21,000 workers in limbo as Vietnam's oldest industrial park relocates

But not for much longer since the IP in the southern Dong Nai Province with 76 tenants has to relocate to make way for a commercial urban development project.

Over 21,000 workers are currently employed at the park.

Established in 1963, the 324-ha Bien Hoa 1 IP was Vietnam's first industrial park.

But it has been facing troubles, including the risk of polluting the Dong Nai River.

Besides the other costs, companies would also have to spend significant amounts on severance pay to employees who choose not to move with them to a new location.

The Dong Nai People's Committee said VND1.27 trillion ($51.4 millioin) would be needed to safeguard workers' livelihoods and help affected companies stabilize operations.

But it has no detailed plans in place to address either issue.

The Bien Hoa 1 Industrial Park by the Dong Nai River. Photo by VnExpress/Phuoc Tuan

According to a plan unveiled recently by the provincial authorities, the IP will soon be transformed into a riverside commercial urban area and Dong Nai Rubber Corporation has to relocate elsewhere by the end of next year.

Pham Hong Phu, general director of Casumina, said a two-hectare manufacturing plan that generates annual revenues of VND600 billion (US$21.2 million) has to move first.

"We are confused since the relocation deadline has been set, but the authorities have not provided a clear support plan for businesses."

According to Casumina's management, the plant would face a number of difficulties.

Firstly, it has more than 200 employees, most of whom are in their early middle age and have settled in Bien Hoa City, the capital of Dong Nai, who will find it hard to move with the factory to a new location.

But if they stay back in Bien Hoa, it will not be easy for them to find a new job.

If the company cannot retain its workforce, it has to spend considerable time recruiting and training new workers.

Another challenge for businesses in the IP is the cost of relocating and setting up new facilities.

Phu said the factory had planned long-term operations in the IP, and made significant investment in machinery and equipment.

Its lease still has over 20 years to run, a period in which it was expected to be profitable, he said.

The company needs trillions of dong to build a new workshop while the current rental per square meter for 50 years in nearby industrial parks is $190 plus management fees, he said.

A worker at the factory of Dong Nai Rubber Corporation at the Bien Hoa 1 Industrial Park in Dong Nai Province, March 1, 2024. Photo by VnExpress/An Phuong

A new plant would need 10 hectares, meaning just the lease would cost $20 million, not to mention the investment needed for installing machinery, equipment and fire safety systems.

"The industrial park conversion plan has already been approved, and businesses have to relocate. But the local government needs to provide adequate support plans."

Dong Nai Garment Corporation (Donagamex) also faces difficulties due to the IP’s relocation.

The company opened a factory in the IP in 1974.

It measures 32,000 square meters and currently employs over 200 workers, most of them over 40 years old.

Doan Thi Thu Thuy, chairwoman of Donagamex's Labor Union, said: "The conversion plan has been approved, and businesses must relocate, but where is the fund to relocate when the province does not have a clear support plan?"

So the company is considering "splitting up," meaning relocating some departments to some existing facilities first and move the rest later, she said.

Thuy raised the same concerns as Phu did.

She said workers could not just move along with the factory, but staying would leave them in limbo due to the difficulty of finding new jobs at their age.

Besides, the factory has large production floors and machinery, making relocation "not simple at all," she said.

She said once the relocation plan is in place, the local government should also quickly implement compensation and support plans so that affected companies could find new locations and have the money to cover lease costs.