High rents at IPs, EPZs challenge retailer

Retailers have found it hard to lease land in industrial parks (IP) and export processing zones (EPZ) to open shops or supermarkets due to high rent and low profitability.

Saigon Trading Group (Satra) and HCM City Trade Cooperative Union (Saigon Co.op) said in a meeting with the HCM City Department of Industry and Trade last week that they could not expand retail services as assigned due to the challenges.

Satra deputy marketing director Nguyen Doan Phu said that the enterprise earlier planned to carry out the project in Hiep Phuoc IP and Linh Trung EPZ. However, the scheme failed as monthly rent for a 160-square- metre area in Hiep Phuoc IP was 22 million dong.

“The rent is too high while our customers are low-income earners. In addition, we cannot earn profits from the Tet season as workers return to their hometowns during the holiday;’ Phu said.

Saigon Co.op deputy general director Tran Thi Tuyet Hoa said that IP and EPZ representatives often ask for high rents, and it takes a long time for the two sides to negotiate and reach an agreement.

Bui Hoang Phuong, a representative of the HCM City Export Processing and Industrial Zones Authority (HEPZA), said that developers of such zones have leased land from authorities, and have to ask for high rents to recoup their costs.

Relevant agencies have yet to pay attention to shopping areas while setting up IP and EPZ construction projects, making it difficult for retailers to expand sale programmes, Phuong said.

The enterprises asked local government to provide incentives for the project by negotiating with IP and EPZ representatives to share profits or to give free rental initially.

The city government kicked off the sale programme last September under which stores and supermarkets would be opened in 12 local IPs and EPZs to serve workers. Satra and Saigon Co.op have joined the programme.

So far, Saigon Co.op has nearly completed the design for two shops in Hiep Phuoc IP and Linh Trung 2 EPZ. The enterprise plans to open two more stores in the near future.

TBKTSG

Tags: land rents, Vietnam economic zones, Vietnam industrial zones, Vietnam retail market