Revamping IZ management to meet investment appetite Revamping IZ management to meet investment appetite

Investors are calling for significant improvements to the operations of management boards of Vietnamese industrial zones to accelerate administrative procedures and better meet the tremendous appetite for investment.

Management boards are supporting financiers and businesses to carry out administrative procedures related to setting up projects in the industrial zones (IZs), export processing zones (EPZs), and economic zones (EZs). However, their support has been criticised by investors.

Nguyen Mai Dung, deputy director of Nam Anh Trading JSC said, “Our dossier had met all requirements of Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA), but we were requested to redo it over and over again. Moreover, the official of the authority asked us to revise the application, but did not clarify how,” said Dung.

Nam Anh is one of Vietnam’s leading dye and textile manufacturers, supplying for local and foreign fashion companies in Japan, South Korea, Germany, Australia, and the United States.

In addition to the factory in the southern province of Dong Nai and some warehouses, the company wants to build another factory and a research and development centre in Ho Chi Minh City, but remains stuck with administrative procedures.

“HEPZA may often support large domestic and foreign-invested companies, but there is precious little help for us small-sized enterprises. We felt left alone by the authority and gave up on working in the local IZs after 6-8 months of doing paperwork without any result,” said Dung.

Nam Anh is one of many businesses that cannot deal with management boards and are not satisfied with their support. The performance of these boards was discussed by the Ministry of Planning and Investment (MPI) at a meeting held in early July on building a draft decree on the management of IZs and EZs.

According to MPI Deputy Minister Nguyen Thi Bich Ngoc, the draft decree considers the role, performance, and necessity of these management boards across the country.

A representative from the MPI’s Investment Promotion Centre (IPC) claimed many management boards do not carry out their functions very well. “For example, some IZs and EZs in the northern provinces of Bac Giang, Bac Ninh, and Hung Yen were designed for electronics manufacturers and relevant suppliers. But sometimes, textile and garment or other industries were still approved to set up factories,” the IPC representative said.

“Besides this, their investment promotion activities are too poor. They leave all tasks to central and local governments, including the MPI, or the IZ developers,” he added.

Lam Dieu Tam Hieu, deputy general director of Kizuna JSC, one of the pioneers in serviced factory solution in Vietnam, told VIR that such management boards should change their mindset in a more positive direction to support companies to operate smoothly and efficiently and improve the management efficiency. “With the influence of IT, there is now also a higher demand for a transformation in organising production lines and trading goods of manufacturers in IZs and EZs,” Hieu said.

According to him, to maximise the management boards’ efficacy and support manufacturers in their localities, it is necessary to create opportunities to develop new IZ models such as low-rise serviced spaces and multi-floor warehouses. The boards would also need to propose investment incentive policies to effectively exploit the land and improve direct support services to manufacturers.

“Moreover, these boards need to build and digitalise the databases of all manufacturers and labour forces in their zones, facilitating effective communication and business management on IT platforms,” Hieu said.

He also advised management boards to prepare, consult, and submit reports to ministries, sectoral administrations, and provincial people’s committees for them to approve and implement legal documents, policies, and planning schemes related to the investment and development of IZs and EZs.

“Within their decentralised powers, management boards should cooperate with concerned agencies in conducting technology inspections, evaluations, and transfers in investment projects,” Hieu argued.

As of the end of April, 575 IZs were approved by the prime minister with a total area of 219,500 hectares, in addition to 18 coastal EZs across 17 cities and provinces with a total area of 853,000ha and 26 border EZs, according to the MPI.

These special zones have been mobilising huge investments and have been the driving force for development and economic growth. As of the end of April, more than 20,000 local and foreign-invested projects in these zones had the total registered investment capital of nearly $340 billion.

Pham Minh Phuong – Director, Hai Duong IZs Management Authority

Management boards of these zones in general, and especially in the northern province of Hai Duong, have done well to become a single window and one-stop shop to further lure investment.

When investors arrive in Vietnam from elsewhere, which can be much different from their home country in terms of language, culture, and working style, it will be harder for them if they have to travel to a variety of places to work with authorities and handle issues related to land, planning, registrations, and so on. Management boards are therefore friends supporting businesses to help overcome all challenges.

However, there is trouble in Hai Duong. Most of the other cities and provinces have already developed their own public administrative centre, while all agencies and authorities of Hai Duong have yet to gather in one place, so all dossiers of departments and authorities have to be sent from various places, wasting a lot of time and money.

Bui Minh Tri – Director, Binh Duong IZs Management Authority

At present, although numerous administrative procedures have been simplified and digitalised to facilitate investors to register investment and develop their projects, single window and one-stop shop models at management boards are still promoting their roles to support investors conducting administrative procedures and business activities.

The powers of these boards are quite important right now to formulate programmes for promotion of investment in development of such zones, and cooperate with people’s committees and the Ministry of Planning and Investment to implement.

We often forecast the demand of employees working in these facilities and cooperate with competent authorities to supply human resources to manufacturers there. Technology inspection, evaluation, and transfer activities are also under the decentralised power of the management boards.

Businesses are also satisfied when attaining certificates of origin for goods produced there, and granted labour permits by management boards.

Hua Quoc Hung – Ho Chi Minh City Export Processing and Industrial Zones Authority

Over the years, the single window and one-stop-shop mechanism has contributed to reform and simplified administrative procedures, creating favourable conditions for business activities which investors highly appreciate.

However, implementation still has many obstacles, mainly on the differences in the point of view and awareness of central and city governments not yet being unified.

Secondly, the legal corridor on IZs, EPZs, and state management activities for these bodies remains insufficient and inconsistent.

In the long term, it is necessary to determine the exact position of management boards of these zones in the system of state administrative management agencies. This determination can clearly define the decentralisation and authorisation of every organ of the provincial and city levels. It also limits the overlapping functions among different bodies of each city and province.

I also suggest the government would soon develop a law for such zones to clearly define the position, functions, tasks, and organisational structure of management boards. Obstacles involving single window and one-stop shop models caused by the overlapping between specific decrees will be solved at those management boards.

Ha Van Cung – Director, Tay Ninh Economic Zone Management Authority

To improve the efficiency of the management boards and make their operation suitable to the current situation, I recommend that the Ministry of Planning and Investment (MPI) advises the government to soon amend Decree No.82/2018/ND-CP in the direction to apply a decentralised mechanism instead of the current authorisation mechanism used.

Management boards when decentralising must be based on the scale of industrial development in the localities, criteria for evaluation and ranking of investment scale, contributed capital, and number of employees.

It is necessary to soon decentralise several tasks which are now under the authority of people’s committees, such as appraisal and approval of environmental impact assessment reports, and adjusting the approved construction plan of IZs and functional zones in EZs.

The MPI should advise the government to submit the National Assembly for approval of the Law on Management of IZs and EZs as soon as possible.

Besides investing in industrial parks, Logistics properties is also need attract strong investor interest!

By Ngoc Huong, VIR