Vietnam - Economist doubts MPI’s IP achievement report

A prominent economist has expressed his skepticism over a report by the Ministry of Planning and Investment (MPI) that industrial parks in the country have achieved high business efficiency.

Director of the Vietnam Economic Research Institute Tran Dinh Thien bluntly rejected the MPI report as unreliable as it states that the average occupancy rate at 267 industrial parks nationwide had reached 65% by the end of 2011.

In its report, the ministry said industrial parks were operating effectively and contributed substantially to the national economic development. The report is to review the performance of IPs, which are the target for current debate over their wastefulness in land use and investment capital and social welfare.

“The occupancy rate of the IPs was confirmed at only 46% in late 2010. So how it could jump 19 percentage points in only one year?” Thien raised the question at the meeting held by the MPI in Hanoi on Thursday.

The economist reiterated that after 20 years with strong efforts, occupancy had been boosted to 46%, so it could not jump that fast after just one more year.

“This is impossible in the context FDI and domestic investments plunged in 2011 due to the economic downturn,” Thien said.

The development of industrial parks in Vietnam has sparked public concerns, especially at the National Assembly, due to claims that they had been wasting land and capital investment, and are stirring up social issues due to farmers becoming landless.

According to the National Assembly report, local authorities had allocated 93,000 hectares for IP development by 2010, two times larger compared to 44.000 hectares approved by the law-making body by then.

Vietnam aimed to have more 260 more IPs with an additional 75,000 hectares by 2015, and to have the total of 200,000 hectares for IPs by 2020.

Achievements

According to the MPI report, for which the Ministry of Natural Resources and Environment provided inputs, Vietnam has 267 IPs covering 73,000 hectares nationwide.

Infrastructure development of these IPs have cost US$2.8 billion in foreign direct investment and VND110 trillion in domestic capital, with only 3% coming from the State budget for development in poverty-stricken localities.

By the end of last year, the IPs had attracted total investment of US$75 billion, of which US$57 billion was FDI, equivalent to 30% of the total FDI approvals in the country.

Revenue of domestic and international tenants in such IPs totaled US$40-42 billion, averaging out at US$2 million per year each hectare, according to the report.

In 2011, firms in these IPs gained export value of US$20-22 billion, and contributed VND22-24 trillion to the State budget. These parks accounted for 25% of the country’s export value and 32% of industrial output last year, and created jobs for 1.7 million workers.

MPI said in the report: “IPs are operating more effectively than agricultural land if we look at the above mentioned criteria.”

SGT


Business & Investment Opportunities

YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.