1. What is an Industrial Park in Vietnam?

According to Article 3.16 of the Investment Law 2020, an Industrial Park is defined as a geographically defined area that specializes in the production of industrial goods and provides services for industrial production.

Each Industrial Park has one or more infrastructure investors, and investors carry out the construction and business of the infrastructure within the Industrial Park.

2. What are the forms of investment in Industrial Park in Vietnam?

According to Article 6 of Decree 35/2022/ND-CP, there are 06 types of Industrial Park investment, including:

​Export Processing Zone:

• Is an Industrial Park specializing in producing goods for export and providing services for export production and activities;
• It is separated from the outside area according to regulations applicable to non-tariff parks as stipulated in the laws regarding export and import taxes.

Support Industrial Park:

• Is an Industrial Park specializing in the production of supporting industrial products and providing services for the production of supporting industrial products;
• A minimum of 60% of the total industrial land area of the Industrial Park is used to attract investment projects for the production of supporting industrial products in accordance with the law on supporting industry development.

Specialized Industrial Park:

• Is an Industrial Park specializing in the production and supply of services for the production of products in a specific industry;
• A minimum of 60% of the industrial land area of the Industrial Park is used to attract investment projects in this industry.

Ecological Industrial Park:

• Is an Industrial Park in which enterprises within the Industrial Park participate in cleaner production activities and use resources efficiently, with linkages and cooperation in production to carry out industrial symbiosis activities;
• Meets the criteria specified in Decree 35/2022/ND-CP.

High-tech Industrial Park

• Is an Industrial Park that attracts projects including:
  • Hi-tech and information technology investment projects under the list of industries eligible for special investment incentives in accordance with the law on investment;
  • Projects with technology transfer under the list of technologies encouraged for transfer in accordance with the law on technology transfer, technology incubation facilities, science and technology business incubation facilities in accordance with the law on high technology, and the law on science and technology;
  • Investment projects for creative start-ups, innovation, research and development, education and training.
• A minimum of 30% of the industrial land area of the Industrial Park is used to attract these investment projects.

Expanded Industrial Park:

• Is an Industrial Park area formed by increasing the size of the area of ​​an Industrial Park that was established in advance;
• The expanded area of ​​the Industrial Park has adjacent or neighboring boundaries and can connect and share technical infrastructure with the established Industrial Park.

3. What activities can investors undertake when investing in Industrial Park in Vietnam?

Industrial Parks in Vietnam not only provide significant opportunities for robust development but also ensure a clear legal framework for enterprises. According to Article 62 of Decree 31/2021/ND-CP, the activities that can be conducted for investment projects in Industrial Parks include:

• Renting or purchasing factories, offices, warehouses, and yards to serve production and business activities.
• Paying for the use of technical infrastructure works and service facilities, including transportation systems, electricity supply, water supply, drainage, communication, wastewater treatment, waste disposal, and other public utility works (collectively referred to as infrastructure usage fees).
• Transferring and receiving the transfer of land use rights, leasing land, and sub-leasing land that has been developed with technical infrastructure for constructing factories, offices, and other facilities serving production and business activities in accordance with land laws and real estate business laws.
• Leasing or sub-leasing factories, offices, warehouses, and other constructed facilities to serve production and business activities in accordance with land laws and real estate business laws.
• Other activities as stipulated by the Investment Law.

Typically, leasing factories within Industrial Parks for production and business activities is a common choice among investors due to the synchronized infrastructure, favorable business environment, and attractive support policies. This solution not only helps enterprises save on initial investment costs but also facilitates stable and long-term production and business operations.

4. What is the duration of an investment project in an Industrial Park  in Vietnam?

• The duration of an investment project is the period during which the project is permitted to operate, determined and adjusted by the competent authority approving the investment policy and the investment registration agency based on the project's objectives, scale, location, and operational requirements.
• According to Article 44 of the Investment Law 2020, the duration of an investment project outside an economic zone shall not exceed 50 years. However, projects in areas with difficult or extremely difficult socio-economic conditions, or projects with large investments and slow capital recovery, may have a longer duration, but not exceeding 70 years.
• Additionally, according to the guidance in Article 27 of Decree 31/2021/ND-CP, the duration of the investment project is calculated from the date the investor is granted the Investment Approval Decision, the Investment Policy Approval Decision concurrently with the investor approval, or the first Investment Registration Certificate.
• During the implementation of an investment project, the investor is allowed to adjust the operating duration of the investment project, either increasing or decreasing it, and the adjusted operating duration of the investment project must not exceed the specified duration.

5. What is the procedure for an investment project in an Industrial Park in Vietnam?

Step 1: Verifying the legality of the proposed project (legal regulations, required documents, and procedures to be followed).

Step 2: Carrying out procedures to lease a location within the Industrial Park with the Industrial Park infrastructure company.

Step 3: Carrying out procedures for investment policy approval, investment registration, and enterprise registration.

Step 4: Carrying out procedures related to the environment, fire prevention and fighting, construction, and business conditions for specific industries.

6. What dossiers are required to apply for an Investment Registration Certificate in an Industrial Park in Vietnam?

a. On project not subject to investment policy approval

Legal basis: Article 36 of Decree 31/2021/ND-CP

The application for an Investment Registration Certificate for an investment project not subject to investment policy approval includes:​

• A written request to implement the investment project, including a commitment to bear all costs and risks if the project is not approved.
• Documents on the legal status of the investor.
• Documents proving the financial capacity of the investor, including at least one of the following documents:
  • Financial statements for the two most recent years of the investor;
  • Commitment of financial support from the parent company;
  • Commitment of financial support from a financial institution;
  • Guarantee of financial capacity of the investor;
  • Other documents proving the financial capacity of the investor.
• An investment project proposal that includes the following contents: the investor implementing the project, investment objectives, investment scale, investment capital and funding plan, location, duration, investment schedule, labor demand, proposed investment incentives, impact assessment, and economic-social efficiency of the project;
• A proposal for land use; if the project does not request the State to allocate land, lease land, or allow a change in land use purpose, then submit a copy of the lease agreement or other documents confirming that the investor has the right to use the location to implement the investment project;
• An explanation regarding technology use for projects specified in point b, clause 1, Article 32 of this Law, including: technology name, technology origin, technology process diagram; main technical specifications, usage status of machinery, equipment and main technology lines;
• A BCC contract for investment projects in the form of a BCC contract.

If it is an investment project that requires technology appraisal opinions, the enterprise must include documents specified in Circular No. 03/2016/TT-BKHCN of the Ministry of Science and Technology.

b. On project subject to investment policy approval

Legal basis: Article 36 of Decree 31/2021/ND-CP

The application for an Investment Registration Certificate (IRC) for projects subject to investment policy approval includes:

• A decision approving the investment policy;
• A written request for an Investment Registration Certificate.

7. What is the procedure for obtaining an Investment Registration Certificate in an Industrial Park in Vietnam?

Step 1: Dossier submission

The investor submits a dossier as specified in Section 6 to the Department of Administrative Procedure Reception/Result Delivery of the Management Board of the Industrial Park/Export processing zone.

Step 2: Dossier reception

The official receiving and checking the legality of the dossier will:

• f it’s valid, the receiving specialist will issue a Receipt to the person submitting the dossier.
• If it’s incomplete or invalid, the receiving specialist is responsible for guiding the investor to revise the documents and submit them in a timely manner.

Step 3: Result notification

The Management Board issues the Investment Registration Certificate to the investor within 15 working days from the date of receipt of a valid dossier when the project meets the following requirements:

• It does not fall under the industries prohibited from investment and business as prescribed by the Investment Law and international treaties on investment.
• It has an investment project implementation location determined based on a valid copy of the land use rights certificate or a valid copy of the location lease agreement or other documents identifying the right to use the location to implement the investment project.
• The investment project is in accordance with the plans in accordance with the law.
• It meets the reqirements on investment capital per unit area specified by the Provincial People's Committee based on the actual reqirements of the locality and approved by the Standing Committee of the Provincial People's Council (if any), the number of employees used (if any).
• It meets the market access conditions for foreign investors.

Note: If the investment project requires technology appraisal opinions, this period may be extended to 15 working days (according to Circular No. 03/2016/TT-BKHCN of the Ministry of Science and Technology).

8. What are the forms of investment incentives when investing in Industrial Park in Vietnam?

a. Regarding preferential tax rates

According to Article 15.3(a) of Decree 218/2013/ND-CP on income tax incentives, when investing in an Industrial Park, investors will enjoy a preferential tax rate of 17% for a period of 10 years from the time the enterprise generates revenue from the investment project.                           

b. Regarding corporate income tax exemptions and reductions

Note: According to clause 4, Article 22 of Decree 35/2022/ND-CP:

Investment costs for construction, operation, or purchase, lease purchase, or lease of housing, service works, and public utilities for employees working in Industrial Parks and economic zones, as well as technical infrastructure works connected to Industrial Parks, functional areas by investors implementing projects to construct and operate infrastructure in Industrial Parks and functional areas in economic zones, and investors implementing investment projects in Industrial Parks and economic zones are deductible expenses when determining taxable income according to the provisions of the law on corporate income tax.

c. Other incentives for foreign investors

Additionally, foreign investors investing in Industrial Parks may be entitled to the following incentives:

Land lease incentives: Enterprises will be exempted or have their land lease fees reduced according to the provisions of Article 110.1 of the Land Law 2013.

Support from the State for administrative procedures: Investors with investment projects in Industrial Parks and economic zones are supported by competent state agencies in carrying out administrative procedures related to investment, enterprise, land, construction, environment, labor, and trade under the "one-stop shop" mechanism; receive support for labor recruitment and other related issues during the project implementation process based on Article 22.6 of Decree 35/2022/ND-CP.

Access to utility services within the Industrial Park: Along with the trend of building a closed ecosystem within Industrial Parks, investors aim to develop by integrating production activities with utility services that meet fully living and comfort conditions. This creates favorable conditions for foreign investors to minimize costs related to utility arrangements while attracting many workers and high qualified experts.

9. What should investors consider when choosing an Industrial Park in Vietnam?

a. Clarity of legal record

When choosing an Industrial Park, a primary concern is the types of licenses that the owner of the Industrial Park possesses and the legal documents that have been completed by the owner.

• If the investor's industry is not listed on the Industrial Park's license, the enterprise may not be able to carry out the investment procedures.
• Environmental permits, noise regulations, and waste management are crucial considerations for investors to avoid potential environmental issues when facing state regulatory agencies.

b. Price policies

Investors should pay attention to various rental costs, including: land lease rates, factory rental prices, management fees, electricity and water supply costs, and wastewater treatment fees.

An Industrial Park with a complete infrastructure system typically has rental prices for factories that are close to external market rates. Investors may consider choosing newly established Industrial Parks with specific plans for to complete the future infrastructure development.

c. Infrastructure

The location of transportation infrastructure includes: residential areas, national highways or expressways, railways, airports, and the nearest seaports. An Industrial Park with a well-developed transportation system will help businesses save significantly on transportation costs for importing and exporting goods.

d. Professional support services

Complex administrative procedures are a concern for investors entering the Vietnamese market. Industrial Parks that offer support services related to drafting and managing lease contracts, permits, compliance with administrative and personnel regulations, accounting, etc., will help enterprises save time and costs, allowing them to focus more on production and business activities.

10. FAQ

(1) What should foreign investors know before investing in Vietnam?

https://phong-partners.com/en/what-should-foreign-investors-know-before-investing-in-vietnam

(2) How to open a retail store in Vietnam?

https://phong-partners.com/en/how-to-open-a-retail-store-in-vietnam