the attraction of industrial property and investment climate of the country. However, in order to increase the number of industrial urban areas, they need support policies from authorities, as well as the vision and ability of developers,” Tru added.

Meanwhile Trang from JLL Vietnam said that industrial urban towhships should be located strategically, with the favourable conditions for trade, transport, and export-import to lure more employees and residents. An industrial urban area will succeed, Trang added, if there are enough residents surrounding it who commit to live there for long.