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What is an industrial zone? Investment incentives in industrial zones [2024]
Industrial zones in Vietnam have many preferential investment policies for businesses based in these areas. Therefore, businesses or investors who want to expand their businesses in industrial zones or are interested in preferential investment policies should follow this article to understand the regulations that need to be known about industrial zones.
What is an industrial zone?
An industrial zone is an area with a geographical location determined by a specific plan with the purpose of ensuring a balance between economy, society, environment and is licensed by the government for investment with its own infrastructure system and investment incentives and legal system. Industrial zones usually specialize in the production of industrial goods and the provision of services for industrial production purposes.
Types of industrial zones
In today’s developing market economy, Vietnam is increasingly focusing on key industries to develop the economy. Along with that is the development of industrial zones, export processing zones, economic zones or high-tech zones with the purpose of specializing in the production, processing of goods and providing services. Therefore, it is necessary to clearly understand the types of industrial zones prescribed by Decree 82/2018/ND-CP as follows:
+ Export processing zones;
+ Auxiliary industrial area;
+ Eco-industrial park;
+ Specialized industrial zones;
+ High-tech industrial zones.
| Industrial Park Type | Characteristics |
| Export Processing Zone | Specializes in producing export goods, providing services for export production and export activities. Separated from the outside area by a hard fence, with customs agencies to inspect, supervise and control export and import goods, vehicles and passengers entering and leaving the country. |
| Auxiliary industrial area | Auxiliary industrial area means an industrial park specializing in manufacturing auxiliary industrial products and rendering services satisfying the needs of manufacture of these products. At least 60% of the total industrial land area of the industrial park is used to attract investment projects to manufacture supporting industrial products. |
| Eco-industrial park | There are enterprises participating in cleaner production activities and efficient use of resources, with linkages and cooperation in production to carry out industrial symbiosis activities; meeting the criteria in this Decree. |
| Specialized Industrial Park | Specializes in manufacturing and providing services for manufacturing products belonging to a specific industry or profession. At least 60% of the industrial land area of the industrial park is used to attract investment projects in this industry or profession. |
| High-tech industrial parks | High-tech parks attract:
High-tech and information technology investment projects in the List of industries and occupations with special investment incentives; Projects with technology transfer in the List of technologies encouraged for transfer; Technology incubators, science and technology business incubators; Investment projects in creative startups, innovation, research and development, education and training. At least 30% of the industrial land area of the industrial park is used to attract these investment projects. |
Investment incentives in industrial zones in Vietnam
Pursuant to Decree 35/2022/ND-CP in Article 22 on Investment incentives for industrial parks and economic zones, industrial parks have the following incentive policies:
- An industrial park may be an investment incentive area or an area facing socio-economic disadvantages that is offered investment incentives as provided in regulatory provisions on investment.
- Investment incentives for the industrial park area subject to legislation on investment shall be applied from the establishment date of the industrial zone.
- Specific incentive levels for investment projects in construction and business of industrial park infrastructure and investment projects in industrial parks are applied according to regulations of law on tax, land, credit, accounting and other relevant regulations.
- Costs and expenses of construction, operation, purchase, hire-purchase or rental of residential houses, public service or utility facilities for workers and staff members of industrial parks, economic zones; technical infrastructure connected to industrial parks, functional sites of investors executing investment projects on construction and business of infrastructure facilities of industrial parks or functional sites of economic zones; investors executing investment projects within industrial parks or economic zones, are categorized as deductibles for calculation of taxable income in accordance with law on corporate income tax.
- Investment projects on construction of residential houses, public service and utility facilities intended for workers and employees of industrial parks or economic zones shall enjoy incentives according to regulatory provisions on building of social housing and other relevant legislation.
- Investors having investment projects within industrial parks or economic zones shall be assisted by competent authorities in carrying out administrative procedures regarding investment, enterprises, land, construction, environment, labor and trade under the “one-stop shop and on-site” mechanism, and recruiting employees and dealing with other related issues during the project execution process.
Obligations of enterprises in industrial zones
According to regulations, enterprises in industrial parks have the following obligations:
- Comply with the law, the regulations on industrial park management, the investment approval decision or the investment registration certificate, the enterprise registration certificate;
- Register with the provincial Industrial Park Management Board: the quantity and volume of exported and consumed products from the domestic market (for industrial park enterprises), the quantity of waste and scrap with commercial value from the export processing enterprise sold to the domestic market and goods from the domestic market purchased and transferred to the export processing enterprise (for export processing enterprises).
- For high-tech industrial park enterprises, in addition to registering the above contents, depending on the type, the enterprise must register the transfer of advanced technology.
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