Industrial Zones (IZs) in Vietnam is a popular destination for foreign investors. But what are they? IZs are locations earmarked by Vietnam’s government for the industrial production of goods and services.
Investors often locate in an IZ because IZs often have regionally competitive facilities, infrastructure, and logistics. Foreign-invested companies are also able to tap into resources provided by the IZ as well as cost savings and financial incentives.
Nevertheless, IZs differ significantly according to location, structure, incentives, and so on. Investors choosing to set up in an IZ should evaluate IZs closely in order to find a location that best suits their needs. Investors should consider several factors when making a choice about where or if an establishment in an IZ makes sense for a given investment.
Learning more about IZs is increasingly important.
With investors moving factories to Vietnam, the domestic property market has experienced a boom – with prices steadily rising. Ready to build factories were in the highest demand, which recorded more than an 85 percent occupancy rate. Binh Duong and Dong Nai in the southeast are the markets with the highest demand, given their access to transport infrastructure.
Here, we highlight and compare three industrial zones in the north, central and southern part of the country which foreign investors can begin examining. This introduction can provide you and your team a good basis to begin assessing your next investment destination.
Northern spotlight – Dinh Vu Industrial Zone
Hosting over 420 investment projects – representing a cumulative value in excess of US$10 billion – Dihn Vu Industrial Zone (DVIZ) is a well-established option for expansion to northern Vietnam.
In addition to successfully hosting industry champions such as Chevron and Tamada, the completion of Lach Huyen Deep seaport – capable of docking ships up to 100,000 TUE – places DVIZ in direct proximity of northern Vietnam’s largest point of sea-based egress.
Dinh Vu specializes in petrochemicals and heavy industry. Investors in the park include Petrolimex, Petro Vietnam, Nakashima, and Bridgestone, among others.
Resources for investors
Investors in DVIZ benefit from access to utilities and regulatory assistance that ensure operations function at full capacity. For firms seeking quick alternative sources of production, the ability to procure ready-made factories, and tap into Hai Phong’s highly skilled labor pools, ensure operations can be started and staffed in a timely manner. Exporters benefit from close proximity to Cat Bi International Airport, the newly constructed Highway 5, and proximity to the Chinese border.
Cost savings instruments
For companies interested in leveraging Vietnam’s cost competitiveness to its full potential, unconditional tax holidays present direct cost savings opportunities that can be factored into costs immediately. Within Dihn Vu, all investors are entitled to a four-year tax holiday on Corporate Income Tax, followed by nine years at 50 percent of the going CIT. Furthermore, enterprises exporting 100 percent of their goods to international markets qualify for a 100 percent exemption for import and export duties as well as a free VAT on certain purchases.
Central SEZ spotlight – Hoa Khan Industrial Zone (HKIZ)
The Hoa Khan Industrial Zone (HKIZ) in central Vietnam offers investors access to a variety of Vietnam’s largest cities, as well as international export destinations via the North-South Railway at Da Nang Station, access to Han River Port, and proximity to highways 1A and 1B.
HKIZ specializes in mechanical assembly and electronics manufacturing, and hosts companies like Seto Vietnam and Truong Giang Electric. HKIZ also houses a number of companies in the petrochemicals, garments, and agriculture industries.
Resources for investors
Within the industrial zone, investors benefit from infrastructure and facilities structured to meet the needs of Vietnam’s growing industries, such as garments and electronics. This includes access to water, electricity, as well as banking services. HKIZ also benefits from a steady pool of talent from, the Central region’s business hub.
Cost saving Instruments
In addition to up to five years of corporate income tax holidays, foreign investors are able to exempt all fixed assets and other materials essential to the upkeep of machinery needed for the production of goods within the zone. These advantages have not gone unnoticed to investors. With substantial growth in recent years, HKIZ is home to over 48 investment projects from the likes of Mabuchi Motor, Truong Giang Electric, and Seto.
Southern SEZ spotlight – VSIP
Located in Binh Duong Province’s Thuan An district, the Vietnam-Singapore Industrial Park (VSIP) is a good opportunity for those looking to establish themselves in the heart of Vietnam’s economic core.
Specializing in mechanical, electric, and medical equipment, the park has been a massive success in recent years – attracting 238 individual projects with a total value of US$2.6 billion.
Resources for investors
The park successfully integrates industrial, commercial, and residential facilities in a manner that meets the needs of a variety of investors. Within the park, investors benefit from access to an onsite customs office, ready built factories, as well as an educated workforce sourced from the Vietnam-Singapore Vocational College. These services are complemented by close proximity to the north-south railway, Ho Chi Minh City’s Tan Son Nhat International Airport, and multiple points of sea-based transport, including Saigon Port.
Cost savings instruments
To further incentivize investment, a series of tax incentives are also offered to investors within VSIP. For the first two years, investors have waived the requirement to pay any CIT. Following this two-year period, CIT is required, but at a discounted rate.
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