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What is industrial – urban – service complex?

Due to its advantages when integrating industrial development with urbanization, establishing a living and working environment for experts and workers, the model of industrial – urban – service complex is opening up new developments for second and third-generation industrial parks in Vietnam. In this article, ATIM LAW FIRM will synthesize the most basic information regarding industrial – urban – service complex in Vietnam.

As the name implies, the industrial – urban – service complex is a combination of three factors: (i) industrial development, (ii) urbanization to ensure the sustainable development of the industrial park and (iii) create a living and working environment for experts and workers. This model not only contributes to the efficiency of land usage, but also facilitates population growth in already crowded and congested metropolitan centers. It is, therefore, not difficult to understand why the industrial – urban – service complex is one of the new generation industrial park models that is grabbing the interest of state agencies as well as domestic and foreign investors.

What is industrial – urban – service complex?

The concept of industrial – urban – service complex has emerged and been officially recognized in Vietnam since the ratification of the Decree No. 82/2018/ND-CP of the Government dated May 22, 2018 on the management of industrial parks and economic zones (“Decree 82”). The regulations on industrial – urban – service complex, then, continued to be inherited and supplemented by Decree No. 35/2022/ND-CP (“Decree 35”) of the Government dated May 28, 2022, which superseded Decree 82.

According to Article 33 of the Decree 35, “an industrial – urban – service complex encompasses industrial, urban, service functional zones. Amongst these sections, industrial parks play the key role; urban and service zones play the supporting role, providing services, public or social utilities or amenities for normal operation of industrial parks”.

An industrial - urban - service complex is usually organized into two (02) main functional areas on a synchronous technical and social infrastructure, including:

Industrial park: remains in the central core, specializing in industrial production and offering services for industrial manufacturing[1]. Investment projects in industrial parks in the model of industrial – urban – service complex must ensure that they do not cause environmental pollution[2] and avoid adverse effect on urban – service area. Specifically:

• Medium and low construction density, maximum 50%;
• High percentage of trees and open space, at least 15%;
• The public works system fully satisfies the common needs;
• Adopt environmentally friendly technology and thoroughly treat industrial wastes in industrial - urban - service complex.

Urban – service area: Including functional areas such as houses; education, training and research works; medical works; cultural and sports facilities... plays an auxiliary role, providing utility and social services for industrial parks. Whereby,

• The size of the area of ​​the urban - service area must not exceed 1/3 of the area of ​​the industrial park and must be built in accordance with the urban planning of local government at the level of province[3].
• Construction density and height need increasing to ensure efficient land use in a "compressed" urban style;
• Developing types of housing and constructing basic social infrastructure for expert and workers are prioritized
• Using environmentally friendly technologies and connecting to the infrastructure system in the industrial park.

Current status of industrial – urban – service complex in Vietnam

In Vietnam, there have appeared a number of industrial – urban – service complexes, the most notable of which is the group if VSIP industrial parks established based on the joint venture investment between Becamex IDC Corp (Vietnam) and Sembcorp Industries (Singapore), forming VSIP industrial parks in the provinces of Bac Ninh, Binh Duong, Hai Phong, Quang Ngai, Nghe An, Binh Dinh.

Apart from VSIP industrial parks, other names can be mentioned such as Phuoc Dong Industrial – Urban – Service Complex (Tay Ninh), Becamex Binh Phuoc Industrial Complex (Binh Phuoc), Industrial and Urban Park (Long An) ...

However, these titles only represent a minority of the existing industrial parks in Vietnam. For the most part, the current industrial parks are planned with empty premises or rudimentary factories, lacking necessary services to deploy production as well as support workers’ daily lives. In several provinces, it is simply believed that establishing industrial parks, export processing zones and economic zones is only for the purpose of providing premises and factories for investors. They have not yet developed a business ecosystem or a business-assistant area complying with international quality standards.

Prospects for development of industrial - urban - service complex in Vietnam

The outbreak of COVID in the past years has contributed to the modification in the way of thinking and approach to the industrial real estate development in Vietnam. It is the maintenance of the traditional industrial park model, which does not solve the local welfare issues for workers such as education, health care, entertainment ect., that makes social distancing during the pandemic disrupt all socioeconomic activities.

According to the target of the Ministry of Natural Resources and Environment, by 2030, Vietnam is expected to dedicate around 210ha of land to industrial parks. Along with that, the construction of industrial park planning must be synchronized with urban and service development, distribution of population and housing in a comprehensive, unified plan. Thereby, creating a foundation for luring investment in infrastructure development on the basis of advantages, conditions and implementation capabilities.

Currently, in some localities, planning for the model of industrial – urban – service complex has been noticed and developed. Governments in Ho Chi Minh City and Dong Nai are proposing projects to construct industrial – urban – service complexes or renovate traditional industrial parks in the direction of integrating urban – service areas. These can be considered as positive signals for the development of this model in the future in Vietnam.

Ly Tran - Paralegal