Overview of current industrial real estate market in Vietnam
Strong signals of a positive year for the industrial real estate market, Viet Nam’s industrial real estate sector is poised for a prosperous year in 2023 due to a surge in demand. Viet Nam has been implementing numerous policies and measures to attract new capital inflows and develop the industrial real estate sector.
Current and future policies:
In addition to relatively low labor costs, the Vietnamese government maintains policies aimed at attracting foreign direct investment (FDI). It includes a large number of free trade agreements, policies to encourage foreign investors, and new regulations regarding the management of industrial zones and economic zones to improve the economic environment. Below are typical current and future policies:
Current policies:
a. Foreign Ownership:
The Vietnamese government has made adjustments to regulations regarding foreign ownership in the industrial real estate sector. It allows foreign investors to acquire ownership and participate in larger projects. This creates favorable conditions for foreign investors to enter the industrial real estate market.
b. Tax Policies and Incentives:
The Vietnamese government has implemented a series of tax policies and incentives to encourage investment in the industrial real estate sector. This includes reducing import taxes for projects with national significance and those utilizing renewable energy sources.
Additionally, there has been a reduction in value-added tax (VAT) for industrial real estate transactions and projects with greener characteristics.
c. Land Policies:
The government has strengthened land management and allocation for foreign investors’ industrial real estate projects, reducing risks associated with land use and enhancing investment planning.
d. In particular, Decree No. 35/2022/ND-CP:
Decree No. 35/2022/ND-CP dated May 28, 2022, has set the stage for the development of a specialized legal framework related to all activities of industrial zones and economic zones as follows:
• Planning:
Decree No. 35/2022/ND-CP has consolidated and relatively comprehensively addressed typical obstacles related to the management and industrial zone planning activities. Specifically, the Decree allows for zoning plans to be established for the construction of industrial zones in areas that already have general planning; detailed planning can be created in areas with approved zoning plans, and even provincial People’s Committees may delegate the responsibility for infrastructure planning to investors actively organizing zoning plans for the development of industrial zones in areas with established general plans. This is an optimal solution to help investors save costs and shorten project implementation time.
Furthermore, the Decree has also delegated authority and clarified the roles of provincial People’s Committees and investors in infrastructure development for industrial zones when it comes to planning adjustments. Based on the separate development orientations and the strengths of each locality, as well as the specific capabilities of individual investors, provincial People’s Committees can actively propose investment approval to the competent authority for industrial zone development in accordance with Article 27, the current Planning Law.
This simplifies administrative procedures, removes obstacles, and saves time and costs for investors in infrastructure development for industrial zones.”
• The establishment procedures for industrial zones:
A significant advancement is evident in Decree No. 35/2022/ND-CP, which has eliminated the procedures for establishing industrial zones. According to this decree, an industrial zone is considered established from the date when the competent authority approves the investment policy, simultaneously approves the investor, or grants an investment registration certificate for the implementation of infrastructure construction and operation of the industrial zone in accordance with investment laws (Point b, Clause 6, Article 6, Decree No. 35/2022/ND-CP).
This reform in procedures helped citizens and businesses save costs and time during operations, reducing risks for business activities and for those involved in managing and operating businesses.
• The review and approval of investment policy for infrastructure construction and operation of industrial zones
These regulations helped restrict haphazard investments in industrial zones, improve land utilization efficiency, enhance the ability to select investors with competence and experience, ensuring effective and high-quality investments in industrial zones.
For businesses, transparent conditions provide a basis for them to carry out investment procedures for infrastructure projects within industrial zones.
• The national information system for industrial zones and economic zones:
The Decree has expanded the content related to the national information system for industrial zones and economic zones. This helps reduce administrative procedure costs and other compliance costs for investors, businesses, and government agencies through the submission of reports via the system. Additionally, the system enhances efficiency in investment promotion as businesses benefit from accessing information about legal regulations, investment environment, industry-specific information, and the activities of industrial zones and economic zones for analysis, evaluation, and appropriate investment decisions.
For investors and businesses within industrial zones and economic zones, this provides convenience and speed in carrying out online reporting to government authorities, fostering trust in investing in industrial zones and economic zones.
• Land leasing prices within industrial zones:
The decree supplemented provisions on handling measures to handle cases where land leasing prices within industrial zones increased by more than 10% compared to the registered leasing rates with the Industrial Zone Management Board. This regulation ensures economic harmony between infrastructure investors in industrial zones and businesses investing in these zones. Industrial Zone Infrastructure investors still maintain profitability factors in infrastructure projects within industrial zones while retaining advantages in attracting investment.
• Industrial zones and new industrial zone models
For various types of industrial zones, this Decree added specialized models such as deep-processing industrial zones and high-tech industrial zones, aiming to diversify the forms of industrial zone development, avoiding the one-size-fits-all trend of multi-sector and multi-field development that mainly focuses on increasing filled areas.
These provisions provide a foundation for businesses to develop industrial zones that can address emerging needs, such as specialized production zones (electronics, textiles, etc.) and high-tech industrial zones to enhance investment attractiveness and meet the requirements of large domestic and foreign investors. This allows investors to have multiple options when investing in different industrial zone models in Vietnam.
Additionally, the decree contributes to refining the legal framework for eco-industrial zones, building trust among investors, businesses, and the public in eco-industrial activities, aiming for sustainable development in Vietnam.
These specific provisions directly benefit investors. The classification of specific industrial zone types provides investors with the opportunity to choose a development model that aligns with their strengths, establishing a proper direction and precise positioning of their inherent capabilities for specialized and professional development.
• Legal framework for Industrial – Urban – Service Zones and Eco-Industrial Zones
The decree focuses on establishing a more specific legal framework for Industrial – Urban – Service Zones and Eco-Industrial Zones. This allows investors to self-assess their financial capacity to meet the conditions of each specific industrial zone model. This is an area that was previously lacking and did not provide a clear legal pathway.
Furthermore, diversifying the types of industrial zones builds investor confidence toward sustainable development in Vietnam. It also contributes to the transformation of existing industrial zones into more dynamic and job-creating models, enhancing the quality of employment in local areas through improved labor and environmental conditions, strengthened connections, and enhanced community benefits for residents living near industrial zones and economic zones.
• Support from competent authorities:
Investors and businesses with projects in industrial zones and economic zones received support from competent authorities in administrative procedures. It is related to investment, businesses, land, construction, environment, labor, and trade through a ” one-stop, on-site” principle. Support also includes labor recruitment and other related matters in project implementation.
Conclusion
In conclusion, Vietnam is a favorable environment to attract new capital inflows in the industrial real estate sector through its current policies.
Tax policies and incentives, adjustments regarding foreign ownership, and infrastructure development are providing attractive opportunities for investors and businesses interested in this field.
About our company:
HMLF is a Law Firm licensed to provide legal services to Enterprises. With over 70 years of experience in:
– Finance, Accounting, Tax.
– Industry: Manufacturing, Service, Aviation, Transport, Technology, Finance.
– Helping Customers control transactions from internal legal to international trade. Become the best legal defender for Businesses.
– Try to offer optimal solutions to bring customers satisfaction.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn
