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New regulations on investment conditions for Industrial Zones Infrastructure

Since its promulgation, Decree No.35/2022/ND-CP (hereinafter referred to as “Decree 35”) has made practical and timely changes to complete a typical legal corridor for the Industrial Zones that Decree No.82/2018/ND-CP (hereinafter referred to as “Decree 82”) has not been able to do or unclear regulations, including contents related to investment in Industrial Zone Infrastructure. In this article, ATIM LAW FIRM would like to send readers the article “New regulations on investment conditions for Industrial Zones Infrastructure”.

1)    Investment conditions for Industrial Park Infrastructure

Industrial Zones Infrastructure includes internal road systems; water supply; drainage systems; wastewater and waste treatment; electricity supply; public lighting; internal communications; operators and maintenance; protection and other works serving the activities of industrial clusters. Article 9 of Decree 35 stipulates six (06) conditions for investment in Industrial Zone Infrastructure, specifically including:

Initially, the conditions for investment in Industrial Zones Infrastructure must be consistent with the planning prescribed by the State. Specifically, the content of this plan must comply with regional and provincial planning. In addition, the content must show conditions consistent with the approved and licensed list of industrial zones in the province or central city. In particular, it must be compatible with industrial zone construction planning.

Secondly, in some cases land in an industrial zone must be phased out if:

• In case the industrial zone has a land area of over 500 hectares, it must be phased out and must not exceed 500 hectares per phase.
• For the Mekong River Delta and Red River Delta: the conversion of land use purposes for rice cultivation with two or more cops with a scale of more than 200 hectares must be phased in.
• For the North Central, Central Coast, and Southeast: the conversion of land use purposes for rice cultivation with two or more crops with a scale of more than 150 hectares must be phased out.
• For the Northern midland and mountainous region and the Central Highlands: the conversion of land use purposes for rice cultivation with two or more cops with a scale of more than 100 hectares must be phased out.
• For projects implementing industry clusters with the total investment capital of projects in the cluster at least equivalent to USD 2 billion or 45,000 billion, which is considered and invested in phases with a scale of 2 billion USD and the area is not more than 1.000 ha/

Thirdly, to reserve at least 05 hectares of industrial land or 3% of the total land area of the Industrial Zone for small and medium-sized companies, supporting enterprises and innovative concerns to develop and enjoy more special incentives for other businesses in the same area.

Fourthly, it is required to meet the conditions for changing the land use purposes as prescribed by law and the average occupancy rate of Industrial Zone established in the provinces and centrally–run cities must meet the minimum requirements of at least 60%.

Fifthly, to make planning on the construction of residential areas and public service and utility works for workers in Industrial Zones which have been approved by the decision of State Agencies.

Sixthly, the investment in Industrial Zones Infrastructure to expand on the basis of previously established Industrial Zones and implemented by the same investor must satisfy some of the following conditions:

• The previously establish Industrial Park has a minimum occupancy rate of 60% and has invested in building and putting into operation environmental protection infrastructure and has completed the investment in building the infrastructure system according to the regulations construction plan.
• Capable of connecting and using the same technical infrastructure with the previously establish Industrial Zones.
• Built and put into use the housing area and service works, public utilities for employees.

2)    The difference in regulations between Decree 35 and Decree 82

This is considered a completely new regulation that the State added in Decree 53 to perfect the condition for investment in Industrial Zone Infrastructure as an activity with the following specific characteristics:

• This new point is used to synthesize regulations on planning related to infrastructure investment conditions.
• To limit the rampant investment and the situation of investors “Holding land” in an area that is too large and slow to use efficiency.
• Increasing opportunities to access the land fund for businesses in the priority group still faces many difficulties.

Regulate and keep the occupancy rate unchanged to limit rampant investment and ensure balanced development between regions and localities where the Industrial Zones are invested and built.

It can be seen that the addition of investment conditions for industrial park infrastructure can significantly limit the rampant investment in industrial zones; improve the efficiency of land use, the ability to select investors with capacity and experience; ensure attract investment in industrial zones with efficiency and quality. However, Decree 35 also took effect on July 15, 2022, so it still needs time for businesses to apply it in practice and evaluate the strengths and weaknesses of this regulation.

Tran Ngoc Long - Paralegal