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The formation and development of Industrial Park – Export Processing Zone in Ho Chi Minh City

From the early 90s of the 20th century, Ho Chi Minh City as well as other provinces in Vietnam, after realizing the great potentials from foreign investment sources in the models of industrial parks and export processing zones, has advocated to urgently proceed constructing and developing these models. In this article, ATIM LAW FIRM will review the process of formation and development of Industrial parks and Export Processing Zones in Ho Chi Minh City throughout the historical stages.

After the Law on Foreign Investment in Vietnam was promulgated in 1987, foreign investment in Vietnam rapidly developed. However, the investment in domestic industry, particularly the manufacturing industry, encountered two main challenges, which are: (1) weak infrastructure and (2) complex and lengthy application process for investment permits. Based on experiences abroad, the Government has advocated to establish and promote Export Processing Zone (“EPZs”), Industrial Park (“IPs”), and maintained setting out development policy to the present day.

The development of the IPs and EPZs in Ho Chi Minh City can be summarized through the following periods:

The period from 1990 to 1993

This is the formation stage. Tan Thuan EPZ and Linh Trung EPZ were established in 1991 and 1992 respectively with the initial objectives of luring foreign investment, fostering export activities has set the foundation for the integration of Vietnam’s economy to the world. These EPZ have made several preliminary strides, laying the groundwork for the following phase of the development.

The period from 1994 to 1997

With the introduction of Decree No. 192/CP of the Government dated December 25, 1994 on Promulgating the Regulation on IPs, the stage witnessed the formation of IPs, aiming to promote investment attraction and diversify industries, especially light and export-oriented industries. This led to a surge in foreign investment in the period of 1994-1997.

The period from 1997 to 2003

In the entire country, this is the stage of spreading the IP model, forming high-tech zones along with piloting and establishing border gate economic zones. In this atmosphere, Ho Chi Minh City has promoted the creation of 11 novel IPs with a total area of 2.123,57 hectares.

The period from 2004 to present

This is the stage of an IP’s development and completion. According to the data from the Ho Chi Minh City Export Processing zone and Industrial Park Authority (“HEPZA”), after 30 years of construction and development, Ho Chi Minh City has 3 EPZs and 16 IPs established with a total area of 4,532 hectares, in which 17 EPZs and IPs have been in operation.

According to the planning to 2020, Ho Chi Minh City would have 23 EPZs and IPs with a total area of 5,822.5 hectares. However, the city has only deployed 03 EPZs and 16 IPs, accounting for 76,78% of the intended territory. In which, the occupancy rate in several IPs has reached 100%. These can be mentioned as Tan Binh IPs, Minh Xuan IPs, Vinh Loc IPs, Northwest Cu Chi IPs, Cat Lai II IPs, An Ha IPs... In some IPs with sizable areas, the remaining land available for lease is insignificant, such as Tan Thuan (2,82 hectares available out of 300 hectares), Tan Tao IPs (11,62 hectares available out of 380,15 hectares), Tan Phu Trung IPs (15,44 hectares available out of 542,64 hectares)

The development orientation of EPZs and IZs of Ho Chi Minh City from now to 2025 is to gradually transform existing EPZs and EPZs into green, clean and hi-tech application zones; establishing new IPs in the direction of developing high-tech industries and luring investment in four key industries with high technology content, including: mechanical engineering, electronics-informatics, chemicals, and food processing; as well as supporting industries serving four key industries.

Tran Ly - Paralegal