Investment in industrial clusters requires large capital

Phu Yen Province currently has 13 industrial clusters. According to the Department of Industry and Trade of the south-central coastal province, most industrial clusters have encountered difficulties in attracting investment in infrastructure development. The problem stems from the significant expense involved (VND96-715 billion per IC) and the long capital recovery period as well as low economic efficiency yields.

What is more, IC infrastructure developers do not benefit from investment incentives of the type offered to industrial and export processing zones. The ICs’ location in remote rural areas also dissuades investors. Most ICs are small and lack access to state investment. Specifically, from 2016-2020, the government allocated VND36 billion for infrastructure development in only one IC – Ba Ban IC – in Phu Yen Province, just VND16 billion or 44.4 percent of which has been disbursed.

The provincial people's committee has approved industry promotion funding worth VND4.2 billion for infrastructure development in each industrial cluster but this budget has not been disbursed due to capital shortages.

Most IC infrastructure developers/investors in the province are district-level financially dependent IC management boards, which are not allowed to lease land for sublease to industrial producers.

The Phu Yen Province Department of Industry and Trade has therefore proposed that the Ministry of Industry and Trade, the government and other ministries and authorities allow businesses to act as IC infrastructure developers and investors, increase incentives for investors in the field, and revise and improve laws and policies to ease the problems and attract investment in IC development.