Developing industrial zones in the Northern key economic region in a sustainable direction

slippers... A leader of Thang Long Industrial Park said that most of the transportation activities of enterprises in this Industrial Park are by air, including the purchase of raw materials and the sale of goods (accounting for over 90%). Another typical example is a leader of a garment company (100% Chinese capital specializing in producing suits and other types of clothing for the US and EU markets) in Nam Sach, Hai Duong also said that all their products are transported by air via Noi Bai International Airport. With such time costs, industrial parks in Hanoi and other localities in the Northern Key Economic Zone are the choice to help investors reduce time and air transportation costs. This is an important advantage of the Northern Key Economic Zone compared to other economic zones, especially the Central Key Economic Zone.

- Regarding sea transport: From Hanoi, the average transport time for a 20-foot container to Dinh Vu seaport, Hai Phong (about 120 km) is 150 minutes; to Cai Lan port, Quang Ninh province (about 170 km) is 270 minutes. In reality, the time and distance of goods transport also depends on the specific location of the factory, the time of transport during the day and the conditions of road quality. Investors operating in some industrial parks said that the average time and distance to Hai Phong port from the industrial parks are as follows: Sai Dong B Industrial Park: 120 minutes/100 km; Thang Long Industrial Park: 150 minutes/120 km; and Noi Bai Industrial Park: 180 minutes/130 km. In addition, enterprises in industrial parks in the region can choose Cai Lan port (Quang Ninh) as an effective alternative, especially for enterprises in industrial parks located along National Highway 18. The transportation time and distance from other industrial parks in the Northern Key Economic Zone to the two seaports mentioned above are equivalent or mostly shorter than those of enterprises in the above industrial parks. However, compared to localities in the Southern Key Economic Zone, sea transport in the Northern Key Economic Zone has less advantages, but compared to provinces in the Central Key Economic Zone, where there are many seaports, the Northern region has a clear advantage because the volume of goods transported at each port in the Central region is very small (because goods are divided equally among the ports in the Central Key Economic Zone), so the financial costs for loading, unloading and transportation are often higher.

much higher than the cost at Hai Phong or Saigon ports. In addition, due to the limited volume of transport, goods transported from these ports often have to wait quite a long time, about 2 weeks, even 3 weeks, affecting the seasonality, quality of goods and financial efficiency of enterprises, so many enterprises in industrial parks in the Central Economic Zone even transfer their goods by road to Saigon or Hai Phong ports to carry out import and export activities.

In fact, in some localities in the Northern Key Economic Zone, especially the provinces along National Highway 5 and National Highway 1 such as Hai Duong, Hung Yen and Bac Ninh, a lot of rice-growing land is used for industrial park development. This is an unavoidable problem when implementing the goal of industrialization and modernization. According to preliminary statistics, the area of rice-growing land converted in established industrial parks in the Northern Key Economic Zone accounts for over 30% of the total natural land area of the industrial park. This rate is much higher than in regions that have developed many industrial parks in recent times such as the Southeast and the Mekong Delta, where the ratio of rice-growing land to the natural land area of the industrial park only accounts for 7-8% [11]. However, for these localities, using part of the agricultural land area to develop industrial parks is really necessary to accelerate industrial development in the early stages, creating a driving force to promote the shift of the local economic structure towards industrialization by contributing to the modernization of the infrastructure system; attracting many workers; improve the qualifications and skills of workers and contribute to improving the lives of people in rural areas. However, this cannot help but cause concern for macro managers because it can affect the food security of the Region and the whole country.

b. Industrial park area scale

Industrial zones in the Central Highlands Economic Zone are built with many different comprehensive objectives such as: increasing industrial production value, shifting economic structure, attracting foreign investment capital, relocating production facilities in the inner city... so the determination of scale is mainly based on the actual conditions of the locality as well as the ability to recover land for industrial zone development. The specific scale of the industrial zones in the Region is as follows:

Table 2.2: Area scale of industrial parks in the Northern Key Economic Zone by locality

Unit: Industrial park, %

Location

Scale of natural area of industrial park								Total
Below 100 hectares		From 100 up to 200 hectares		Over 200 up to 300 hectares		Above 300 hectares		Total
Number quantity	billion percentage	Number quantity	billion percentage	Number quantity	billion percentage	Number quantity	billion percentage	Number quantity	billion percentage
Bac Ninh	0	0.0	0	0.0	3	33.3	6	66.7	9	100.0
Hanoi	4	36.4	4	36.4	2	18.2	1	9.1	11	100.0
Ocean	3	30.0	4	40.0	1	10.0	2	20.0	10	100.0
Hai Phong	0	0.0	3	50.0	2	33.3	1	16.7	6	100.0
Hung Yen	0	0.0	3	50.0	1	16.7	2	33.3	6	100.0
Quang Ninh Province	1	25.0	2	50.0	0	0.0	1	25.0	4	100.0
Vinh Phuc	0	0.0	1	20.0	2	40.0	2	40.0	5	100.0
KTTDBB Region	8	15.7	17	33.3	11	21.6	15	29.4	51	100.0

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Source: Author processed from [72]

Table 2.2 shows that in general, the scale of industrial parks in the Northern Key Economic Zone is small. Industrial parks with an area of less than 200 hectares account for 25/51 industrial parks in the Region. Notably, there are 8 industrial parks with an area of less than 100 hectares (4 industrial parks in Hanoi, 3 industrial parks in Hai Duong and 1 industrial park in Quang Ninh). Industrial parks with an area of over 300 hectares are only 15/51, accounting for 29.4%, mainly concentrated in Bac Ninh with 6 areas. It can be seen that the scale of industrial parks in the Northern Key Economic Zone is generally smaller than that of the other 2 economic zones, specifically: the number of industrial parks with an area of over 300 hectares in the Southern Key Economic Zone is 34/89, accounting for 38.2% (typically the provinces: Dong Nai has 14/26 industrial parks, Binh Duong: 8/22 industrial parks, Ba Ria - Vung Tau: 7/8 industrial parks and Ho Chi Minh City has 5/15 industrial parks); The number of industrial parks with an area of over 300 hectares in the Central Economic Zone is 4/12 zones, accounting for 33.3%, typically Thua Thien Hue has 2/3 industrial parks and Quang Ngai has both industrial parks ( As of September 2008) . Specifically, we see Figure 2.4 below:

100%

80%

60%

40%

20%

VKTTDBB

VKTTTĐMT

VKTTDPN

General

Under 100 ha From 100 to 200 ha From 201 to 300 ha Over 300 ha

29.4

33.3

38.2

34.5

21.6

50.0

14.1

14.6

31.5

35.2

33.3

15.7

16.7

15.7

16.2

Figure 2.4: Proportion of industrial parks and economic zones nationwide classified by size

Source: Author processed from [4]

It is worth mentioning that most of the industrial parks under 100ha in the Northern Key Economic Zone were established before 2003; while all industrial parks with an area of more than 300ha were established after 2003. This also reflects the increasing trend in the area of industrial parks in the region. However, if considering the effective scale of the industrial park is 200-300ha for the Northern Key Economic Zone and 300-500ha for the provinces, the area of the industrial parks in the area is still quite small. This affects the efficiency in organizing the management apparatus, investing in industrial park infrastructure and the ability to connect between enterprises in the industrial park.

c. Ratio of land area available for lease in natural area of industrial park

According to this index, Quang Ninh industrial parks have the lowest rate, only 63.5%. This shows that the rate of land in the province's industrial parks for public purposes such as: roads, trees, service areas, wastewater treatment... accounts for a high rate; Meanwhile, Hai Phong industrial parks have the highest rate of land for lease, reaching 74.8%. The remaining provinces are all in the range of 64.5% (Vinh Phuc) to 68.9% (Hanoi). On average, the rate of industrial land in the provinces in the region accounts for a rate of

67%. Specifically, we see table 2.3 below:

Table 2.3: Industrial land ratio of industrial parks in VKTTD localities

(As of September 2008)

STT

Location	Acreage natural land ( ha )	Land area available for lease (ha)	Ratio of land available for rent ( % )
	1	2	3	4=3/2 x 100%
1	Quang Ninh Province	771.1	489.7	63.5
2	Vinh Phuc	977.3	629.9	64.5
3	Hung Yen	936.0	639.0	68.3
4	Ocean	1886.8	1238.5	65.6
5	Bac Ninh	2913.2	1949.9	66.9
6	Hanoi	1628.9	1121.9	68.9
7	Hai Phong	453.0	338.8	74.8
General		9566.3	6407.6	67.0

Source: Author processed from [4]

Compared to other key economic zones, the rate of land available for lease in the region is similar. Specifically, the index of the key economic zone is 67.1%, the highest is Binh Duong 69.6% and the lowest is Ho Chi Minh City 63.6%. The key economic zone has a higher rate, an average of 68.4% with the highest rate belonging to Quang Ngai up to 73.8% and the lowest is Quang Nam only 64.4%.

Thus, compared to the reasonable industrial land ratio, which is about 60% - 70%, the industrial parks in the provinces of the Northern Key Economic Zone in general, except Hai Phong, all have a suitable industrial land ratio. This also requires Hai Phong to have stricter management in the appraisal of industrial park planning.

d. Industrial park occupancy rate

The business efficiency of industrial park infrastructure investors depends largely on the occupancy rate of the industrial park. Because there are no detailed statistics on the occupancy rate of industrial parks according to the time of establishment and the time the industrial park starts operating, the author bases

Total Leased Area Occupancy Rate (%)

30000

25212

25000

67.8

20000 53.3

15000

40.9

10000

9566

9003

5000

2623

2601

1207

Northern Key Economic Zone Central Key Economic Zone Southern Key Economic Zone

Unit: ha

Unit: %

on the current status of the ratio of leased land in industrial land of industrial parks to evaluate as shown in Figure 2.5 below:

Figure 2.5: Scale and occupancy rate of industrial parks in key economic zones

(As of September 2008) Source: Author processed from [4]

The figure above shows that, by September 2008, if the occupancy rate is calculated based on total

Regarding the expected industrial land area for lease in the area, the occupancy rate of industrial parks in the Northern Key Economic Zone is very low compared to the other two key economic zones. Specifically, the occupancy rate of industrial parks in the Northern Key Economic Zone is currently only 40.9%, while this rate of the Southern Key Economic Zone is 53.3% and the Central Key Economic Zone is the highest, up to 67.8%.

However, the assessment of the occupancy rate based on the total land area of the industrial parks is not accurate. If we only calculate the occupancy rate for the industrial parks that have been put into operation, at this time the results are as in Table 2.4: As of September 2008, the Northern Key Economic Zone has 21 industrial parks that have been put into operation and 20 areas are in the process of compensation, clearance or basic construction. In the 21 operating industrial parks, the total natural land area is 4,700 ha, of which the industrial land that can be leased is 3,158 ha and the average occupancy rate of the industrial parks is 70.4% of the leaseable area, equivalent to the occupancy rate of the industrial parks in the Central Key Economic Zone but lower than that of the industrial parks in the Southern Key Economic Zone with an occupancy rate of up to 75.8%. The reason for the difference between the two ways of calculating the rate

The filling is due to the age of the Southern industrial parks being quite high while the proportion of industrial parks in the Northern Key Economic Zone being in the construction phase is quite large. The number of industrial parks established in 3 years, from 2006 to September 2008, reached 16/41 industrial parks.

Table 2.4: Scale and leasing situation of industrial parks of VKTTD

(As of September 2008)

Key Economic Zone

Operating status	Industrial park land area ( ha)			Ratio Industrial park occupancy (% )
Operating status	Total acreage	Available for rent	Already lease	Ratio Industrial park occupancy (% )
	Already in operation	4,700	3.158	2.222	70.4
North	Under construction	4,866	3,250	401	12.3
	General	9,566	6,408	2,623	40.9
Central region	Already in operation	2,501	1,714	1,207	70.4
	Under construction	100	66	0	0
	General	2,601	1,780	1,207	67.8
	Already in operation	15,572	10,616	8,043	75.8
South	Under construction	9,640	6,290	960	15.3
	General	25,212	16,907	9.003	53.3
Total 3 regions		37,379	25,094	12,833	51.1
The whole country		46,588	31,228	14,946	47.9

Source: Author processed from [4]

Land available for lease Land leased Occupancy rate

1000

900

800

867

85.1

87.0

78.6

700

600

500

400

300

200

100

682

629

64.2

54.5

57.6

59.6

576

490

343

354

334

220

211

214

178

127

100

155 20

Hai Hai Hung Vinh Bac Hanoi Quang

Yen Phuc Ninh Ninh Duong room

Unit: ha

Unit: %

Considering the operating industrial parks by locality, Hai Duong is currently the province with the lowest industrial park occupancy rate, reaching only 54.5%. Meanwhile, this rate in Hanoi is 85.1% and the highest is in Quang Ninh, reaching 87%. Specifically, we see in Figure 2.6 below:

Figure 2.6: Occupancy rate of industrial parks in the Central Highlands economic zone by locality

(Calculating industrial parks in operation up to September 2008) Source: Author processed from [4]

According to the provisions of Article 5, Chapter 2 of Decree 29/2008/ND-CP dated March 14, 2008 of the Government, the conditions for localities to establish new industrial parks are: "The total industrial land area of industrial parks established in the territory of provinces and centrally-run cities that have been leased or subleased to projects that have registered for investment and granted investment certificates is at least 60%" [28] . Thus, although the ratio of leased industrial land area (occupancy rate) of the three provinces: Hai Duong, Hai Phong and Hung Yen is below 60%, the above provinces are still continuing to expand and establish new industrial parks (Currently, the number of industrial parks in these provinces in the infrastructure construction phase is: 5; 1 and 2 zones with a total natural area of 919, 150 and 418 hectares, respectively). This causes a great waste of land resources, especially since most of the industrial parks in these localities are built on rice-growing land. If we count the approved industrial parks that are in the construction phase, all 7 provinces in the region have an occupancy rate of less than 60%. Specifically: Bac Ninh: 40.3%; Hanoi: 52.9%; Hai Duong: 31.6%; Hai Phong 37.4%, Hung Yen 33%, Quang Ninh 32.9% and Vinh Phuc 56.2%; the total for the region is 40.9%.

e. Increase production value, added value and contribution to the state budget in production and business activities of enterprises in industrial parks.

In recent years, along with the growth in scale, area of industrial parks and the number of investment projects in operation, the scale of production value added and added value of enterprises in industrial parks has also increased rapidly, contributing increasingly to the socio-economic development of the locality. In the whole region, it can be seen that the growth rate of production value added in the period 2000 - 2008 was quite high, up to 55%/year (in US dollars), from 232 million USD in 2000 to 7,734 million USD in 2008. Details are shown in Figure 2.7 below:

Developing industrial zones in the Northern key economic region in a sustainable direction - 13

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