Identifying new trends in attracting FDI into industrial zones

	FDI enterprises want to re-export raw materials
	Nine-month FDI inflows up 4.4 percent despite COVID-19
	Success of FDI firms vital for Vietnam: PM

Existing challenges

The heavy impacts of the Covid-19 pandemic in the past two years have stalled the operations of businesses in industrial parks, disrupted supply chains, labour chains.

The context that global investment capital flow shifts after the pandemic, competition with developing countries in attracting foreign direct investment (FDI) in general and in industrial zones are increasing, which has set up new requirements on foreign investors and industrial development in the future.

Speaking at the seminar "Identifying new trends in industrial zone development" held on September 20, Mr. Phan Huu Thang, former director of the Foreign Investment Bureau (Ministry of Planning and Investment), said that according to statistics, annually, the amount of FDI invested in industrial parks and economic zones accounts for 60-70% of the total amount of FDI attracted in the country.

Strategic competition and trade competition among major powers, especially US – China, would create huge challenges for Vietnam when implementing the orientation of "multilateralization and diversification" in foreign investment cooperation and in the context that a small country was next to a large country when the economy had not implemented self-control yet.

“The recent report of the Ministry of Planning and Investment also said that the implementation of social distancing to prevent Covid-19 led to the blockade of factories and the movement restriction of workers in industrial zones, which has slowed down production, increased production costs, reduced capacity and products, disrupted the global supply chain. So, some orders had to be moved to other areas in the supply chain. Although this is only a temporary solution, if this situation is prolonged, it is likely that investors will shift production to other countries and affect the psychology of new investors. In that context, competition with developing countries in attracting FDI in general and in industrial parks and economic zones in the region is a significant barrier to maintaining the speed of attracting foreign investment in these areas of Vietnam," Mr. Phan Huu Thang said.

Vietnam should develop a new model for industrial parks, not only building factories but also providing services for workers to live and work on the spot. Photo: Internet.

Focusing on key industries

According to Mr. Phan Huu Thang, it was necessary to focus on attracting foreign investment to create conditions for the development of industrial parks and economic zones into key processing and manufacturing points, in the direction of focusing on a number of key industries with competitive advantages such as: mechanical engineering, electricity and electronics, information technology (identified in the socio-economic development strategy 2011-2020).

The attraction of foreign investment in industrial parks and economic zones must be in the direction of ensuring synchronization with the speed of socio-economic infrastructure development, in the direction of prioritizing attracting projects using high technology under the requirement of transforming to the digital economy, and being environmentally friendly.

Continue to attract large-scale, high-tech dynamic projects from reputable and potential foreign investors to form large-scale and specialized production clusters with high linkages among enterprises in industrial parks, economic zones, between domestic enterprises and FDI enterprises. In particular, focus on developing new industrial park models such as eco-industrial parks, industrial-urban-service zones, supporting industrial parks, high-tech agricultural parks with high infrastructure quality in order to create conditions to attract quality FDI inflows into industrial parks and economic zones.

From the perspective of representing Korean enterprises in Vietnam, Mr. Hongsun, Vice President of Korcham in Vietnam, said that in traditional industrial parks, there were only simple factories, no houses, that policy had lasted from the beginning. While the development trend of industrial parks of other countries were mixed, even combining urban areas, houses, clinics, and schools to be able to serve daily activities for officials and employees of the park.

Therefore, Vietnam should develop a new model industrial park, not only building factories but also providing services for workers to live and work on the spot.

“Project investment management boards, local authorities as well as industrial parks should adjust this issue to apply the model that developing and developed countries have done. If it is just a simple factory, it will be difficult to sustainably exist, especially during the preparation time after the Covid-19 pandemic," said Mr. Hongsun.