Vietnam Daily News

Trillions of dong buried in industrial zones

Written by Dailynews.vn Saturday, 10 December 2011 17:18

On average, to have one hectare of clean land for investors, the costs for ground clearance and compensation previously was 3-4 billion dong. But the figure now is much higher in the context of inflation.

With the wastage of land in industrial zones at this time, a huge investment amount is buried in IZs.

The reckoning of abandoned IZs also was concerned by economists. But the action was unable to surmount land wastage due to high cost for ground clearance. It takes so much time to improve abandoned land for production.

Double wastage

If abandoned IZs are a single wastage, other IZs which were projected and built with completed infrastructure will cause double or triple wastage. According to statistics, the fulfilling ratio of IZs in the country is 46 percent, the figure in the central region alone is 30 percent and in Mekong Delta at around 25 percent.

Huynh Van Nuoi, Head of Ben Tre IZ Management Board said that the biggest difficulty in developing the province's IZs was costs for compensation, ground clearance at average 1.7 billion dong per hectare. If basing on the state budget only, it is very hard to supply clean land to investors. If calling for enterprises to invest in infrastructure, the land rental will be very high, harder to attract investors and compete with neighbouring provinces.

According to IZ management boards in Mekong Delta, it costs around 4 billion dong to have one hectare of clean land. As estimated by Dr Tran Thi Be - director of Can Tho City Social and Economic Institute, infrastructure investment for IZs in Mekong Delta is costly because of weak foundation; about 30 percent of investment cost is invisible. In other regions, the cost for building factories is 10 billion dong while that of Mekong Delta must be 13 billion dong. "High investment capital along with uncompleted roads raised difficulties for Mekong Delta IZs, industrial complexes in attraction, and caused prolonged land wastage", she added.

Investors lack capital

Local governances attributed the low fulfilment ratio of IZs to the global economic recession and hardships in attracting investors. But, the major reason is that investors did not have capacity, some seemed to ask land or projects for transfer to earn profit [property trading] rather than building of IZs.

Most technical infrastructure systems of IZs were not finished according to progress. According to Le Minh Chau-Head of Ba Ria-Vung Tau IZ Management Board, financial strength of investors is not able to meet requirement of infrastructure investment. They [investors] mainly were trying to obtain investment certificates into IZs and then waiting for lend leasing, using finance of secondary investors.

Tran Thanh Duc, Chair of Trung Nguyen Steel Company as owner of Phan Thiet 2 IZ in the southern province of Binh Thuan was quoted as saying that if there was no change in monetary policies, it would have been very difficult to call for secondary investors to IZs. Especially in the context of weak infrastructure facilities, many investors do not want to spend money on building workshops in this period.

Furthermore, the investment attractiveness of IZs remained low because the allocation of IZs is imbalanced due to the lack of a master development project for the whole region. Most of IZs is multi-functional, each province or city built several IZs with similar projects so the competition is getting fiercer.

Mai Thi Thuy Linh, vice Head of Investment Department of Da Nang IZs Management Board reported that they withdrew 17 projects in 2010 and 2011, in which 8 were proposed by foreign firms due to idle progress. And recently, the board had to reckon 2 foreign invested projects including a $10 million seafood processing project of Rativiet Co Ltd granted the certificate in November 2009.

Source: www.intellasia.net/news/articles/business/111350341.shtml