Nov 12, 2012

Vietnam - Move to police surging park rentals

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The government is considering rent control on all industrial park developers to screw down surging rates.

The Ministry of Planning and Investment (MPI) has just introduced the draft of a new decree amending Decree 29/2008/ND-CP regulating the operation and management of industrial parks and economic zones.

In the draft, the MPI proposed a new rule requesting all industrial park developers to register land rental rates with state management authorities, a thing that developers have never had to do.

“This is a crucial regulation to control rental rates at industrial parks because rates have been surging sharply in recent years,” said Vu Dai Thang, director of the MPI’s Economic Zones Management Department. Thang said if rates kept on surging, Vietnam would lose its cost advantage against rivals like Thailand, Cambodia and Indonesia.

Statistics from the Economic Zones Management Department show that average land rental rates at industrial parks nationwide are ranging from $100 to $200 per square metre. Particularly, some industrial parks in Hanoi announced land rental rates of up to $280 per square metre.

“We understand the target of developers is profit, but the surging rates will affect our country’s investment climate. We want developers to register to ensure that increases must be reasonable,” said Thang.

Industrial parks play a crucial role to attract foreign direct investment (FDI) to Vietnam. According to the MPI, industrial parks have attracted more than 4,000 FDI projects with total registered capital of around $65 billion, accounting for nearly one-third of FDI capital committed to Vietnam.

Because of the importance of industrial parks, at a meeting held by the MPI in Hanoi two weeks ago, most local industrial park management authority representatives agreed with the ministry’s proposal.

“Last year, I introduced a foreign manufacturer to invest in an industrial park. At that time, the rental rate was $70 per square metre per 50 years, but when the manufacturer came back later, about several months ago, the rate was $100. Consequently, the manufacturer left Vietnam for other country,” said Bui Hong Mai, deputy director of the Industrial Parks Management Authority in Bac Ninh province.

Ngoc Linh |

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