HCM City IZs, EPZs: Leverage for Industrial Development

Ho Chi Minh City was the first locality in Vietnam to experiment with the export processing zone model. After 18 years of development, industrial zones (IZs) and export processing zones (EPZs) in HCM City have become attractive destinations for both domestic and foreign investors and play important roles in drawing investment, creating an important capital source for socioeconomic development investment and diversifying investment sources for infrastructure development. The number of investment projects and amount of investment capital in IZs and EPZs has increased steadily and reflects investor interest in a good investment destination.

Currently, the city has 16 EPZs and IZs with a total area of 3,614.23 hectares, of which 13 operational IZs and EPZs have leased 1,165.26 ha out of 1,609.95 ha, or 72 % of rentable area; two IZs (namely Phong Phu and Dong Nam) are underway and one industrial park is also in the pipeline. By the end of December 2009, EPZs and IZs housed 1,168 projects with total investment capital of over US$5.4 billion. The development of EPZs and IZs is a driving force for economic development and restructuring toward increased industrial production and export value.

While EPZs and IZs in the city mainly drew small and medium enterprises and labour-intensive industries like garment production and electronic assembly in the initial years, after that the city focused on projects heavy on science and technology. EPZs and IZs in the city have attracted 473 foreign investment projects worth US$2.7 billion, accounting for 40 % of total projects and 58 % of investment capital in EPZs and IZs, and 10 % of FDI capital in the city. Foreign investors mainly invest heavy industries like mechanics (28 % of registered capital), electricity – electronics (19 %), pharmaceutical chemistry – advanced plastic rubber (15 %), services (13 %), processed food (12.8 %) and textiles (10 %).

Many enterprises in the EPZs and IZs use advanced production technology, machinery and equipment. Since 2000, new and modern technologies have been imported into IZs and EPZs, especially in the fields of high-tech automation like precision engineering, chip manufacturing, and sensor research and development.

Besides, EPZs and IZs have housed 695 domestic investors with US$1.98 billion, accounting for 60 % of projects and 42 % of capital in EPZs and IZs. The Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) consistently creates favourable conditions for tenants to expand production and business activities.

One important achievement of EPZs and IZs after 18 years is the rapid export revenue growth. The accumulated export revenue of EPZs and IZs reached US$19.982 billion, accounting for 14 % of the city’s export turnover, and this proportion grows year after year. Companies in EPZs and IZs export to stable and high potential markets like Japan, the United States, China, Spain, South Korea and the EU. In addition, EPZs and IZs have created jobs for over 249,812 people, apart from the thousands of people working outside EPZs and IPs and for suppliers for companies in EPZs and IZs.

EPZs and IZs are being expanded with higher levels of technology and business administration. They have created the leverage for the industrial development of in the southern region and the country as a whole.

Tags: HCM city industrial parks, HCM city industrial zones, Vietnam Industrial Parks, Vietnam industrial zones