Vietnam is experiencing a noteworthy evolution in its industrial landscape, marked by the emergence of Eco-Industrial Parks (EIPs). Beyond traditional industrial zones, these parks blend economic advancement with environmental concerns.
Moreover, the Vietnamese government’s proactive initiative to convert existing parks into EIPs is underpinned by influential decrees, suggesting a substantial move towards environmentally conscious industrial strategies.
This article will delve into the intricacies to reveal the challenges and opportunities that define Vietnam’s path toward a more sustainable industrial future.
I. About Vietnam’s industrial parks and its strategy to develop eco-industrial parks
Eco-industrial parks (EIPs) are industrial zones that aim to achieve sustainability by integrating social, economic, and environmental aspects into their planning, management, and operations. EIPs encourage enterprises to adopt cleaner production, efficient use of natural resources, and industrial symbiosis, which means cooperating and exchanging materials, energy, water, and by-products with other enterprises within the park.
A. Plan and target of the government to develop EIPs.
EIPs are a relatively new concept in Vietnam, but they have gained attention and support from the government and various stakeholders in recent years. The development of EIPs is in line with the national strategy for green growth and the government’s commitments to achieving the UN Sustainable Development Goals by 2030 and the Paris Agreement on Climate Change.
About a decade after eco-industrial parks were established in Vietnam, the government issued Decree 82/2018/ND-CP, which defines EIPs and provides a legal framework for their management and development. The decree emphasizes the state’s continual encouragement and maximum support for organizations to establish or convert industrial parks to operate under the eco-industrial park model. Decree No. 35/2022/ND-CP was also issued regulating the management of industrial parks and economic zones. This represents a positive change in government attitudes to the responsible use of natural resources and environmental impact in the industrial sector.
Moreover, the Vietnamese government’s 30-year industrial park development report envisions that by 2030, 40-50% of areas will transition existing industrial parks into eco-industrial parks. Additionally, 8-10% of regions will include plans to construct new eco-industrial parks from the initial stages of construction planning, focusing on industries and trades to attract investments.
B. The current eco-industrial parks
- Phong Phu Textile and Garment Industrial Park: is a part of Phong Phu Corporation. The industrial park is located in Nha Trang City, Khanh Hoa Province, and covers an area of 50 hectares. It produces and exports high-quality cotton fabrics and apparels from jean and khaki materials, with a capacity of 20 million meters of fabric and 12 million pieces of garment per year. The industrial park also applies eco-friendly technologies and practices, such as wastewater treatment, waste management, and energy saving. Phong Phu Textile and Garment Industrial Park is one of the successful examples of eco-industrial parks in Vietnam.
- Dinh Vu – Cat Hai Economic Zone: is one of the five key coastal economic zones of Vietnam, established in 20081. It covers an area of 22,540 hectares, including tariff and non-tariff areas, port system, industrial zones, warehouse, public service centers, specialized centers, urban and residential areas, and transportation and technical infrastructure1. It aims to promote the socio-economic development of Hai Phong city and the north coast region, as well as attract foreign investment by offering preferential policies. Some of the major industrial zones in the economic zone are Nam Dinh Vu, Lach Huyen, Trang Due, VSIP, and Dinh Vu. The economic zone also applies eco-friendly technologies and practices, such as wastewater treatment, waste management, and energy saving.
- Nhon Trach 2 Industrial Park: is an industrial zone in Dong Nai Province, Vietnam, that covers an area of 69.53 hectares. It is located in a strategic transportation hub in the southern key economic region, with convenient access to road, waterway, and air transport. It offers various types of land for factories, warehouses, service centers, and green space, as well as shared infrastructure and services, such as wastewater treatment, waste management, and energy saving. It is suitable for multi-sector development and activity diversification in production. It also provides preferential policies for investors, such as tax incentives, land rent exemptions, and simplified administrative procedures.
- Long Hau Industrial Park is an industrial zone in Long An Province, Vietnam, that specializes in leasing industrial land and ready-built factories. It has a strategic location near Ho Chi Minh City, with convenient access to road, waterway, and air transport. It also applies eco-friendly technologies and practices, such as wastewater treatment, waste management, and energy saving. It offers preferential policies for investors, such as tax incentives, land rent exemptions, and simplified administrative procedures. It is suitable for multi-sector development and activity diversification in production.
II. Opportunities and Challenges for Vietnam’s Eco-Industrial Parks to foreign investors
In the dynamic landscape of sustainable development, Vietnam’s Eco-Industrial Parks (EIPs) beckon foreign investors with the promise of environmentally conscious practices and economic gains. These parks, designed to minimize environmental impact and foster collaboration among businesses, present a compelling investment opportunity.
Vietnam has set ambitious goals of achieving developed country status by 2045 and attaining net zero emissions by 2050. Despite being a challenging endeavor for a developing nation like Vietnam, the concept of eco-industrial parks has emerged as a novel approach to establishing sustainable industrial zones. While the idea of such parks has gained traction over the past decade, there are still considerable obstacles to fully realizing this model.
One of the challenges is that there are no specific guidelines for building eco-industrial parks that suit Vietnam’s special situation. Recommendations have been made to establish specific guidelines for eco-industrial park development in the country.
In support of fostering eco-industrial parks and promoting green growth, the government has introduced Decree No. 35/2022/NDCP, which governs the management of industrial parks and economic zones. This decree is anticipated to lay the foundation and drive the eco-industrial park concept to play a constructive role in advancing green growth, and working toward sustainable development objectives.
III. Policy and Regulatory Support
1. Government initiatives promoting eco-industrial parks
The government is actively promoting eco-industrial parks through Decree No. 35/2022/ND-CP, focusing on green growth. Key initiatives include provincial support for infrastructure development, encouraging collaboration among industrial park enterprises, and incentivizing information sharing for resource efficiency. Third-party partnerships for industrial symbiosis are encouraged, and industrial park authorities play a leadership role in certifying, monitoring, and inputting accurate information into systems at the local and national levels.
To promote the development of eco-industrial parks and green growth, the Government issued Decree No. 35/2022/ND-CP regulating the management of industrial parks and economic zones.
a. Provincial Policy Support
Provincial People’s Committees are mandated to provide support for the construction, renovation, and upgrading of technical and social infrastructure within and beyond existing industrial parks. This aims to foster industrial symbiosis and transform these areas into eco-industrial parks. In specific, aspects including scientific, engineering, and technology transfer assistance are offered to enterprises within industrial parks to enhance management procedures, adopt new manufacturing technologies, reduce pollution sources, and promote resource efficiency through recycling and effective use of resources.
b. Cooperation for Eco-Industrial Parks
Enterprises within industrial parks are encouraged to collaborate on shared use of technical and social infrastructure, services, and input materials, fostering cooperation to reduce costs and enhance competitiveness.
Industrial park enterprises are also encouraged to engage with third parties for the development of industrial symbiosis, either through investor partnerships or collaboration with enterprises providing necessary infrastructure facilities and services.
Participating parties are granted flexibility to agree on cooperation forms, sharing interests and expenses in accordance with civil law.
c. Encouragement for Information Sharing
Agencies, organisations, and investors are incentivized to develop and provide resource efficiency and cleaner production information or data accessible to industrial parks. This is aimed at supporting enterprises within industrial parks and establishing connections for the implementation of industrial symbiosis.
d. Leadership of Industrial Park Authorities
Industrial park and economic zone authorities are tasked with leading and collaborating with relevant agencies to develop and provide resource efficiency and cleaner production information and data at the local level. This includes certifying, monitoring, supervising, and measuring the performance of eco-industrial parks and eco-businesses. Additionally, these authorities are responsible for inputting up-to-date and accurate information into local and national systems for information about industrial parks and economic zones.
2. Investment incentives for businesses (FDIs) in eco-industrial parks
The Vietnamese government is incentivizing foreign direct investment in eco-industrial parks (EIPs) through policies that include land rent exemptions, priority access to investment loans, and financial support. Investors in EIPs can secure green credit, issue green bonds for infrastructure, and receive preferential participation in assistance programs. Additionally, recent revisions aim to streamline procedures, reduce risks, and enhance attractiveness for foreign investors in various industrial park projects, including eco-industrial parks.
The Vietnamese government has implemented a range of policy measures and incentives to promote the development of eco-industrial parks (EIPs) and eco-businesses. The key incentives can be summarised as follows:
a. Incentive Policies for Infrastructure Projects:
Investment projects focused on constructing and operating infrastructure facilities within industrial parks are eligible for specific incentive policies outlined in Article 32, Clause 1. This granted to investment projects on eco-industrial parks shall comprise the followings:
- Land rent exemption or reduction granted in accordance with legislation on land;
- Priority to have access to the State-offered investment loans and receive other funds mobilised in other forms under the provisions of law on enterprises, credit and other relevant legislation;
b. Financial Support and Green Credit:
- Investors engaged in projects related to the construction and operation of infrastructure facilities for eco-industrial parks and eco-businesses are encouraged to secure loans from various financial institutions, including the Viet Nam Environment Protection Fund, Vietnam Development Bank, Small and Medium Enterprise Development Fund, and other domestic and international funds.
- Preferential treatment includes access to green credit from financial institutions and foreign bank branches operating in Vietnam, as per environmental protection laws and other relevant regulations.
- Permission may be granted for the issuance of green bonds to fund the development of technical infrastructure within eco-industrial parks, promote cleaner production practices, and facilitate efficient resource use and industrial symbiosis.
c. Participation in Assistance and Promotion Programs:
Investors involved in the construction and operation of infrastructure facilities for eco-industrial parks and eco-businesses receive preferential consideration for participation in technical assistance and investment promotion programs conducted by state regulatory authorities.
d. Information and Cooperation Facilitation:
Enterprises operating within eco-industrial parks are given preference in accessing information related to technology markets. They are also encouraged to explore possibilities for cooperation in industrial symbiosis within their business scope.
e. Reduces time, costs, and risks associated with enforcement with benefit foreign investors:
Revisions to the decree aim to spur the development of various industrial park (IP) projects, including eco-industrial parks, specialised IPs, and high-tech IPs. The changes streamline procedures, eliminate inconsistencies in legal provisions, and address obstacles related to legal risks in investment activities within IP projects. These amendments are crucial for attracting significant infrastructure developers.
Final Thoughts
As we navigate through Vietnam’s evolving industrial narrative, the emergence of Eco-Industrial Parks (EIPs) stands out as a transformative force. Beyond mere industrial zones, these parks harmoniously blend economic growth with environmental consciousness. The government’s commitment to transitioning existing parks into EIPs, backed by influential decrees, signals a significant shift towards sustainable industrial practices. Our exploration has uncovered the challenges and opportunities shaping Vietnam’s journey toward a greener, more sustainable industrial future. As the nation embraces EIPs, each park becomes a microcosm of innovation, collaboration, and a promising step towards a responsible and forward-thinking industrial landscape.
