HCM City needs to upgrade industrial zones to attract FDI: experts

Hiep Phuoc Industrial Park in Nha Be District, HCM City. The city has 17 export processing zones and industrial zones with a total area of more than 2,570ha. - VNS Photo Van Chau

Their infrastructure, mostly built in the 1990s, had deteriorated, especially wastewater treatment facilities, with a number of central wastewater treatment systems being found to violate environmental regulations, Truong said.

Many companies seeking to expand could not find enough land for lease in them and rentals were too high compared to EPZs and IPs in neighbouring provinces. Roads near EPZs and IPs were often overloaded, leading to higher production costs for their tenants and reducing their competitiveness, Tran Trong Tien, a representative of enterprises in Tan Thuan Export Processing Zone said.

Other problems included flooding, lack of schools, accommodation and medical facilities for workers and their families, Tien said.

The limited availability of skilled IT and management personnel was also an issue.

To address these problems, administrative procedures related to investment, labour and construction in the EPZs and IPs needed to be simplified to attract foreign investment.

The quality of life and working environment for workers needed to be improved.

Dao Xuan Duc, deputy head of the HCM City Export Processing Zones and Industrial Parks Authority (Hepza), said the city would make all EPZs and IPs green, clean and hi-tech by 2025 and build new hi-tech zones for supporting industries.

The city targeted having 23 EPZs and IPs with an area of around 6,000ha by 2020.

Priority would be given to current investors in hi-tech, Industry 4.0 technologies and parts supply industries with high value-addition.

Losing sheen

The city is losing its advantages over neighbouring provinces, and one of the main reasons is its high land rental rates.

The average rental in its EPZs and IPs is US$120 per meter square. In comparison, it is $74 in Dong Nai Province, $73 in Long An and $43.7 in Binh Duong. The city needs to improve the efficiency of land use to reduce rentals and also strengthen linkages with other zones in the southern region, Trinh Ngoc Vu an expert in economics said.

Last year the city’s EPZs and IPs attracted $772.3 million worth of investment, but only $290.8 million worth of foreign investment, a drop of 25.8 per cent from 2017, according to Hepza.

Most projects were in technology-oriented industries, including food processing, chemical-rubber, information technology, and supporting industries.