Land clearance a chronic bottleneck in Vietnam

Vu Thu Hang, head of sales with TNI Holdings Vietnam, enumerated several problems with land clearance at a recent webinar on "Identifying new trends in industrial park development."

She said infrastructure investors were forced to pay site clearance compensation in stages and the process was prolonged even further because of legal and procedural hassles.

This, in turn, interferes with enterprises' planning process and reduces project duration for investors, she added.

"Businesses have lost many opportunities, especially when there were many orders that could not be met because site clearance did not happen in time," Hang said.

A wave of factory relocations from China has heated up Vietnam's industrial real estate market generating high demand and increasing rentals.

While investors are willing pay a premium to sign leases, complete licensing procedures and begin operations, land clearance continued to be a bottleneck for industrial real estate investment enterprises, Hang said.

For instance, she noted, data from the HCMC Department of Natural Resources and Environment in May 2021 showed the city currently has 11 industrial parks with incomplete land clearance covering more 100-hectares and thousands of households yet to be relocated. One 20-year-old business had to ask the government’s intervention to resolve a land clearance dispute.

Industrial real estate firms like TNI Holdings want the government to remove these difficulties, cut red tape and shorten the time taken to complete legal procedures, Hang said.

Hong Sun, Vice President of the Korean Chamber of Commerce in Vietnam, said industrial parks in Vietnam are typically traditional, with just factories and no accommodation.

"The industrial park is simply a production base," he said, adding that the trending model in many countries, especially in South Korea, was to combine urban areas, houses, schools and hospitals, virtually evolving industrial parks into a miniature city.

"In the context of Covid-19, many factories in Vietnam have applied the stay-at-work model. If Vietnam develops a mixed industrial park model, it would be much more convenient to live and work on site," he said.

Ko Tae Yeon, general director of the Heesung Electronics Vietnam Company based in Hai Phong, agreed that having accommodations like houses or dormitories inside industrial parks will facilitate production while ensuring the health and safety of workers.

Ko Tae Yeo nalso emphasized the need for specialized IPs. He noted that at the Trang Due Industrial Park in Hai Phong, the presence of LG Electronics has brought in many suppliers and other partners.

As of the end of the first quarter this year, Vietnam had 370 industrial parks with 115,200 ha, according to the Ministry of Planning and Investment.