Many industrial zones in Ho Chi Minh City are facing difficulties due to land acquisition issues.

Land scarcity is the main "bottleneck" preventing Ho Chi Minh City from attracting large projects, and foreign investment flows into the city have continuously declined in recent years. Many industrial zones in the city, established by the Prime Minister's decision 20 years ago, have yet to be built due to land clearance issues.

At the end of June 2024, Hepza submitted Document No. 1784/BQL-VP to the Ho Chi Minh City People's Committee reporting on slow-developing industrial park projects. In particular, in Binh Chanh district, there are up to four industrial parks with hundreds of hectares of land that are behind schedule. Among them, Phong Phu Industrial Park, with an area of ​​67 hectares, established in 2002, has yet to develop the infrastructure needed for land leasing.

According to a report by Hepza, the Phong Phu Industrial Park Project has not completed land clearance. The investor has also not signed a land lease contract with the Department of Natural Resources and Environment. To date, the project has not commenced infrastructure construction and has not become operational. Due to the project being stalled for 20 years, the remaining operating time is only 30 years. Hepza believes that with such a limited operating period, it will be difficult to attract investment.

Also located in Binh Chanh district, the Vinh Loc Industrial Park expansion project, covering an area of ​​56 hectares, has also not been implemented. The project has received a land acquisition notice and is conducting surveys, measurements, and land inventory, but is currently suspended because a compensation contract has not yet been signed with the Binh Chanh District Land Compensation and Resettlement Board.

It is understood that Cho Lon Import-Export and Investment Joint Stock Company (the infrastructure investor of the expanded Vinh Loc Industrial Park) is awaiting a reassessment of the investment costs in the project by the competent state agency in order to finalize the conversion from a state-owned enterprise to a joint stock company. Furthermore, rising land prices in the project area have led to increased compensation costs for land clearance, making compensation work difficult and affecting the project's investment efficiency.

Similarly, the Vinh Loc 3 Industrial Park, covering 200 hectares, is facing a similar deadlock. This project is currently stalled due to land compensation, site clearance, and resettlement issues, preventing its implementation.

Unlike the aforementioned projects, the Le Minh Xuan 2 Industrial Park Project, covering 319 hectares, is facing difficulties because the investor, Le Minh Xuan 2 Industrial Park Investment Joint Stock Company, has not yet terminated its cooperation agreements with its capital partners. Therefore, the project cannot proceed to the next stages.

Urgent addition of 11 new industrial zones.

According to Hepza's data, Ho Chi Minh City has planned nearly 6,000 hectares of industrial land, but as many as 1,500 hectares are facing legal or land clearance issues.

According to Ms. Nguyen Thi Bich Ngoc, Head of Investment Management at Hepza, the obstacles related to investing in new industrial parks in Ho Chi Minh City mainly concern land compensation and clearance, and issues related to public assets. This is a difficult problem that has existed for many years.

In 2024, Hepza set a modest target of attracting $550 million in investment into export processing zones and industrial parks. This target is considered achievable given that the city only has 74 hectares of "clean" industrial land available for investment. "The city is still working to remove obstacles and create more land to attract investment," Ms. Ngoc informed.

While many industrial parks are facing land clearance issues, all hopes are focused on the Pham Van Hai I and II Industrial Parks (Binh Chanh District), with a total area of ​​668 hectares. Compared to the construction of other industrial parks in Ho Chi Minh City, the Pham Van Hai I and II Industrial Parks have a significant advantage as 97% of the land here is agricultural land managed by Ho Chi Minh City, but with low economic efficiency due to severe acidity and saltwater intrusion, thus the land clearance process will not take much time.

Currently, Hepza is processing the investment procedures for Pham Van Hai Industrial Park I and II. According to the plan, construction of this industrial park will begin in 2025, and at the earliest, land will not be available for lease until 2026 or 2027.

To create more industrial land to attract investment in the coming years, Hepza proposes adding a series of new industrial zones. Mr. Nguyen Thanh Binh, Head of the Construction Planning Department of Hepza, said that the Management Board is coordinating with departments, agencies, and localities to find underutilized agricultural land and propose converting it into land for industrial and service development.

"We have submitted a proposal to the Department of Planning and Architecture and the Department of Planning and Investment (the two agencies in charge of drafting the adjustment of Ho Chi Minh City's planning) to include 11 new industrial zones with a total area of ​​4,127 hectares into the planning for the coming years," Mr. Binh said.

To avoid missing out on the new wave of investment, Mr. Dao Xuan Duc, Chairman of the Ho Chi Minh City Industrial Park Enterprises Association, believes that the wave of investment shifting from other countries to Vietnam is still ongoing, and if Ho Chi Minh City is slow to remove the bottleneck regarding land availability, it will miss the opportunity.

He likened these investors to "eagles," but Ho Chi Minh City currently only has "sparrow nests," lacking the capacity to attract and retain "eagles." "If Ho Chi Minh City cannot address the land bottleneck, it will be difficult to develop industry; without land, it's impossible to attract investment," Mr. Duc emphasized.