Industrial parks play an important role in helping to develop the national economy and integrate into the world economy. The article below will help you answer the question of what is industrial park, its characteristics, and its types of industrial parks.
1. What is Industrial Park?
An industrial park (IP) is a designated area, distinctly outlined and reserved exclusively for industrial development, where residential living is not permitted. It is a specially planned zone in regions with favorable geographical, natural, and societal conditions to construct and operate business production activities.
Businesses within an industrial park primarily focus on industrial manufacturing and related services to support industrial production, as governed by Decree 82/2018/NĐ-CP.
In addition to businesses providing infrastructure and public utilities along with waste management services, industrial parks are integrated with functional zones within them, such as urban service areas. These functional zones include residential areas, hospitals, schools, and research and development centers, among others, designed to support and provide social utility services to the industrial park.
Industrial parks (IPs) typically exhibit the following basic characteristics:
- No specific regulations regarding minimum or maximum area, but industrial parks usually have a large scale and can easily accommodate expansion needs.
- Primarily composed of large enterprises to serve industrial production.
- Industrial parks comprise both industrial manufacturing enterprises and service providers that support industrial production.
Industrial parks and industrial zones (IZs) are two distinct concepts in the field of industrial development, and they have several key differences:
| Criteria | Industrial zone | Industrial park |
|---|---|---|
| Scale |
10 – 75 hectares |
There are no specific regulations regarding minimum or maximum area size. |
| Type of business operation | Focused on small and medium-sized businesses, mainly engaged in industrial production, small-scale industrial and handicraft processing, agriculture, forestry, and aquatic product processing. | Mainly composed of large businesses that primarily serve industrial production. |
| Function | Manufacturing agricultural machinery parts and equipment. | Industrial production and supply of services for industrial manufacturing. |
| Establishment conditions | Construction planning must be approved by the state, and there must be an investor capable of implementing it within one year of establishment. | The industrial park construction plan is approved by the Government, and it has a comprehensive system of mechanisms, synchronized infrastructure, and comprehensive policies. |
| For export-oriented business | Not allowed to operate within the industrial zones. | Allowed to operate within the industrial parks. |
2. Roles of the industrial park
The content of part 1 has helped you answer the question of what is industrial park. So how does the role of industrial parks affect Vietnam’s industrial economy? Let’s find out more details with Du Long.
Industrial parks play a significant role and directly impact the national economic structure, as well as drive key resources to support industrial and business activities.
- Attracting investment: IPs act as strong magnets for attracting FDI. Financial resources are concentrated in these parks, meeting criteria related to location, transportation, and infrastructure services.
- Creating employment: Domestic businesses that adopt technology transferred from FDI enterprises generate a substantial driving force that stimulates outstanding industrialization. This contributes to the transition of the national economy towards a modern market-oriented economy.
- Catalyzing national development: IPs have a major impact on the economic structure shift, with the majority of sectors shifting towards industry and services, compared to agriculture, forestry, and fisheries.
- Promoting sustainability: IPs require a large labor force, leading to the creation of a significant number of jobs and a substantial reduction in unemployment rates in the local area.
- Support local area development and urbanization: Supporting services and technical infrastructure in IPs are required to develop in parallel. This change helps bridge the gap between rural and urban areas in Vietnam.
3. Specific characteristics of industrial parks
Industrial parks possess distinct characteristics that set them apart from other areas of the economy. These characteristics make them attractive locations for businesses looking to establish manufacturing and industrial operations. Below, we delve into the specific features that define industrial parks:
- A regulatory regime distinct from the rest of the economy: IPs operate under a specialized regulatory framework separate from the broader economy. This regime is meticulously tailored to cater to the unique needs of businesses within IPs, offering an array of incentives, including tax breaks and simplified administrative procedures.
- Geographically-delineated: IPs in Vietnam are geographically delineated areas, strategically located to maximize logistical efficiency and connectivity. These well-defined boundaries are not arbitrarily set; rather, they are carefully planned to ensure proximity to vital transportation networks, suppliers, and consumer markets.
- Serviced with infrastructure and utilities: These facilities typically include well-maintained roads, reliable electricity and water supply, and efficient sewage systems, among others. The presence of such ready-to-use infrastructure significantly reduces the time and financial burden required for businesses to establish their operations.
- Dedicated management system: Industrial parks are typically managed by specialized authorities or management boards. These dedicated entities are responsible for overseeing the day-to-day operations within the park, including infrastructure maintenance, security management, and regulatory compliance.
- Multi-tenant (clustering of several companies in one place): The clustering of multiple companies from various industries within industrial parks offers significant advantages. This concentration fosters enhanced supply chain collaboration, as businesses can easily interact with suppliers and customers in close proximity, leading to increased efficiency and reduced operational costs.
4. Types of Viet Nam industrial park
At present, there are six main types of industrial parks in Vietnam. Each type embraces different characteristics and roles in the overall economic development of the country, including:
- Export Processing Zones (EPZs): Export Processing Zones (EPZs) are specifically designed to produce goods for export. These zones are designated areas within a country that are established to promote and facilitate export-oriented industrialization.
- High-Tech Parks: These specialized industrial zones place a strong emphasis on fostering cutting-edge technology and promoting innovation. High-Tech Parks provide an ideal environment for research and development activities, attracting businesses and organizations looking to push the boundaries of technology.
- Eco-Industrial Parks: These specialized zones prioritize ecological responsibility and the integration of green technologies. With a strong commitment to environmental protection and sustainability, Eco-Industrial Parks aim to minimize their carbon footprint and reduce the environmental impact of industrial activities.
- Mixed-Use Industrial Parks: These parks are characterized by their unique blend, where manufacturing, residential, and commercial zones seamlessly integrate, creating a holistic ecosystem. Businesses across various sectors coexist and collaborate within these parks, fostering synergies and opportunities for cross-industry partnerships.
- Specialized Industrial Zones: These zones are meticulously designed to cater to the unique requirements of specific industries, such as automotive and electronics. These zones are precision-engineered to provide customized infrastructure and support that align with the specialized needs of the targeted sectors.
5. Status of Viet Nam industrial park 2024
The above content has helped you answer the question of what is industrial park is and some types and forms of Industrial Parks. In the next content, let’s learn with Du Long about the development situation of Vietnam’s industrial parks in the future.
As of 2023, the development of industrial parks in Vietnam is on an upward trajectory, receiving increased attention and investment from the government. These parks are becoming more organized and planned, achieving certain milestones compared to previous years.
According to a report by Avison Young, in the fourth quarter of 2023, the industrial real estate segment experienced significant growth in the market due to rising rental prices and stable occupancy rates.
In Ho Chi Minh City, the average industrial land rental price reached USD 232/m2/ lease term, with an occupancy rate of 93% of the total area. In Hanoi, the average rental price was USD 188/m2/ lease term, with an occupancy rate of 90%. Meanwhile, in Danang, the lowest rental price was USD 95/m2/lease term, a 9% increase compared to the previous year, with an impressive occupancy rate of 94%.
Statistics from the General Statistics Office highlight that FDI in the manufacturing and processing sector reached $8.4 billion, accounting for 63% of the total FDI in the first six months of 2023. There were 379 new projects with registered capital of $5.4 billion. Among the 345 existing projects, 225 projects saw an increase in capital, totaling an additional $2.1 billion.
The future development goals for this sector in the 2021-2025 period include further efforts to attract FDI, continued planning and synchronization of industrial parks, and a focus on eco-industrial parks, specialized industrial parks, and urban-service industrial parks. This approach aims to promote sustainable industrial park growth while concurrently ensuring environmental protection.
In conclusion, industrial parks play a vital role in modern economies by providing a dedicated space for industrial activities, promoting economic growth, and facilitating efficient production and distribution.
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