Green industrial parks in southern Vietnam post zero losses in Q3

Despite the ailing economy and increased prices and costs due to inflation, green and ecological industrial parks in southern Vietnam have still seen positive results, with no business reporting losses in the third quarter (Q3) of 2023.

Falling profit but no loss

Hiep Phuoc Industrial Park, the largest of its kind in Ho Chi Minh City, recorded total revenue of nearly VND31.8 billion ($1.3 million) and net profit of VND11.93 billion ($491,140) in Q3, down about 16% and 31%, respectively, from the same period last year.

The leaders of the industrial park, registered on the unlisted public companies market (UPCoM) as HPI, attributed the Q3 profit drop to falling land rentals and other revenues while sales and service costs increased.

Meanwhile, Long Hau Joint Stock Company, listed on the Ho Chi Minh Stock Exchange (HoSE) as LHG, owner of Long Hau Eco-Industrial Park, posted net revenue of more than VND67 billion ($2.76 million), down 62% year-on-year. Of which, revenue from renting factories, accommodation, and commercial centers was VND40 billion.

The biggest reason for LHG’s revenue decline came from zero revenue generated from leasing land with infrastructure and ready-built factories during the period.

In the first nine months of the year, LHG’s net revenue and profit hit nearly VND250 billion ($10.3 million) and VND107 billion ($4.4 million), down 52% and 38%, respectively, over the same period in 2022. The company achieved 84% of the year’s after-tax profit target after nine months and is on course to complete its goal in the rest of the year.

IDICO Corporation, listed on the Hanoi Stock Exchange (HNX) as IDC, reported Q3 net revenue of nearly VND1,444 billion ($59.45 million), a drop of 30% from the corresponding period in 2022. Its net profit was only VND161 billion ($6.63 million), down 62%, partly due to a year-on-year 64% rise in loan interest costs.

Its nine-month net revenue and profit hit nearly VND4,998 billion ($205.76 million) and over VND842 billion VND ($34.66 million), down 29% and 60%, respectively, year-on-year.

Advantages attracting "green" FDI

According to experts, although the world and regional economy presents complex and unpredictable developments, with numerous difficulties and challenges, Vietnam is still considered a bright spot on the FDI attraction map with many advantages.

Phan Van Chinh, deputy general director of IDICO, said that Vietnam holds many advantages to become an attractive destination for foreign investors. However, to lure FDI, especially “green” investment, Vietnam needs to improve the business environment, ensure policy and legal stability, minimize risks, and create favorable conditions for investors.

“When investors study an investment environment, the first things they look at are location and premises, utilities for production like electricity and water supplies, waste treatment systems, and human resources. However, the new trend will focus on sustainable production meeting environmental, social and governance (ESG) criteria,” he noted.

Therefore, an industrial park needs to not only have utilities serving normal production, but also develop additional amenities such as housing for workers, green energy sources like rooftop solar power, and circular waste treatment system.

Currently, very few industrial parks have invested in housing for workers. Workers have to find boarding places on their own and face many difficulties including high rent, cramped spaces, and lack of security.

According to Deputy Minister of Planning and Investment Tran Quoc Phuong, foreign investors have shown strong belief in Vietnam's investment environment. The country’s international position has been enhanced, with deeper and wider integration. Vietnam has signed and effectively implemented 16 free trade agreements (FTAs), including new-generation ones such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the E.U.-Vietnam Free Trade Agreement (EVFTA).

Listed in the group of 20 economies with the largest trade scale in the world, Vietnam has drawn investors from 143 countries and territories, with nearly 38,000 projects registering total capital of over $452 billion.

In addition, Vietnam boasts advantages in human resources and a domestic market of nearly 100 million people with a rapidly growing middle class. Its synchronously invested infrastructure has helped reduce transportation and logistics costs as well as input costs for businesses, thus improving the competitiveness of the economy.

According to Phuong, the Vietnamese government has issued a 2021-2030 national foreign investment cooperation strategy and an action plan to realize it.

Under the strategy, Vietnam will attract FDI projects that use advanced, new and high technology, and modern governance; have high added value and positive spillover effects; and connect global production and supply chains. At the same time, it will expand markets and improve the competitiveness of the economy, businesses and domestic products.

The country plans to improve efficiency and comprehensive quality in attracting and using foreign investment capital, increase the proportion of the FDI sector’s contribution to socio-economic development in commensuration with incentives and support they enjoy.

According to the Ministry of Planning and Investment, by the end of 2022, Vietnam had 407 industrial parks with a total natural land area of nearly 129,000 hectares. Of these, 292 had been put into operation, accounting for about 72%, and 115 or 28% were in the stages of site clearance compensation and infrastructure construction.