Dynamic regions at heart of planning

At last week’s meeting between the Ministry of Planning and Investment (MPI) and experts from World Bank Group (WB), former WB vice president Danny Leipziger highlighted the role of economic zones in Vietnam’s master planning for the rest of the decade. “These dynamic regions will be the key for Vietnam to become a high-income country, as centralised economic activities improve productivity and stimulate innovation,” he said.

In all countries, clusters of economic zones are the engines of growth such as the Silicon Valley, the Pearl River Delta, and Paris. Leipziger emphasised that over-spread investment could reduce economic yields and slow down Vietnam’s progress to become a high-income country.

“But the dynamic economic region is only effective if it is supported by institutions and mechanisms to promote cooperation among localities. Since then, the zone can fully exploit the benefits of scale and concentration of the economic efficiency, and complement each other,” added Leipziger.

Dynamic regions at heart of planning- Illustrative image (Photo: Internet)

In fact, the Vietnam Chamber of Commerce and Industry (VCCI) has initiated to strengthen the links between the four northern provinces of Haiphong, Quang Ninh, Hai Duong, and Hung Yen following the eastern expressways to form a vibrant economic growth centre of the Red River Delta region.

In the view of the VCCI, these four provinces with good performance in foreign investment attraction would mobilise investment for the whole region instead of a single locality.

Therefore, WB experts expect that the dynamic regions in the country’s master plan would offer positive effects to the whole country. These regions encourage people to immigrate from other regions and localities, which is a natural phenomenon of urbanisation for people to improve their livelihoods.

“The dynamic regions will enhance the connectivity of all localities to various regions, being one way to improve market access and creating the necessary conditions for positive spillovers to take place,” Leipziger said. He added that investing in people by providing basic public education and services to all areas is the best way to develop and strengthen links.

According to the draft of the country’s master plan, based on the major economic regions, there will be cores and poles of growth. Specifically, in the northern major economic region, the core of growth is the triangle of Hanoi, Haiphong, and Quang Ninh, and the pole is Hanoi. In the southern region, the core of growth is the quadrilateral of Binh Duong, Dong Nai, Ba Ria-Vung Tau, and Ho Chi Minh City, with the latter the pole in this set-up.

The master plan also pointed out economic corridors in all directions based on the transport systems of highways, and railways, as well as connecting cities, seaports, airports, and border gates to major economic regions and growth poles.

José Luis Irigoyen, senior director of the WB’s Transport and ICT Global Practice, took the example of China’s National Territory Spatial Planning. Irigoyen said that the dynamic urban regions are formed based on special economic areas and the opening of cities along the east coast, leading to the emergence of three large urban regions with high population density: the Pearl River Delta, the Yangtze River Delta, and the Beijing-Tianjin-Hebei region.

“The three major metropolitan areas contribute nearly 45 per cent of China’s GDP, most of China’s modern industrial output, and 70 per cent of China’s exports. Those cities have focused a lot on research and development, innovation, starting new businesses, and driving GDP growth,” said Irigoyen.

He also highlighted some determinants of the result of the dynamic regions. “In China, they have been generating spillover effects like the rapid increase in incomes in the dynamic regions and neighbouring localities through infrastructure connectivity and labour demand. Overall, prosperity is shared across the country, but regional income gaps persist, while rapid industrialisation and urbanisation are also responsible for environmental degradation, pollution, and congestion in cities,” Irigoyen said.

Industrial zone workers: realities in low-quality living quarters Vietnam currently has 260 industrial zones in operation, with 75 more being planned, for over 16 million workers that generate massively for the country’s GDP. Industrial zone and social housing developers currently only meet less than 10 per cent of the demand, with other workers forced to rent in low-quality, dark, and humid hostels. Developing social housing and housing for workers and ensuring socioeconomic development and quality of life, therefore, is deemed an urgent mission for both local authorities and industrial zone owners.

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Flurry of activity for industrial players The appearance of big names and new large-scale projects have brought positive signals to the growth of industrial property, amid the sharp increase in rent prices in industrial zones.

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