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EU-VNFree Trade Agreement to boost IP development: expert

The EU-Vietnam Free Trade Agreement (EVFTA) will help Vietnam become the regional hub for many foreign manufacturing companies, promoting the development of industrial parks (IPs) in the country, said Gellert Horvath, vice chairman of the European Chamber of Commerce (Eurocham).

EU-VNFree Trade Agreement to boost IP development: expert

According to Gellert the EU is currently Vietnam’s second largest export market and Vietnam is the EU’s 11th largest source of imports. About 900 European enterprises have invested in Vietnam – the highest in Southeast Asia.

The EU’s total registered capital till December 2016 reached US$21.5 billion. In the first quarter of the year, it reached $96.29 million.

EU companies have invested in 18 sectors, focusing on manufacturing and processing (34.7 percent), power distribution (14.8 percent) and real estate trading (11.9 percent).

He said that Vietnam had the advantages of having favourable political and geographical location in comparison to other countries in the region, such as Indonesia, Malaysia and Thailand. In addition, the Government made efforts in its international integration process.

He added that Vietnam was a great location for EU manufacturers to export their goods to Asian countries. Its industrial park network was therefore expected to grow strongly over the next few years.

According to Nguyen Noi, deputy head of the Foreign Investment Agency under the Ministry of Planning and Investment, Vietnam has 324 IPs, 16 seaside economic zones and three hi-tech parks. The Government is set to increase the number of hi-tech parks to six by 2030, while developing three special economic zones in Van Don, Cam Ranh and Phu Quoc.

Noi said Vietnam had signed 66 Bilateral Investment Promotion and Protection Agreements (BIPA). The country would have free trade relationships with 55 partners and 15 members of G20, which accounts for three-fourth of the world’s GDP.

He explained that the investment inflow into Vietnam, especially garment and textile, leather shoes, wooden furniture, electronics and information and technology would increase thanks to deep integration and zero export taxes.

The country’s northern region has the advantages of abundant labourers, big market and improved infrastructure, and more particularly, integrated IPs system and high tenant rate, according to Nội.

The region has been the country’s biggest industrial manufacturing hub, with the establishment of a supply chain in the electronics sector from companies such as Samsung, LG, Canon and Kyocera and automobile makers including, Toyota, Honda, Hyundai and Ford, since 2008.

Victor Lim, deputy director of Vietnam – Singapore Industrial Park (VSIP) Bac Ninh, said that they planned to build a smart city near the IP called the VSIP Bac Ninh Township Development Master Plan, which is a combination of manufacturing and residential.

The move was taken by many IPs to boost investment in infrastructure and welcome more foreign manufacturers into Vietnam.

The master plan includes many categories, such as a sports hub, a golf driving range, the Belhomes landed housing project, a business hub cluster and park, a wet market, a shopping mall, a hotel, mid-end landed properties, a school complex, and worker housing. He noted that many of these were calling for investment.

Horvath said Vietnam should develop the complex model in the future.

Chua Ah Lay, Chairman and CEO of Santomas Vietnam, which has been in Vietnam for nearly 20 years, said his company was providing transport for workers from neighbouring towns to IPs.

“If there was workplace accommodation next to the IP, it would be very good for us,” he said.

Over the last two decades, VSIP has become one of the largest developers of integrated IPs and complexes in Vietnam. It has operations in the southern, northern and central economic zones of Binh Duong, Bac Ninh, Hai Phong, Quang Ngai, Hai Duong and Nghe An.

VSIP has about 690 companies from 30 economies, attracting an investment capital of $9.1 billion and generating about 180,000 jobs from operating tenants.

VSIP was established in 1996 based on mutual co-operation and support between the two governments of Vietnam and Singapore.