Vietnam’s Industrial Zones: Strategies for Small and Medium Enterprises
Industrial zones (IZs) and Export processing zones (EPZs) in Vietnam have played an important role in attracting foreign investments and the development of the local economy. Firms investing in these zones have enjoyed preferential governmental policies in terms of tax and land rent incentives. But now some IZs and EPZs are lagging behind in attracting investors due to intense competition amongst neighboring IZs, and hence have started to change their strategy, focusing on small and medium-sized enterprises (SMEs), which account for the majority of the firms in Vietnam.
Traditionally, IZs were usually set up in areas with developed infrastructure and good connectivity to attract investors. However, almost all the IZs established in the last few years have similar characteristics, leading to an intense competition between them.
Shifting strategy
As provincial authorities try to shift away from labor-intensive and low-cost industries to high-tech industries for a sustainable growth, IZs are also implementing new strategies to adapt to the changes. IZs and EPZs are focusing on prioritizing investments in the manufacturing and production industries with high technology to improve production value and competitiveness. As of now, less than 10 firms in IZs and EPZs have high-tech enterprises certificates.
In addition, as some IZs and EPZs fail to attract investors due to intense competition amongst neighboring IZs, they have also started to shift away from the traditional model of focusing only on acquiring large ticket investors for rent, to building workshops for SMEs who have limited capital and are in need of facilities.
This is an excerpt from an article appearing in Vietnam Briefing, a subsidiary of Dezan Shira & Associates. For the latest economic, regulatory and business news from Vietnam, visit vietnam-briefing.com.