Making Vietnam more inviting for investors
If lightning strikes Bero Vietnam's coffee warehouse,
the beans will be safe as can be. That's because the
management board of the industrial park in southern
Binh Duong province replaced the lightning shield even
before the company knew there was a problem,
recounts John Burdsall, director of the
coffee-processing and export firm owned by Germany's
Neumann Group. Burdsall has grown to expect such
proactive concern since setting up shop last February.
"They come and visit me, just to see if I'm happy," he
says.
For companies looking to invest in Vietnam, one of the
most important decisions is choosing a good industrial
park. At present, it's a mixed bag. With 71 industrial
zones and three export-processing zones scattered
across 30 provinces, facilities vary widely. At some
parks, companies will find wastewater treatment plants,
broadband Internet access, plentiful power and on-site
customs offices. Others have barely any infrastructure
at all.
The management varies, too, though all parks are
supervised by provincial officials. Some parks are run
by private domestic firms or foreign-invested joint
ventures, while others are managed by the state.
Clearly, parks in more remote provinces are
hard-pressed compared to those near Hanoi or Ho Chi
Minh City, which have good road access to ports.
But those discrepancies can work to the investor's
advantage. With provincial officials avidly competing to
lure companies and boost local employment, they are
dangling a variety of tax breaks, rental discounts and
other amenities. For example, investors choosing
among Haiphong's three functioning parks (12 others
are still under development) can expect up to 15 years
of free rent, and the park will subsidize up to 30% of
the cost of local training carried out by the foreign
company. In the central city of Danang, officials hope to
entice foreign executives with tourist distractions along
with business amenities. "We have an unpolluted
environment and proximity to three World Heritage
sites," says Lam Quang Minh, director of the Danang
Investment Promotion Centre.
Some incentives do seem a bit odd. In northern Hai
Duong province, for example, the management board
claims it will pay up to 1 billion dong ($65,000) to
sweep the company's plot for landmines.
Throughout Vietnam, decisions on investment licences
have been decentralized. For provinces still burdened
by obstructionist officials, this has caused some
problems. But overall, the new system has been yielding
licences in two weeks or less. In Hanoi and Ho Chi
Minh City, officials can approve investments of up to
$10 million independently of the central government;
elsewhere the cap is $5 million. For investments
exceeding that amount, provincial officials must submit
forms to ministries concerned in Hanoi. If Hanoi fails to
respond within a week, the local officials have a green
light to issue the licence.
For Henry Chua, deputy general director for the
Vietnam-Singapore Industrial Park in Binh Duong,
Vietnam's policy direction is a big selling point. "In
2003," Chua predicts, "foreign investors will be
convinced that Vietnam is a forward-looking country."
By Margot Cohen - The Far Eastern Economic Review - January 23, 2003.
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