Industrial zones and industrial parks are familiar concepts in industrial park real estate. However, many investors are often confused about these two concepts. Please join us to know about the differences between industrial zones and industrial parks concept in the article below!
1. Everything you should know about industrial zones
An industrial zone (IZ) is a large area designated for industrial activities. It concentrates industrial locations, parks, clusters, and centers with similar production processes. This represents the highest level of development in industrial park real estate.
The industrial region possesses the following essential characteristics:
- Covers a large area
- Influences the domestic economy.
- Includes various forms of industry, such as industrial spots, clusters, and parks, with similar industrial processes.
- Contains both industries and supporting industries.
2. Everything you should know about industrial parks
According to 16 Article 3 of the Investment Law 2020, the industrial park is defined as an area with defined geographical boundaries, producing industrial goods and providing services for industrial production.
The industrial park possesses the following basic characteristics:
- Clearly defined geographical boundaries, separating it from residential areas.
- A favorable location with fully developed infrastructure.
- A concentration of manufacturing enterprises that can collaborate within the supply chain.
- A dedicated management system run by specialized agencies or industrial park management boards.
→ For more detailed information about the industrial park, readers can refer to the article: “What is an industrial park?”
3. 4 differences between Industrial zones and industrial parks
Industrial park (IP) and industrial zone (industrial zones) are two concepts in the field of industrial park real estate with specific differences as follows:
| Criteria | Industrial zone (“IZ”) | Industrial park |
|---|---|---|
| Concepts | The concentration of industrial spots, industrial parks, and industrial centers.
Vietnam currently has 6 IZ:
|
Focus on large enterprises serving industrial production processes.
According to Article 2 of Decree 35/2022/ND-CP, industrial parks have three types as follows:
|
| Scale | There are no minimum and maximum regulations on IZ territories.
The area is much larger than the Industrial Park, including many provinces and cities. |
There are no minimum and maximum regulations on industrial parkland areas.
The area can be up to several hundred hectares of land. |
| Characteristic | IZ functions as a unified whole. While activities within the zone operate independently, they share common goals and benefits aimed at optimizing the overall regional process. | Industrial parks Gather individual manufacturers and businesses and often have a specialized management board. |
| Role |
|
|
3.1. Concept
Industrial parks focus on large enterprises, providing services and large-scale production and contributing to the region’s economy. According to Article 2 of Decree 35/2022/ND-CP, here are the prevalent types of industrial parks:
- Export processing zone: This industrial park model specializes in manufacturing, service provision, and export activities.
- Supporting industrial park: This industrial park model specializes in producing products to support industrial production and industry services.
- Eco-industrial park: This is an environmentally friendly industrial park model. Its goal is to produce and operate in a way that reduces emissions and applies renewable energy.
- Specialized industrial park: This industrial park model specializes in the production and provision of services for the production of products belonging to a specific industry or trade. At least 60% of the industrial land area of the industrial zone is used to attract investment projects in this industry or trade.
- High-tech industrial park: This industrial park model attracts high-tech investment projects, information technology projects belonging to the list of industries and trades especially encouraged for investment according to the laws on investment, projects with technology transfer belonging to the list of technologies encouraged for transfer according to the laws on technology transfer, technology incubators, science and technology business incubators according to the laws on high technology, laws on science and technology, innovative start-up investment projects, research and development, education and training; at least 30% of the industrial land area of the industrial zone is used to attract these investment projects.
Industrial zones are the highest type of industrial territorial organization. Industrial zones focus on industrial locations, industrial parks, and industrial centers that are closely related. According to Appendix IX decision No. 73/2006/QD-TTG, According to the Prime Minister, Vietnam has 6 main Industrial zones, including:
- Region 1 – Northern midlands and mountainous regions: According to Resolution No. 11 – NQ/TW, the goal for 2030, vision to 2045, is to turn the Northern midland and mountainous region into a sustainable and comprehensive development region. Focus on green development.
- Region 2 – Red River Delta: According to Resolution No. 30-NQ/TW dated November 23, 2022, the goals are to 2030, and the vision is to 2045, focusing on developing diverse and modern industries and services.
- Region 3 – North Central region and Central coastal region: According to Resolution No. 26-NQ/TW dated November 3, 2022, target to 2030, vision to 2045, region 3The orientation of marine economic development combined with ensuring national security and defense at sea, focusing on improving industrial parks.
- Region 4 – Central Highlands Region: According to Resolution No. 23-NQ/TW dated October 6, 2022, the goal by 2030, vision to 2045, is for Region 4 to develop the agricultural and forestry product processing industry, the aluminum mining and processing industry, aluminum, and renewable energy.
- Region 5 – Southeast Region: According to Resolution No. 24-NQ/TW dated October 7, 2022, the goal is 2030, and the vision is 2045. Region 5’s development orientation focuses on developing the high-tech industry.
- Region 6 – Mekong Delta region: According to Resolution No. 13-NQ/TW dated April 2, 2022, the goal to 2030, vision to 2045, region 6 focuses on comprehensive development towards sustainability, green industry, and renewable energy.
Industrial zones represent a higher level of real estate compared to industrial parks. Investors in the industrial park real estate market can choose between industrial zones and industrial parks based on their business goals.
For instance, businesses focused on renewable energy might consider regions 1, 3, and 6, which are oriented toward green development. These regions offer incentives and support from the State and localities for investors committed to sustainable development. Subsequently, investors can select an industrial park that aligns with the eco-industrial park model to match their business direction.
3.2. Scale
There are no specific regulations on the exact size of industrial parks and zones. However, the Vietnam-Singapore Industrial Park (VSIP) model covers a broader area, spanning multiple provinces and cities, while an industrial park is generally a specific area within a single province or city, often covering several hundred hectares.
Investors should evaluate the overall development and potential of the region by checking the occupancy and vacancy rates of industrial zones. These rates can provide insights into the region’s land rental price compared to other areas.
Although there is no set limit on the size of industrial park land, investors should carefully review the planned land allocation for industrial parks in each locality. Additionally, the occupancy and vacancy rates of the industrial park should be considered to ensure that the land area is sufficient for production activities.
3.2. Characteristic
Industrial parks are characterized by a collection of individual manufacturers and businesses engaged in industrial, production, and service activities. They often have a specialized management board that monitors and develops the park. Industrial parks are often located in places with convenient transportation and developed infrastructure, ensuring convenience in production and supply chains.
The key advantage of industrial parks is the range of incentives from the State and localities, such as tax reductions, land rent reductions, investment support, etc. These benefits help investors lower business costs and make investing in the industrial park real estate more attractive.
In contrast, industrial zones are larger, integrated areas that encompass multiple industrial sites, parks, and centers. While activities within industrial zones can operate independently, they collectively benefit from regional advantages designed to optimize overall processes.
While an industrial park can be seen as a functional unit with full facilities for investors, an industrial zone represents a broader spatial concept. Industrial zones are larger and more comprehensive but do not focus on specific functions like an industrial park. The development of industrial parks is typically driven by management boards and investors, while regional development within industrial zones is usually planned and coordinated.
When deciding to invest, it is crucial to carefully research industrial zoning to ensure it aligns with the investor’s industrial development plan. Complying with the specifications of industrial zones and industrial parks not only helps investors to achieve profitability but also ensures alignment with the national goal and community needs.
3.3. Role
Industrial zones have the following roles:
- Form and develop economic regions: Serve as the foundation for creating and expanding economic regions.
- Resource utilization: Exploit and use resources efficiently to achieve economic benefits.
- National industry growth: Contribute to the advancement of national industry.
The industrial park has the following roles:
- Production and services: Produce industrial products and provide services for industrial production.
- Investment attraction: Attract investment from both domestic and foreign sources.
- Job creation: Contribute to job creation and support stable livelihoods.
- Infrastructure modernization: Modernize infrastructure and develop new urban areas.
- Skill development: Promote skill improvement and high-skilled labor, and advance technical technology.
Industrial zones have a broader, macro role aimed at the general development of the country’s economy. Meanwhile, industrial parks often focus on the local economy, such as creating jobs for workers, modernizing infrastructure, and developing new urban areas.
Understanding these roles helps investors align their development strategies effectively, ensuring smooth progress and contributing to broader community development.
4. Industrial zones and industrial parks in Vietnam
Currently, Vietnam is divided into 6 Industrial zones based on regional resources:
- Northern Midland and Mountainous Region
- Red River Delta Region
- North Central and Central Coastal Region
- Southeast Region
- Central Highlands Region
- Mekong Delta Region
The State provides tailored development directions for each region, reflecting their unique resources, characteristics, and potential. In 2022, the 13th National Congress marked a significant milestone by issuing six Development Resolutions for these regions, covering the period until 2030 with a vision extending to 2045. These resolutions emphasize that regional development must align with national strategies and planning.
Despite challenges in the real estate sector, industrial parks continue to attract significant investment. The State plans to focus on industrial park development from 2025 to 2030, with a particular emphasis on sustainability. Industrial parks are expected to play a crucial role in achieving the national goal of reaching net-zero emissions by 2050.
In the future, ecological, green, and renewable industrial parks will be prioritized. Developing sustainable industrial parks aligns with both national and global goals. Efforts will include innovation, ecological balance, emission reduction, and the use of renewable energy to meet these objectives.
→ For more detailed information about industrial parks in Vietnam, please read the article: “Industrial Park in Vietnam.”
The blog provided the latest information about Vietnam’s Industrial zones and industrial parks. We hope the information has partly answered your questions about these two types. If you want to learn more about the industrial park real estate market, please read more articles at https://dulongip.vn/.
