Thai Nguyen looks for IC infrastructure investors

The northern province of Thai Nguyen is seeking investors to build infrastructure for 11 new industrial clusters through the PPP format Photo: Dung Minh

Investors are being welcomed to 11 newly planned industrial clusters (ICs) covering 283.5 hectares, focusing on seven locations in the province, namely the city of Song Cong, Pho Yen town, and Dong Hy, Dinh Hoa, Phu Binh, Phu Luong, and Dai Tu districts, according to the Thai Nguyen Department of Industry and Trade.

The investors are encouraged to build the ICs under the public-private partnership (PPP) model to reduce reliance on the state budget. Significantly, most of the ICs offer convenient transport connections. For instance, the 48.5ha Ba Xuyen IC (Song Cong) connects to Road 262 and is 18 kilometres from Thai Nguyen’s city centre, while the 20ha Kim Son IC (Dinh Hoa district) links to National Highway 3C and the Ho Chi Minh Highway.

When taking part in building these ICs’ technical infrastructure, businesses will receive financing for 10 per cent of total site clearance costs or 10 per cent of total investment cost put into building IC technical infrastructure and wastewater treatment facilities, up to but not exceeding VND6 billion ($265,487) for each IC.

In addition, in light of the government’s current regulations on land rental and corporate income tax (CIT) incentives, seven out of nine districts in Thai Nguyen belong to areas entitled to investment encouragement policies. Accordingly, these seven districts are subject to a CIT exemption in the first two to four years and a 50 per cent reduction in the subsequent four to nine years, depending on their locations.

A new development, touted as a fresh move in wooing investors to build Thai Nguyen’s ICs, is that under a decision of the Thai Nguyen People’s Committee, the Centre for Industrial Promotion and Industrial Development Consultancy belonging to the Thai Nguyen Department of Industry and Trade was assigned to act as the developer for building the infrastructure for several ICs, primarily the 52ha Son Cam 2 IC.

The move attests to the provincial leadership’s commitment to courting investment into local IC development.

Centre director Nguyen Dinh Hung said that the IC investment proposal has been submitted to the local management authorities for approval and investors are encouraged to advance their capital for site clearance and building IC infrastructure.

Economists say that infrastructure investment plays a vital role in making IC projects appeal to investors. In fact, despite having detailed plans, many ICs fail to lure investors due to incomplete investments into infrastructure works such as power, water, and wastewater treatment.

To address this bottleneck, Thai Nguyen has reviewed its IC development plan to remove underperforming ICs and supplement new ICs with favourable locations and advantages in local labour or natural resources. Seven ICs covering 162ha were removed from the provincial IC plan and more than 250ha were cut from five other ICs, while 10 new ICs were added to the plan.

The Thai Nguyen Department of Industry and Trade has proposed to the Ministry of Industry and Trade to raise the capital support volume from the central budget through an industrial promotion programme and has asked the State Bank of Vietnam to offer concessionary credit packages for investors in ICs located in remote, mountainous areas.

In the words of Tran Anh Son, head of the Industrial Management Division under the Thai Nguyen Department of Industry and Trade, to attract investors, ICs need convenient access to material supply sources and the consumer market as well as favourable transport infrastructure.

In light of Thai Nguyen’s revised IC development plan for 2020 with a vision towards 2030, the number of local ICs will increase from 32 to 35, covering 1,259ha in total area. Investment will be implemented in two phases. In the first phase, from now until 2020, efforts will be geared towards building infrastructure for 28 out of 35 ICs covering 731ha, with an expected occupancy averaging 60-65 per cent.

In the second phase, from 2021 to 2030, efforts will be put into finalising the infrastructure construction of these 28 ICs, matching the detailed IC plan, striving to reach 100 per cent occupancy, and building infrastructure for the remaining seven ICs covering more than 202ha.

The province is set to raise $79.6 million in total investment capital in the first phase and $98.9 million in the second, with the amount sourced from the non-state budget to surpass $44.2 million in each phase.