Vietnam has to up its game for green FDI: industrial park exec

IDICO is a leading industrial park developer in Vietnam with 10 facilities across the country. How successful have you been in attracting investments?

IDICO is in the process of attracting investment to five of its latest industrial parks (IPs) and we have achieved occupancy of 60% in the remaining five. Our new IPs like Huu Thanh in Long An province have seen an occupancy rate of nearly 30% in just three years.

We attract investments from diverse industries. Customers at the Phu My II Industrial Park in Ba Ria-Vung Tau province are manufacturers of heavy industrial products and construction materials. Meanwhile, the Huu Thanh IP is suitable for consumer goods manufacturing, light industry, pharmaceuticals and e-commerce warehousing.

In terms of sources, capital inflow in recent years has mainly come from foreign countries and foreign businesses operating in Vietnam. Some Vietnamese businesses have also expanded their investments.

Does IDICO have any preference for foreign direct investment?

IDICO identifies industrial park development as its core area and gives priority to attracting quality investments. All of IDICO's industrial parks aim to attract quality, capable and influential investors to set the lead for others to follow. It can be said that attracting the right investors plays a great role in promoting IDICO's investment attraction and effectiveness.

For instance, Huu Thanh IP has Suntory PepsiCo Vietnam Beverages with a total investment of $320 million; Nhon Trach 5 IP in Dong Nai province is home to Hyosung Vietnam with a $1.9 billion investment; Phu My II IP has Posco Vietnam with $1.3 billion; and Kim Hoa IP in the northern province of Vinh Phuc houses Honda Motors.

Our investment attraction strategy is based on creating trust, investing in synchronous infrastructure, continuously improving the ability to meet customer needs, providing maximum support for tenants and maintaining close relationships with them.

What are some of the advantages and disadvantages of Vietnamese industrial parks in terms of attracting FDI, in your opinion?

In terms of advantages, Vietnam is a promising investment destination. With the trend of shifting production activities from large countries to Vietnam, we have seen a significant increase in the number and scale of FDI projects.

Vietnam has lower investment costs than other countries, which is an advantage in attracting FDI. At the same time, the country offers a large consumer market and serves as an export gateway for products. This helps Vietnam become an attractive destination for foreign investors.

However, to attract FDI, especially green FDI, Vietnam needs to improve its business environment further, ensure policy and legal stability, minimize risks for investors and create other favorable conditions for them.

Currently, strict legal fire prevention and fighting regulations have made compliance difficult for investors because it takes a lot of time and is costly. Some investors have been discouraged at the prolonged investment procedures, which has led to failure in meeting delivery deadlines per signed contracts. Besides, there were several short-term power outages some months ago. Such things make investors feel insecure.

In addition, workers’ recruitment is no longer as easy as it used to be and transport infrastructure in the southern region has not improved much of late.

Some observers say that IPs in Vietnam have not yet developed sustainably, making investors, especially foreign ones, hesitant about investing in the country. Housing for experts and workers is not guaranteed. Can you comment?

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

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

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

In the coming time, IDICO's industrial parks will focus on synchronous development of housing for workers and amenities in a sustainable and environmentally friendly manner. Actually, this is both a legal requirement and an investor’s choice when implementing projects.

Green growth, including the development of green and ecological industrial parks, has become an urgent and essential task to achieve the net zero emissions target by 2050. Where is IDICO in this regard?

According to the government's sustainable development orientation, business activities need to target net zero emissions. There needs to be some synchronization between government policies and strong involvement of businesses.

IDICO's development always follows the government's policies and orientations, so we strive to meet the requirements of building environmentally friendly and socially responsible industrial parks. European countries and Canadian manufacturers require application of ESG criteria. To meet these, businesses must demonstrate awareness of environmental protection, social responsibility and transparency in corporate governance.

IDICO has taken many actions to meet ESG criteria, including building housing areas for workers in industrial parks and participating in volunteer programs in localities. Its hydroelectric projects have earned the certified emission reduction (CER) qualification under the Clean Development Mechanism (CDM). Synchronous investments have been made in greening areas in the IPs and installing waste treatment systems.

Furthermore, IDICO is a listed company with transparent governance and management and a strict monitoring system.

What are IDICO's market expansion plans and what will be its development orientation for the coming years?

As I said earlier, IP investment is IDICO's core area and we are constantly expanding this, not only to develop IDICO's business but also to contribute to socio-economic development in localities where our projects are based. Investment in IP projects will result in a great source of revenue for the local budget. The company will continue to expand investment in IP projects in localities with potential.

IDICO is one of the leading enterprises in the industrial real estate market in Vietnam. In the third quarter of 2023, the firm recorded revenue of over VND1.44 trillion ($58.6 million) and an after-tax profit of over VND260 billion ($10.58 million).

IDICO is listed on the Hanoi Stock Exchange (HNX) as IDC. The ticker closed Monday at VND43,800 ($1.78).